KATHMANDU, Oct 8: The government has initiated formal correspondence with the Nepal Army headquarters seeking investment from the Nepal Army Welfare Fund for the 309-MW Upper Tamakoshi Hydroelectric Project (UTKHEP) located in Dolakha district.
The Nepal Electricity Authority (NEA) has written a request letter to the Directorate of Welfare and Planning, which comes under the Office of Chief of Staff (CoS), NA, in this regard seeking additional investment for the project. The NEA and NA also held a preliminary meeting in this regard at the Army headquarters a few days ago.
“The government has written a request letter seeking our investment in the Upper Tamakoshi Project,” a high-level NA source told myrepublica.com. He, however, added, “But this is a difficult proposition and it requires new policy initiative by the NA. The initial recommendation and go-ahead has to come from the concerned Welfare Fund Committee.”
The source further said that the proposal was ´risky´ given the NEA´s own poor financial record. “We need guarantee from the state at least in the principal amount to be invested in the project,” the source said. He also informed that the NEA has not quoted any specific amount for investment from NA so far. If the proposal comes through, it will be the first hydropower project to receive Army funding.
The government, on the other hand, is confident that it would convince the NA to invest in the project, which is considered one of the most viable hydropower projects in the country.
Talking to myrepublica.com, Minister for Energy, Dr Prakash Saran Mahat, said, “We have sought investment from both the Employee Provident Fund and the Nepal Army to expedite the project, besides the already committed assistance from the consortium of local commercial banks of the country.”
In January last year, the NEA signed a Memorandum of Understanding (MoU) with the Employee Provident Fund to finance Rs 12 billion -- Rs 10 billion as a debt and Rs 2 billion as a debenture. Similarly, in July, 2008, the NEA and Himalayan Bank Ltd (HBL), the lead bank for the consortium of local commercial banks of Nepal, signed a MoU to finance Rs 6 billion for the project.
An NEA official also informed that the public utility company has also sought Rs 6 billion from Nepal Telecom (NT). “If the requests made to NA and NT comes through, the project should face no problem,” the official said. The total cost of project is Rs 27.4 billion of which Rs 19.2 billion is debt and Rs 8.2 billion is equity. Experts have said that the project can be expanded to produce up to 456 MW power.
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