The expert committee of the Board of Investment has suggested that the Indian company Grandhi Mallikarjun Rao (GMR) can manage the finances in Upper Karnali. While the Central Bank of India (Reserve Bank of India) rejected the proposal of the Indian Renewable Energy Development Agency (IREDA) to invest 5 percent equity in Upper Karnali, the committee suggested that GMR can manage the finances.
It is mentioned in the Indian media that IREDA was informed through the decision letter that was rejected by the Central Bank of India on February 23. Pradyumna Upadhyay, spokesperson of the Board, said that the expert committee has already suggested that GMR can manage the finances without receiving any information that IREDA's proposal has been rejected.
"After the expert committee made recommendations, we learned that the Central Bank of India has rejected IREDA's investment proposal," he said.
GMR will have 34% stake, Indian government company Sutlej Jalvidyut Vikas Nigam (SJVN) will have 34% share, IREDA will have 5% share and Nepal Electricity Authority will have 27% share in Upper Karnali with a capacity of 900 MW. The 60th meeting of the board approved the share structure change submitted by GMR. GMR formed an expert committee to review the financial management report of Upper Karnali submitted on January 2. Board spokesperson Upadhyaya said that despite the
suggestion, there was no concrete decision as the board meeting was not held. "We formed an expert committee to study the documents submitted by GMR," he said, "The committee has already suggested that all the financial management documents are in order." GMR submitted the document to the board claiming that since IREDA gave a positive response to invest 65 billion baht and a group of Nepali banks agreed in principle to invest 20 billion rupees, the investment management of the project was ensured.
But after the central bank of India rejected, Upadhyay suggested that a joint venture agreement could be made in another modality by adding 5 percent of IREDA to GMR and 2.5/2.5 percent to SJVN. The 60th meeting of the board was held on December 13. The meeting has not been held since then. A meeting has been called for next Sunday. According to the board, there is an agenda related to the financial management of Upper Karnali in that meeting. 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 said to be the best among international talks to build the project, and a memorandum of understanding (MOU) was signed between the then government and GMR in 2008 for the construction of the project.
On December 5, 2066, GMR submitted an application to the Electricity Development Department to increase the maximum utilization from 300 MW to 900 MW. After the establishment of the Investment Board in 2068, according to the provisions of the Investment Board Act, 2068, this project was decided by the Council of Ministers and placed under the office of the Investment Board. Similarly, on October 3, 2071, a Project Development Agreement (PDA) was signed between the Investment Board and GMR.
Although financial resources should be raised within two years of PDA, the deadline was extended by 1 year in December 2073 when financial resources could not be raised within the stipulated time. After not being able to raise financial resources even after 1 additional year, the board extended the deadline by 1 year in October 2074. Since 2075 August (September 2018) no time has been extended to GMR for financial management. Then on June 31, 2079, the Council of Ministers meeting decided to extend the deadline for another 2 years. According to the PDA, Nepal will get 12 percent free electricity and 27 percent share from Nepal Electricity Authority. Due to the interim order issued after the government filed the case in the Supreme Court, the lost 186 days have been added.
Since 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, on the writ filed by Ratan Bhandari and others, on 24 Baisakh 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 before the
case, but then blocked the extension. Earlier, GMR Company was repeatedly extended the deadline 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.
