Kathmandu— Financial closure for the proposed 420-megawatt Tila-2 Hydropower Project in Nepal's Kalikot district was formally completed on Monday through an investment agreement signed in Kathmandu between Urja Tila Power Company Pvt. Ltd., and a consortium of banks and financial institutions; the project, estimated to cost Rs. 70.07 billion, will be financed with 75 percent loans and 25 percent equity from the promoter company, with a portion of investment offered as shares to local residents and the public.

Project Financing Details

The total estimated cost for the Tila-2 Hydropower Project is Rs. 70.07 billion. Of this amount, Rs. 52.55 billion will be financed through loans from various banks and financial institutions, while Rs. 17.52 billion will come from equity contributed by Urja Tila Power Company Pvt. Ltd. Everest Bank Limited is serving as the lead bank for the project, with Sanima Bank Limited acting as co-lead. Prime Commercial Bank, NIC Asia Bank, and Global IME Bank are also participating as co-lead banks, alongside Siddhartha Bank, Nabil Bank, Nepal Infrastructure Bank, Agricultural Development Bank, Muktinath Development Bank, and Kamana Sewa Bikas Bank.

Project Scope and Capacity

The Tila-2 project is a semi-reservoir hydropower plant designed to operate at full capacity for up to six hours daily during peak demand. Once operational, the facility is expected to generate 2,318.79 gigawatt-hours of electricity annually, feeding it into Nepal’s national grid. A power purchase agreement (PPA) was signed with the Nepal Electricity Authority on October 23, 2024, for 296.74 MW. The project's generation is projected to include 451.05 GWh during dry-season peaks, 205.45 GWh during dry-season off-peak periods, and 1,662.29 GWh during the wet season.

Local Impact and Timeline

The dam for the Tila-2 project will be constructed in Tilagupha Municipality, while the powerhouse will be located in Khandachakra Municipality, both within Kalikot district. The project aims to begin electricity generation within four years of commencing construction, marking a significant milestone for the development of Karnali Province. Local residents have expressed optimism about the project’s progress. Hari Bahadur Shahi stated that focus should now shift towards development and construction, while Lal Bahadur Malla noted his hope that the long-awaited investment will finally allow the project to move forward after nine years.

Investment Stakeholders

Stream Investment, Urja Impact Fund, Robbins USA, and a range of domestic and international institutional and individual investors are listed as principal promoters of the Tila-2 Hydropower Project. The completion of the financial closure signifies the end of the most complex phase of financial management for the project’s construction, paving the way for physical work to begin.

With financing now secured, the Urja Tila Power Company Pvt. Ltd. is poised to commence construction on the Tila-2 Hydropower Project and contribute significantly to Nepal's energy infrastructure.

(With inputs from RN)

Originally published on abcnews.com.np.