Refinance facility for flood affected hydropower projects

Kathmandu; Nepal Rastra Bank (NRB) has agreed to provide a refinance facility to flood affected hydropower projects.

In a tripartite discussion held among NRB, the Association of Independent Energy Producers Nepal (IPPAN) and Nepal Bankers’ Association, the central bank has consented to the issue.

Ganesh Karki, chairman of the IPPAN, said they had requested the central bank to facilitate refinancing, interest capitalization and loan restructuring for the flood-damaged projects. According to him, they also requested the central bank not to restrict the hydropower companies from paying dividends to their shareholders even if the bank interest of the affected hydropower projects is capitalized.

According to a directive of the NRB, banks are not allowed to show their interest earning from the hydropower companies in their profits until the hydropower companies start their production. In addition, banks providing loans to hydropower companies need to maintain 12.5 percent of the credited amount in provisioning while restructuring their loans to the energy sector. Due to this reason, banks are reluctant to invest in hydropower projects, even if they can capitalize the interest amount.  

Bam Bahadur Mishra, deputy governor of NRB, the central bank is ready to refinance projects damaged by floods throughout the reconstruction period. He said that interest capitalization and rescheduling of loans will also be facilitated.

According to the IPPAN, the floods of June 16 and June 17 in Taplejung, Panchthar, Sankhuwasabha and Bhojpur districts damaged the 30 hydropower projects of 463 MW in total capacity. These projects sustained damages worth Rs 8.5 billion due to the reason.