Small hydro projects lure banks

Spurred by Nepal Rastra Bank (NRB) policy to bring investments in hydro-electric projects of up to 50-kilowatt under a priority loan scheme, banks have now set out to seek clients.

Pashupati Bikash Bank and Araniko Bikash Bank of Kavre have already invested in five small hydro-power projects, all in remote places. This is the first time that banks have extended their investments to the backwoods of Koshipari, Roshipari and Dandapari.

The Energy Sector Assistance Program predicts that it will take some Rs 4.5 billion to produce an estimated 13,710 kilowatt of electricity from small hydro-projects by 2012. Half the costs will be covered by the government, local bodies and through labor contributions while the other half, nearly Rs 2.5 billion, will remain open to the banks.

´´Banks that would not trust us over the purchase of buffaloes now okay even hydro-power projects,´´ says Bikram Shrestha, chairman of Dauune Khola 3rd Consumers Committee. His group, which owes Pashupati Bikash Bank, has started production of 7 kilowatt.

A string of bank loan-based projects has already started power generation -- 10 kilowatt from Jyamire Khola, 11 kilowatt from Durlung Khola and 10 kilowatt from Chourin Khola. Dauune Khola 3rd, 7 kilowatt, and Chourin Khola 6th, 68.5 kilowatt, have entered the last phase of construction.

Banks make life easier for the consumers´ groups with one year grace period and start taking installments only after power production. The groups have borrowed up to Rs 1 million each. They first take subsidies from the VDCs and DDCs and then turn to the banks for the remaining amount. Durlung Khola and Chourin Khola 4th have already cleared their dues while the Jyamire Khola project has cleared 74 percent of its total loan.

Government subsidy, investment from DDCs and VDCs and local labor contribution cover 60-75 percent of the total cost. Says Ananda Raj Maskey, program officer at the Rural Energy Council, "Banks are naturally attracted if 75 percent of the risk goes to others.´´

The Alternative Energy Promotion Center now subsidizes power at the rate of Rs 125,000 per kilowatt. The average production cost for each kilowatt is Rs 0.25 million. The center also covers insurance for the entire project including equipment and powerhouse.

Pashupati Bikash Bank has introduced a provision for issuing loans to industries that consume unused electricity produced by the projects. It is said to be ready to introduce a personal loan scheme for members of consumers´ groups.

Source: Republica