KATHMANDU, March 30 (Xinhua) -- Dongfang Electric International Corporation (DEC International), a Chinese company based in Sichuan, has agreed to finance a Nepal's private sector-led Hydropower Project under Engineering, Procurement, Construction and Financing (EPCF) modality.
The Chinese company agreed to finance the 75MW Trishuli Galchhi Hydroelectric Project located at the border between Nuwakot and Dhading districts in province 3, said Siddhakali Power Limited (SPL), the developer of the project.
The DEC International signed the Memorandum of Understanding (MoU) with SPL on Wednesday evening. Under the EPCF modality, the Chinese company will coordinate all design, procurement, construction work and finance.
The SPL is the second private sector company of Nepal that signed the MoU with the Chinese company to develop the hydropower project under EPCF modality.
Recently, Chongqing Water Turbine Works Co., Ltd, another Chinese company based in Chongqing, signed agreement with Nepal's People's Energy Limited to develop 48.8 MW Khimti-2 Hydropower Project located at the border of Ramechhap and Dolakha districts in province 3.
As per MoU signed between DEC International and SPL, the Chinese company will finance 94 million U.S. dollars for the project. This is the amount equivalent to loans secured by the developer --SPL from a consortium of Nepali banks.
"As the estimated project cost is 150 million U.S. dollar, the rest of the amount will be injected by the promoters," Guru Prasad Neupane, chairman of SPL, told Xinhua on Thursday.
He said that the EPCF modality, which is a new concept in Nepal, could be idle solution for developing the hydropower projects in Nepal in time.
Both sides have agreed to sign a formal agreement before the end of April as per the MoU. The construction of the project is expected to start from September 1 and complete within 42 months from the start of construction date.
After the project comes into commercial operation, the SPL has agreed to repay to the Chinese company from the loans it had secured from the Nepali banks within a year.
Neupane said that the SPL would repay to the Nepali banks after the Chinese company recoups its investment along with profit.