The Central Bank of India (Reserve Bank of India) has rejected the proposal of the Indian Renewable Energy Development Agency (IREDA) to invest 5 percent equity in the 900 MW Upper Karnali. IREDA is about to submit an application to the Central Bank of India, according to Indian media. It is mentioned in the media that IREDA was informed through a decision letter that was rejected by the Central Bank of India on February 23.

IREDA's Board of Directors meeting held on July 16, 2024 gave in-principle approval to invest up to 10 percent equity in Upper Karnali, which was acquired by the Indian company Grandhi Mallikarjuna Rao (GMR). But after the Central Bank of India rejected IREDA's proposal to invest its own capital in Upper Karnali, the question of what will happen to the financial management in Nepal has been raised.

IREDA issued a press release on January 3 last saying that it has entered into a joint venture (JV) agreement with GMR, Indian government company Sutlej Jalvidyut Vikas Nigam (SJVN) and Nepal Electricity Authority. GMR submitted the documents related to financial management to the Investment Board on January 2. GMR submitted a document to the Board of Investment stating that IREDA is positive to invest 65 billion rupees in Upper Karnali and a group of Nepali banks has given in-principle consent to invest 20 billion rupees.

Board spokesperson Pradyumna Upadhyaya said that the committee formed to study the financial management documents is evaluating. "An independent committee has been formed for evaluation, the said committee has not yet submitted its report," he said, "after the committee submits its report, we will submit it to the board meeting."  He said that the evaluation committee is working to submit the

to the next board meeting. It has been given to an expert group for review. When will the board sit,'' he said, 'All the things submitted by GMR have been agreed. If it is according to the rules, the financial management of Upper Karnali will be approved.

Upadhyay said that he was not aware of the matter of the Central Bank of India not accepting IREDA's proposal to invest in Upper Karnali. "We are not aware of the internal details of IREDA's proposal acceptance, the evaluation committee will definitely analyze that too," he said, "IREDA is trying to come as a member in Upper Karnali with a 5 percent share."

GMR will keep its entire net worth as a guarantee, SJVN will keep it, etc. After the evaluation committee has studied and submitted the report, the board meeting will decide based on that, he said. In Upper Karnali, 34 percent of GMR, 34 percent of Indian government company Sutlej Jalvidyut Vikas Nigam (SJVN), 5 percent of IREDA and 27 percent of Nepal Electricity Authority remain. 

The 60th meeting of the Investment Board approved the share structure change submitted by GMR. Earlier, GMR proposed 9 members on the board of Upper Karnali, but the investment board decided to keep 11 members, Upadhyaya said. It was decided that 3 members of GMR, 3 members of SJVN, 1 member of IREDA, 2 members of Nepal Electricity Authority and 2 independent members (one must be a Nepali citizen) in the board of Upper Karnali.

The government has added 186 days of lost time due to the interim order issued after the case was filed in the Supreme Court. As the Supreme Court has already asked not to add time, it was mandatory to raise financial resources for the construction of the project by January 4. 

Earlier, the government had extended the deadline of 2 years for the financial management of the project on June 31, 2079. The decision was appealed to the Supreme Court. The Supreme Court heard the writ on 17 November 2079 and gave an interim order not to extend the deadline. Then, in the writ petition filed by Ratan Bhandari and others, on 24th May 2080, the Constitutional Bench of the Supreme Court gave a directive order to the Council of Ministers not to extend the deadline again. The Supreme Court upheld the extension of the deadline until the case was heard, but then it stopped the extension of the deadline.

Earlier, GMR Company was extended time and again after failing to raise financial resources. It is mentioned in the order that 10 years have been given only to raise financial resources in Upper Karnali and the Supreme Court has said that this time is sufficient and should not be extended again. A memorandum of understanding was signed between the government and GMR on January 10, 2064 for the survey of the Upper Karnali project and the construction of 300 MW of electricity. The government awarded the Upper Karnali to GMR under the Build, Own, Operate and Transfer (BOOT) model. GMR's proposal was considered the best among the international talks to build the project, and a memorandum of understanding (MOU) was signed between the then government and GMR in 2008.