Upper Kabeli Awards EM Contract with Fast-Track 15-Month Deadline

Kathmandu; Peace Energy Company (PEC) Pvt. Ltd., which is developing the 28.1 MW Upper Kabeli Khola Hydropower Project, has awarded the contract for the production, supply, and installation of electromechanical (EM) equipment to Flovel Energy Pvt. Ltd. The contract, signed on Friday at a formal event, mandates the completion of the work within 15 months. The agreement was signed by Shyam Prasad Mainali, Director of the PEC, and Vivek Saxena, Vice President (Marketing) of Flovel.

At the event, Director Mainali stated that approximately 20 percent of the hydro-mechanical (HM) works have already been completed, and Flovel has committed to fulfilling its responsibilities within the stipulated timeframe. "So far, the project has achieved around 35% of overall physical progress, with tunnel construction reaching nearly 48% completion," he said, "Given this progress, we are confident that the project can be integrated into the system ahead of schedule and within budget."

Similarly, Flovel's Vice President Saxena expressed satisfaction that Nepal, which is advancing in renewable and clean energy development, has entrusted his company with the EM works. "We will ensure high-quality equipment without any compromise, keeping the company’s reputation in mind," he stated, "The work will be completed within the approved timeline, adhering to the promoter’s directives and the contract’s provisions."

Echoing this commitment, Flovel’s Nepal representative, Ranjil Basnet, emphasized the company’s dedication to importing and installing high-quality equipment. "Flovel has been working in Nepal for decades, and there have been no reported issues with its services or equipment," he remarked, "It consistently provides services that align with its reputation. As Nepal’s local representatives, we will closely monitor the progress."

Meanwhile, Project Manager Dr. Prakash Dhungana also affirmed that efforts are being made to complete the work within the timeline and budget. "Collaboration with government agencies and local stakeholders has been instrumental in ensuring that we can finish before the required commercial operational date (RCoD)," he said, "With skilled and young manpower on our team, we are highly motivated."

Financial Closure and Investment Scenario

The Upper Kabeli Khola is being developed by PEC, a subsidiary of the USA-based company Tesla Hydro. Tesla Hydro, a company established by a group of Non-Resident Nepali (NRN) entrepreneurs and investors, holds a 78% stake in PEC. Both companies aim to bring in Foreign Direct Investment (FDI) to develop hydropower projects in Nepal.

The project's financial closure (FC) was completed on May 8, 2023, with an investment of approximately NPR 5.65 billion. Of the total investment, 75% is financed through loans, while 25% comes from equity investment. Nepali banks have contributed approximately NPR 4.23 billion as loans (75%), and NPR 1.41 billion has been invested as equity (25%).

The financing arrangement is led by Machhapuchhre Bank Limited, along with three other banking institutions jointly investing in the project:

- Machhapuchhre Bank Limited: NPR 1.48 billion
- Hydroelectricity Investment and Development Company Ltd. (HIDCL): NPR 1 billion
- Rastriya Banijya Bank: NPR 1 billion
- Laxmi Sunrise Bank: NPR 750 million

The company also plans to issue an Initial Public Offering (IPO) to local affected communities and the general public. The civil construction works for the project have been awarded to Infrapro Construction Pvt. Ltd. The project aims to commence RCOD by January 2027. A study has estimated that the project will generate 169.748 GWh of power annually. A study has estimated an annual electricity production of 169.748 GWh, with the generated power being supplied to the national grid through the proposed Amarpur Substation of NEA.

“We Are Focused on Good Governance and Systematic Development in Hydro Sector”

Dr. Madan Kumar Upreti
Chairman: PEC Pvt. Ltd.

Despite operating from abroad, the project team is working towards early completion. Our operations are fully digitized, ensuring efficient management. In Nepal, people often claim that the system does not function well, but our experience proves otherwise. If a proper system is in place, anyone can work efficiently.

The company emphasizes investing in system development, ensuring transparency in procurement, and strengthening human resources. Our organizational structure allows project management to exercise necessary authority, ensuring smooth operations. We have also implemented proper safety measures for workers. To us, a laborer is just as important as the chairman of the company.

The company aims to set a new standard for project development in Nepal by delivering high-quality construction within the stipulated timeframe in a transparent manner. We believe in teamwork, and the safety of every individual involved, from drilling personnel to senior management, is our top priority. Additionally, we do not compromise on construction quality.

The project team is working towards completing construction by October 2026, three months ahead of RCOD. Following the successful execution of this project, the company plans to develop hydropower projects ranging from 50 MW to 300 MW in western Nepal.