Kathmandu. The 63-MW Chujung Khola Semi-Reservoir (PROR) Hydropower Project under construction in Bhotkhola Rural Municipality-2 of Sankhuwasabha district has received investment. The project started by Shangrila Energy Limited has signed a consortium loan agreement between half a dozen banks and financial institutions under the leadership of Machhapuchchhre Bank.

As per the agreement, banks and financial institutions will invest a total of Rs 9 billion in loans for the project. The remaining Rs 3 billion will be invested in equity by Ghalemli Hydro Limited and other promoters. Machhapuchchhre Bank is the lead bank in the co-financing while Prabhu Bank and Lumbini Bikas Bank are the co-lead banks.

Similarly, Muktinath Bikas Bank, NIC Asia Bank and Shangrila Development Bank are participating as member banks. Chhujung is probably the first hydropower project to be financed after the Bhotekoshi disaster of August 10.

9 billion debt and 3 billion equity

}

The total estimated cost of the project is Rs 12 billion. Out of this, Rs 9 billion has been raised from loans from banks and financial institutions and the remaining Rs 3 billion has been raised from the equity of the founders.

The cost of the project is estimated to be Rs 19 crore per megawatt. The project is cheaper in terms of cost per megawatt. The project will be semi-reservoir for 4 hours. With the completion of the financial management, the necessary financial resources for the construction of the project have been assured.

The Power Purchase Agreement (PPA) has been signed with the Nepal Electricity Authority. According to the feasibility study conducted by the company, the project will generate 37.18 crore units of energy annually. The construction materials are being transported by helicopter to the project site. It has been proposed that the power house of the project will be underground.

The project is projected to earn Rs 2.27 billion in the first year after starting power generation. Similarly, by the ninth year of operation, the annual income is expected to increase to about Rs 2.84 billion. The project will get eight price hikes from the NEA at the rate of 3 percent annually.

According to the financial analysis of the project, the return on equity (ROE) will be 25.67 percent and the internal return rate (IRR) will be 15.47 percent. Looking at the ROE and IRR two financial indicators, the project looks financially attractive and will give good returns to the investors. Similarly, the profit-cost ratio of the project is 1.58 and the net present value (NPV) is Rs 5.33 billion. The average payback period is estimated to be around 5.73 years.

Ghalemdi Hydro invests Rs. 1.10 billion

}TAG_OPEN_strong_56

Ghalemdi Hydro Limited has an investment of about Rs 1.10 billion as the main shareholder in the project. Ghalemdi is operating the 5 MW Ghalemdi Khola Hydropower Project in Annapurna Narchyang of Myagdi. With the huge loan investment from banks and financial institutions in the project to be promoted by Shangrila Energy, the necessary financial base has been prepared to proceed with the construction.

The Chhujung Khola Hydropower Project is expected to be constructed in the Bhotkhola area of Sankhuwasabha and after the operation of the project, it is expected to generate electricity in the area and contribute to the national transmission system.

The electricity will be supplied to the Electricity Authority’s Shitalpati 220 KV substation, which is 55 kilometers away from the project’s power house. The project will have to construct a 55-kilometer-long, 220 kV double-circuit transmission line.

Shangri-La Energy has signed an agreement to build the transmission line in partnership with half a dozen hydropower projects to be built in the corridor. The company said that the cost will be further reduced as other projects will also be added to the corridor.

Similarly, the felling of trees required for the project has been completed. According to the policy of planting 10 trees after cutting one tree, the project has provided Rs 3.63 crore to the Department of Forest and Soil Conservation for planting and conserving trees. Currently, the project has completed a 14-km long access road. It has also constructed the necessary camp for the project.

After signing the agreement, Chief Executive Officer (CEO) of Machhapuchchhre Bank Santosh Koirala said that the bank and the participating banks are committed to complete the project on time and connect it to the national grid.

“This project should be started on time and without any hindrance. There will be no shortage of investment from the bank. The promoter should also pay special attention to safety and quality and complete the work on time,” Koirala said.

Similarly, Mohan Kumar Dangi, president of the Independent Power Producers’ Association, Nepal (IPPAN), said that the promoter of the project has got a consortium of experienced and supportive banks. Recalling that Machhapuchchhre Bank had invested in his first hydropower project, he said that the project was completed before the scheduled time due to the bank’s support.

“My first hydropower project was 7. It was 5 MW. Machhapuchchhre Bank had invested in it. We had set a target to complete the project in three years. But due to the bank’s support, we were able to complete it in 22 months,” said Dangi.

He expressed confidence that the project will be completed on time as the promoters of the Chhujung Khola project are experienced. “You are an experienced team that has already successfully constructed the project. You have worked in a remote geography. Therefore, IPPAN is confident that the 63 MW Chhujung Khola project will be completed on time,” Dangi said.

Stating that time is of special importance in the construction of a project, he said that any delay in the construction period would increase interest during the construction period and affect the financial condition of the project.

“How good and profitable the project will be is linked to the time of completion of the project. If the construction is not completed on time, the interest of the construction period will increase and the project will be weak. I believe that experienced leaders like you will contribute to the energy security of the country by completing the project on time,” Dangi said.

Kishor Subedi, executive chairman of Shangrila Energy Limited, said that the project could be completed in a short time and at comparatively low cost due to geographical and technical condition.

According to him, there is no need to construct very big structures in terms of capacity as the project head is more than 900 meters.

“Since the head of the project is more than 900 meters, there is no need to build big structures according to the capacity. Therefore, we can complete the project at a low cost and in a short time,” Subedi said.

He claimed that more than 59 per cent of the project’s catchment is above 3,000 metres, adding that the water flow would increase with the rise in temperature even in winter, which would reduce the hydrological risk.

“We will fully maintain the trust of all the banks and investors, including Machhapuchchhre Bank, who trust us,” he said. Pushkar Poudel, managing director of Shangri-La, said that the half-reservoir project will generate 63 MW of electricity daily for four hours even during the dry season. He said that the project has been designed to run at full capacity for four hours daily even in dry season, keeping in mind the energy security of the country.

Poudel clarified that there is no risk of damage to the project as the project is 45 meters above the river. Poudel said that there is very little sediment in the river and there is no risk of avalanche.

171 MW reservoir project

}

Shangrilal Energy is going to start the 171 MW storage hydropower project. The company is going to construct the Chhimdi Kawadi Khola Hydropower Project in Bichhaya, Bajura district. Poudel informed that the feasibility study of the project is currently underway. He said that the project is in the process of study.