 "GMR Group")
The cost of the project is estimated to be around $1.5 billion.
The agreement, which is a major milestone for the project, was signed on Friday after due approvals of the Board of Investment Board of Nepal and the cabinet of Government of Nepal, a statement from GMR said today.
It said this is the largest FDI for Nepal and also the largest investment for GMR Group outside India.
The Upper Karnali Hydro Power project was awarded to the GMR Group through an International competitive bidding process in 2008 on BOOT basis. The project, with a capacity of 900 MW, is being developed as an export-oriented project to be constructed in a period of about 5 years.
The project is located on Karnali river in the Surkhet, Dailekh and Achham districts of Nepal.
G M Rao, Group Chairman of GMR Group, said the signing of the project development agreement for the Karnali Hydro Power project reinforces the strong ties between India and Nepal.
"The development of the Upper Karnali project will be beneficial for both countries leveraging on each other's strengths and resources. We are committed to the development of the project and the betterment of the communities in the region," Rao said.
The financial closure of the project (long-term tie up of debt and equity capital) is expected to be achieved within September 2016 and thereafter the commencement of the commercial operation is expected by September 2021, the statement said.
The project is expected to generate about 3500 MUs of energy annually and 420 MUs of energy (12% of installed capacity) has been earmarked as free power to Nepal.
The Nepal Electricity Authority will hold 27% free equity stake in the project including all project royalties and that the 100 per cent ownership of the project will be transferred to the Government of Nepal, at the end of the 25-year concession period, according to GMR.
