India, Nepal to jointly develop 900 MW Upper Karnali hydro power project in Nepal

India and Nepal will jointly develop the 900 MW Upper Karnali hydro-electric project over River Karnali, the largest hydro-electric power project in Nepal.

Nepal Electricity Authority (NEA) on Friday formalised a joint venture agreement with Indian Renewable Energy Development Agency Ltd (IREDA), SJVN Ltd and GMR Energy Ltd for the construction of the $1.5 billion project.

This strategic initiative will help expand and accelerate renewable energy growth and strengthen regional energy security, IREDA stated in a stock exchange filing on Friday.

Nepal, will be utilising only 108 MW of the total power generated for domestic consumption, leaving 792 MW of power for export to countries like India and Bangladesh.

The project will be developed on a build-own-operate-transfer (BOOT) model, as per the joint venture agreement.

The project construction and power purchase agreement has a life of 25 years from the start of commercial operation of the project.

The project is partly funded by the Asian Development Bank, and is expected to be completed within five years of commencement of construction. 

The project will also provide employment to an estimated 3,000 people during the 5-year construction phase.

IREDA will invest Rs174.22 crore to acquire a 5 per cent stake with SVJN also investing a similar amount to acquire up to 10 per cent joint stake in GMR Upper Karnali Hydro Power Ltd and Karnali Transmission Co Pvt Ltd, both of which are being executed by GMR Nepal, in association with SJVN.

IREDA, jointly with SVJN, had, in July last year, accorded in-principle approval for an equity investment of up to 10 per cent in the project. 

IREDA will have one director on the board of the joint venture. Its board will also appoint the chairman and CEO from amongst the directors nominated by SJVN and GMR.