GMR Group is pleased to announce the finalization and execution of the Project Development Agreement for the 900 MW Upper Karnali Hydro Power Project with the Government of Nepal, on 19th September, 2014. The agreement was signed in the presence of Hon’ble Prime Minister of Nepal, Shri Sushil Koirala, Hon’ble Deputy Prime Minister and Home Minister of Nepal Shri Bamdev Gautam and Hon’ble Home Minister of India, Shri Rajnath Singh and other dignitaries. The agreement, which is a major milestone for the Project, was signed after due approvals of the Board of Investment Board of Nepal and the cabinet of Govt. of Nepal. 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. The power generated, net of Free Power and power supply to Nepal, if any, is planned to be evacuated through a 400 kV double circuit transmission line up to the interconnection point of Power Grid Corporation of India (PGCIL), in India.

Mr. G. M Rao, Group Chairman of GMR Group expressed “The signing of the Project Development Agreement for the Upper Karnali Hydro Power Project reinforces the strong ties between India and Nepal. The development of the Upper Karnali project will be a 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.”

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. Continuing with its ALAR Strategy, GMR Group will be exploring strategic/ long term capital tie up of both debt and equity for the project at an appropriate time.

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 the 100% ownership of the project will be transferred to the Government of Nepal, at the end of the 25 year concession period.

The Upper Karnali project once completed will benefit Nepal and India by way of energy security, Industrial growth, improvement of job opportunities in Nepal, promoting community development through various initiatives, up gradation of health and educational institutions and improvement of communication and transportation facilities, thereby a possible boost in the economic growth of the country.