Nepal to facilitate construction of 900 MW Upper Karnali hydropower plant — Kathmandu Post
Nepal’s Investment Board has decided to facilitate the immediate start of construction of the 900 MW Upper Karnali hydropower plant in the west of the country. This was reported by the Kathmandu Post. The project, which had struggled for years to attract investment, is being developed by India’s GMR Group.
The decision was made at the 68th meeting of the Investment Board in accordance with the project development agreement. At the same time, the Investment Board Office has not yet sent GMR an official letter regarding the decision. The company said it would act after receiving the document.
Financing and shareholders
On January 15, 2025, GMR submitted documents on the project’s financial closure and said it had secured financing. According to the company, the Indian Renewable Energy Development Agency, IREDA, gave a positive response to a proposal for a loan of 65 billion Indian rupees, while a consortium of Nepali banks preliminarily approved a loan of 20 billion Nepalese rupees.
Under the revised shareholding structure, GMR Group and India’s state-owned Satluj Jal Vidyut Nigam each hold 34% of the project, IREDA holds 5%, and the Nepal Electricity Authority holds 27%. Previously, GMR held 73%, while the Nepal Electricity Authority owned the remaining 27%. GMR brought in IREDA and SJVN as shareholders to mobilize investment.
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Deadlines and court proceedings
An expert committee under the Investment Board reviewed GMR’s report on financial closure and concluded that the company could have completed the process by the end of February 2025. A representative of the board’s office said that the developer may submit the remaining and updated documents and begin construction, which must be completed within the next five years.
In December 2024, lawyer Dan Bahadur Budha applied to Nepal’s Supreme Court. He argued that GMR had not achieved financial closure within two years after signing the agreement and had also entered into agreements to transfer stakes to other companies for investment in a project in India without government approval. The court dismissed the lawsuit and issued a directive order.
The full text of the court ruling states that the change in the shareholding structure did not require a negative attitude because it complied with the provisions of the project development agreement. GMR repeatedly received extensions to mobilize financing. The Supreme Court noted that the developer had already had 10 years to mobilize funds and prohibited any further extensions.
