SBI is set to invest Rs.80 billion in a hydropower project of Nepal called the Arun III. The project has an electricity production capacity of 900 megawatts.
The construction of the project was awarded to SJVN which has entered into an informal agreement with the State Bank of India in order to procure the investment in terms of a loan. The formal agreement for the mega power project will soon follow.
As reported by Economic Times, SBI has decided to extend the loan and the interest rate has been finalized. However, the Director Committee Meeting of SBI is yet to make the recommendation.
It is estimated that Rs.11 billion will be spent for transmission lines, while a whopping Rs.1.4 trillion will be spent for building the structure. Once the project is completed, Nepal will stand to gain 21.9% of the over electricity produced in a year. That roughly translates to 197 megawatts of electricity with 86 crore units free per year.
In addition, Punjab National Bank (PNB) will also extend a loan towards the construction of the 400 KV transmission line that is estimated to be 268 kilometers long. The loan will be offered via the Everest Bank, a joint venture of PNB. The Everest Bank Limited is also set to make an investment of Rs.3.60 billion in the project.
The Arun III hydropower project will also receive funding to the tune of Rs.4.06 billion from Nepal banks as a bridge loan.
The license for the construction of the project is expected to be issued within the next month by the Nepal Investment Board. ANI reported from another source that it shouldn’t take more than a month which means the license should be granted by mid-June.
The Arun III hydropower project is expected to be completed by September 2022.