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Nepal’s first privately financed hydro plant takes shape

Proving to be a milestone for Nepal, the 36MW Bhote Koshi hydro project is set to become the country’s first privately financed power plant.

German investment and development company DEG is providing US$12M of financing for the plant. With the co-operation of the International Finance Corporation in the US, a total investment of US$98M has been raised on a

non-recourse project financing basis by means of debt/equity funding.

With a potential output of 36MW, the Bhote Koshi run-of-river plant will increase Nepalese electricity generation by 10%. This is quite an achievement for the country which has 40,000MW of hydroelectric potential, but whose inadequate electricity supply has so far led to

considerable economic disadvantages.

‘In the framework of our power plant strategy, we support smaller and medium-sized power plants on the basis of local resources,’ Rainer von Othergraven, chairman of DEG’s management board said. ‘The co-financing of this hydroelectric plant is a further step in applying that strategy to the area of private infrastructure financing,’ he added.

The main responsibility for the Bhote Koshi project lies with American company Panda Energy. Other firms involved include Nepalese company Himal International Power Corporation and US-based Harza Engineering.

In addition, the supporting risk is borne by US electricity supply company, MCN Energy Group, and the International Finance Corporation.

Construction of the project began in 1997 and it is scheduled for commercial operation late in 1999.