The Energy Ministry on Friday concluded “initial signing” of the Project Development Agreement (PDA) with Nepal Water and Energy Development Company (NWEDC) for the development of 216MW Upper Trishuli-1 Hydroelectric Project.

The Energy Ministry has sent the PDA to Finance and Law Ministries for approval. Once the PDA is approved, it will be forwarded to the Cabinet for endorsement, according to an official at the Energy Ministry.

“After the Cabinet’s endorsement, there will be final signing of the PDA,” said the official. “It will take a couple of weeks for the two ministries to give approval. So if everything goes well, the final deal will be sealed by mid-October.”

The PDA has given NWEDC two years to complete the project’s financial closure, and five years to complete the construction and start generation. Once the construction is complete, the developer will operate the project for 30 years and hand it over to the government in working condition.

The PDA also speaks about the Power Purchase Agreement (PPA) that Nepal Electricity Authority (NEA)  has to sign after the PDA. “The PDA will allow NEA to sign the PPA in convertible currency for the amount that covers the foreign debt for 10 years,” said the source.

“Also, the government will guarantee payment to the developer if NEA defaults during the concessional period of 30 years.”

In the case of the government’s failure to provide any kind of payment to the developer, the International Development Association (IDA) of the World Bank (WB) Group will guarantee the payment, according to the PDA.

“In that case, IDA will later claim the amount form the government,” said the source. “The government and the WB will later finalise the amount to be covered under such a guarantee.”

NWEDC is a joint-venture company with stake of three Korean companies—Korea South East Power Company, Daelim Industrial Corporation and Kyeryong Constr-uction Industrial Corporation—the International Finance Corporation (IFC) and Bikesh Pradhanang, a Nepali investor.

The run-of-river project will generate 216MW of hydroelectricity through three turbines of 72MW capacity each. The project  is expected to generate 1456.4 Gigawatt hours of net electricity per year, of which 1149.7 Gigawatt hours would be generated in the wet season and 306.7 Gigawatt hours would be generated in the dry season. The project site is near Dhunche, the headquarter of Rasuwa district.