September 19: Governor of the Nepal Rastra Bank (NRB), Maha Prasad Adhikari, has said the situation of trade deficit would end if power worth Rs 130 billion is exported annually.    
During a meeting with the office-bearers of the Independent Power Producers' Association, Nepal (IPPAN), Governor Adhikari mentioned that power export would be the best medium to reduce the trade deficit.    
On the occasion, Governor Adhikari assured that Nepal Rastra Bank will provide necessary facilitation in development of hydropower sector.    
Meanwhile, IPPAN President Ganesh Karki urged Governor Adhikari to a make provision requiring banks and financial institutions to invest 20 per cent of their total investment in the energy sector.    
IPPAN said around Rs 555 billion is needed within five years for developing projects to generate around 3700-megawatt electricity while around Rs 2,055 billion is needed in 10 years if power export agreement between Nepal-India is to be implemented and more than Rs 3,750 billion if additional 25,000-megawatt electricity is to be produced as per the declaration of Energy Decade.    
As NRB is providing loan to projects with the capacity of producing more than 200 megawatts electricity by adding only one per cent to the base rate, the organisation requested to the central bank to implement this arrangement in all hydropower projects.    
IPPAN further said banks and financial institutions have not shown interest to further invest in hydropower projects due to the directives issued by the Nepal Rastra Bank for banks and financial institutions. As per the directives, the interest income of the under-construction period could not be distributed as dividend.    
The IPPAN also demanded the continuity of sharing of bonus for the interests generated during the construction phase. It has sought the government’s role for management of new financial instruments such as green bond or climate bond or sovereign bond from the international market. The private sector energy producers also want the Nepal Rastra Bank (NRB) to ensure refinancing facility for clean energy, citing high interest rates charged by financial institutions in the energy sector.    
In response, the NRB governor said though the matters relating to bond falls under the jurisdictions of the Finance Ministry, the central bank is ready to facilitate towards that end.    
The IPPAN has also requested the central bank to make provisions allowing banks and financial institutions to invest in energy production as capital. They also want rules and provisions related to investment, bonuses, and withdrawal of investments for international investors to be eased to achieve ambitious goal of generating 25,000 megawatts of electricity and exporting 15,000 megawatts in the next decade.    
The IPPAN has urged revisions to the NRB’s unified directives regarding the risk weight of hydropower projects. They propose reducing the risk weight for operational projects from 100 to 50 percent and to 75 percent for under-construction projects.    
Moreover, the IPPAN delegation called on the NRB to develop progressive policy provisions that ensure interest grants, refinancing, interest capitalization, debt restructuring, and an extended moratorium period for rebuilding hydropower projects damaged by water-induced disasters.    
Present at the meeting were NRB Deputy Governor Bam Bahadur Mishra, executive directors Dr Gunakar Bhatta, and Dev Kumar Dhakal. The IPPAN delegation, led by President Karki, included Vice President Mohan Kumar Dangi and former President Shalendra Guragain, among others. -- RSS