GMR Energy Limited has joined hands with Sutlej Jal Vidyut Nigam Limited (SJVNL) and Indian Renewable Energy Development Agency Limited (IREDA) for developing the 900 MW Upper Karnali Hydel Project.

A memorandum of understanding (MoU) was signed on September 9 by the three companies for the developing and implementing the project, according to Indian media reports . 

GMR Upper Karnali Hydropower Limited (GUKHL), a subsidiary of GMR Energy Limited, is developing a 900 MW hydropower project on the Karnali River in Achham district. The hydel project is expected to enhance regional power security.

GMR said, in a statement, that it had been seeking financial institutions for debt to fund the billion-dollar project and believes the collaboration with the two major PSUs will provide significant advantages to the project.

“Financial institutions will have increased confidence in extending debt, and power evacuation will be facilitated through India via two cross-border transmission lines,” reads the statement.

SJVNL, which is already developing three hydel projects on Arun River in eastern Nepal, had expressed interest in acquiring an equity stake in the project. After GMR welcomed the proposal, SJVNL had sought permission from India's Ministry of Power to form a joint venture with a private undertaking.

“After due diligence by SJVNL, MoP, and other relevant government agencies, a letter of approval was issued,” the statement adds. “Additionally, IREDA, a leading renewable energy financing agency in India, decided to join with a minority stake of 5%.”

The recent development comes after multiple deadline extensions to manage the resource for the project.

The estimated cost of the project, whose planning began nearly two decades ago, was $1.05 billion in 2011 , according to the Investment Board Nepal (IBN).

The project is to be developed on a build, own, operate and transfer (BOOT) basis with a 25-year concession period after the commission, through a proposed 70:30 debt-equity ratio.

While SJVNL and GMR will hold 34 percent shareholding each, the IREDA will have 5 percent in the proposed JV, according to media reports . And the Nepal Electricity Authority, the state-owned power utility, will hold the remaining stake.

Initially a 300 MW project, its capacity was later increased to 900 MW.

While the GMR signed an MoU with the Government of Nepal for the survey and construction of the project in 2008, it signed the Project Development Agreement (PDA) with the IBN in 2014.

The initial deadline of two years for GMR to complete resource management for the project has been extended three times, with a writ petition filed against the third extension at the Supreme Court.

While the court had initially given an interim order against the extension, it later allowed GMR to continue with the project.

“Following a Supreme Court decision in favour of the Government of Nepal, GMR has been actively addressing all issues related to cross-border transmission lines between Nepal and India, as well as Bangladesh and India,” said Sanjay Barde, CEO-Energy, GMR, in the statement.

Of 900 MW, Nepal will get around 100 MW of electricity while 500 MW will be sold to Bangladesh under a long-term supply agreement with a dollar-denominated tariff, and the remaining 300 MW will be available for sale in India.