China Eximbank provides $116.13 million loan for 50 MW Upper Marsyandgi A Hydroelectric Power Plant Project

Project narrative

In 2010, a project company (special purpose vehicle) called Sinohydro-Sagarmatha Power Company (P) Ltd. — that is 90% owned by Sinohydro and 10% owned by Sagarmatha Power (P) Ltd.(Nepal) — was established for the purpose of financing, designing, implementing, and maintaining the 50 MW Upper Marsyandgi A Hydroelectric Power Plant. This run-of-river project is located in the Bhulbhule VDC of Lamjung district with the Gandaki Zone, which is 180 km away from Kathmandu. It involved the construction of the dam site, a 5 km tunnel, and a powerhouse. It also involved the installation of two turbines of 25 megawatts each and the construction of a 20 km, 132 KV single circuit transmission line from the powerhouse in Bhulbhule to Mid-Marsyangdi. On December 10, 2012, the signing ceremony was held for the strategic cooperation agreement between the Export-Import Bank of China and China Power Construction Corporation and the BOOT project financing agreement for the Shangmaxiangdi A Hydropower Station in Nepal. The total cost of the 50 MW Upper Marsyandgi Hydroelectric Power Plant Project was $165.9 million and it was financed according to a 70:30 debt-to-equity ratio. China Eximbank was the only lender for this project. Therefore, AidData assumes that the face value of the China Eximbank loan was $116.13 million. The borrowing terms of the loan were as follows: 6% interest rate, 4 year grace period, and 15 year maturity. This project was implemented as an independent power project (IPP) on a build, own, operate and transfer (BOOT) model basis. Sinohydro-Sagarmatha Power Company (P) Ltd. signed a Power Purchase Agreement (PPA) with the Nepal Electricity Authority to provide annual power generation of approximately 317 million kWh. Sinohydro (later renamed PowerChina) was the EPC contractor responsible for project implementation. Construction began on January 8, 2013. This IPP reached its commercial operation date on January 1, 2017. Per the terms of the PPA, the NEA will off-take electricity at 6.95 Nepali rupees (Rs) per unit. The electricity produced by the Upper Marsyandgi A hydroelectric power plant will be connected to the transmission line of NEA located at Damauli. Each year, it is expected that the project will generate 317.6 million units of electricity including 57 million units between mid-December to mid-March in dry season and 260.6 million units in rainy season.