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The government has cleared the way to move forward with financial closure with the Indian company GMR, which has secured the 900-megawatt Upper Karnali Hydropower Project.

With the full text of the directive order issued in the writ petition filed at the Supreme Court now released, the Office of the Investment Board has found it easier to proceed with the financial management process.

Although GMR has submitted the required documents, financial closure has not yet been achieved.

On January 16, GMR submitted documents to the Investment Board claiming that investment management for the project had been secured. The company stated that the Indian Renewable Energy Development Agency (IREDA) had given a positive response to invest INR 65 billion in loans, while a consortium of Nepali banks had provided in-principle approval to invest NPR 20 billion in loans.

The 60th meeting of the Board has already approved the proposed change in the share structure of the Upper Karnali project, under which GMR will hold 34 percent, India’s government-owned company SJVN Limited (Satluj Jal Vidyut Nigam) will hold 34 percent, Indian Renewable Energy Development Agency (IREDA) will hold 5 percent, and the Nepal Electricity Authority will retain 27 percent.

Previously, GMR held a 73 percent stake while the Nepal Electricity Authority held 27 percent. However, GMR divested shares to IREDA and SJVN in order to mobilize investment for the project.

Claiming that financial closure had not been achieved within the mandated two-year period and that an agreement had been made to allot shares to other companies in India without government approval, Advocate Dan Bahadur Budha, proprietor of Budhasubba Legal Research, filed a writ petition at the Supreme Court on December 24, 2024.

In the writ filed against the Office of the Prime Minister and Council of Ministers, the Investment Board, the Ministry of Energy, GMR, and others, a joint bench of Justices Sapana Pradhan Malla and Nityananda Pandey dismissed the petition while issuing a directive order.

However, in the absence of the full text of the verdict, the Investment Board had not moved ahead with the financial closure process.

The full text states that since the share structure change was found to be in accordance with the provisions of the Project Development Agreement (PDA), there were no grounds to view the matter otherwise.

GMR had submitted a report on the financial closure of the Upper Karnali project, which the Investment Board reviewed by forming an expert committee. The Board’s expert committee had suggested that GMR would be able to achieve financial closure before mid-February 2025.

Although it is known that the full text of the verdict has been issued, it has not yet been formally received by the Board, said Sushil Gyawali, Chief Executive Officer (CEO) of the Investment Board’s Office.

Gyawali stated that both the court’s full text and the documents related to financial closure submitted by GMR will be presented at the upcoming Board meeting.

“It was not possible to hold a Board meeting before the election. We will table the matter at the first Board meeting after the election and proceed with the project in accordance with the Board’s decision,” he said.

kantipur