Hy­dropower Pro­ject

Southasia - - Briefing -

Nepal re­cently signed a soft loan agree­ment worth Rs. 14.168 bil­lion (15.137 bil­lion Yen) with the Ja­pan In­ter­na­tional Co­op­er­a­tion Agency (JICA) to re­ceive of­fi­cial de­vel­op­ment as­sis­tance for the Tanahun Hy­dropower Pro­ject. The loan agree­ment was signed be­tween the Joint Sec­re­tary at the Min­istry of Fi­nance, Nepal, Madhu Kumar Marasini and Di­rec­tor Gen­eral of South Asia Depart­ment of JICA, Masa­taka Naka­hara. This ends a decade long hiatus from Ja­pan to pro­vide Nepal with fi­nan­cial as­sis­tance for the hy­dropower pro­ject. Ac­cord­ing to the plan, Ja­pan will con­trib­ute to Nepal’s eco­nomic growth and so- cial de­vel­op­ment through three types of as­sis­tance: Ja­panese ODA loans, tech­ni­cal co­op­er­a­tion, and grant aid.

Ja­pan pro­vided Nepal with de­vel­op­ment loans un­til 2001 but halted fur­ther as­sis­tance cit­ing po­lit­i­cal in­sta­bil­ity. The 140 MW reser­voir pro­ject, lo­cated in Tanahun dis­trict in western Nepal, will help the coun­try in de­vel­op­ing its agri­cul­tural sec­tor that des­per­ately needs an ef­fec­tive reser­voir sys­tem. The loan pro­vided by Ja­pan has a ma­tu­rity pe­riod of 40 years with the first ten years as grace pe­riod. Nepal is not re­quired to pay any in­ter­est dur­ing the grace pe­riod. How­ever, the loan has an in­ter­est rate of 0.01 per­cent and con­sult­ing fees amount­ing to the same.

Where the JICA is the pri­mary fi­nancier to the pro­ject, Nepal will re­ceive co-fi­nanc­ing from the Asian De­vel­op­ment Bank (ADB), the Euro­pean In­vest­ment Bank (EIB), and the Abu Dhabi Fund.

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