IFC and Partners Hold Workshop on Hydropower Project Financing in Nepal

Kathmandu, Nepal, July 2008—IFC, a member of the World Bank Group, the Independent Power Producers’ Association of Nepal, the Nepal Banker’s Association, and the Nepal Hydropower Association today held a workshop on hydropower project financing to help promote investments in the sector.

The event was attended by senior government officials, infrastructure and power specialists, and private sector business associations from South Asia. Discussion topics included project financing; risk assessment, securitization, and mitigation; environmental concerns, including climate change; and international best practices and their adaptation to Nepal’s context.

Dr. Sandip Shah, President of IPPAN, said, “Nepal has set ambitious targets of an additional 5,000 to 10,000 megawatts generation in the next 10 years. While the country’s energy needs have encouraged domestic investors and banks to engage in developing small and midsize hydropower projects, international lenders and partners also have an important role to play.”

Anita George, IFC Infrastructure Director, said, “Quality infrastructure is essential for economic growth and prosperity. Investments in power projects are needed urgently in Nepal. IFC is pleased to participate in and support this debate, which will help address important risk management and project finance aspects for developing this vital sector.”

IFC recently supported a feasibility study for the development of the Infrastructure Development Bank of Nepal along with other investors to develop and provide a comprehensive range of financial products and services for the development of infrastructure projects and facilities in Nepal.

At the workshop, Vice Chairman of National Planning Commission Dr. Jagdish Chandra Pokharel reinforced the importance of international capital and partners for harnessing Nepal’s hydropower resources. Secretary Shankar Koirala of the Ministry of Water Resources reiterated the government’s commitment to streamline project development by introducing an appropriate legislation and regulatory framework. Secretary Rameshore Khanal highlighted the key role of international partners in risk assessment and securitization as well as project appraisal for large infrastructure projects. He noted that international developers and lending agencies are welcome to introduce various financial instruments for developing projects.

Over the past few years, Nepal’s government and the private sector have undertaken a number of initiatives to promote investments in the hydropower sector. This includes power summit conferences in 2006 and 2007 that focused on jump-starting private sector initiatives for hydropower development in Nepal. Major outcomes include the awarding of development licenses by the government for two projects through a competitive bidding process, initial steps toward creating an infrastructure development bank, and the building of cross-border transmission lines.