Indian company GMR, struggling to secure funding for the 900-megawatt Upper Karnali Hydropower Project, has requested an extension of the deadline from the Investment Board Nepal (IBN) for raising investment. The request comes as the current deadline, set by the Supreme Court, nears its expiration.

The Constitutional Bench of the Supreme Court, in a verdict issued on May 7, 2023, had ruled that no additional time for financial management would be granted except for the duration lost due to the court's interim order. Calculated from the same date, GMR's deadline is set to end on February 17, 2025. Despite this, the company has failed to secure the necessary financial resources.

According to IBN spokesperson Pradyumna Prasad Upadhyaya, GMR has written to the board, citing a two-month gap between the Supreme Court's judgment and the issuance of its full text, and requesting that this period be added to the deadline.

"GMR stated in its letter that the time lost should be factored in to allow for financial management," Upadhyaya said. However, the board has replied, stating that it cannot independently grant an extension. Any such decision would require approval from the Council of Ministers.

The Supreme Court’s verdict emphasized that granting continuous extensions would contradict the principles of development and public policy. It stated, “Except for adjusting the time lost due to the court’s interim order, no further extension should be given. The project work should be completed promptly.”

The project has faced repeated delays due to GMR's inability to secure financing, leading to legal challenges. Activists, including Ratan Bhandari, filed a petition in the Supreme Court arguing that repeated deadline extensions undermined public interest. In a November 3, 2022 interim order, the court halted an earlier two-year extension granted by the government in July 2022. Subsequently, in its May 7, 2023 ruling, the Supreme Court directed the government not to grant further extensions beyond the adjusted timeframe.

GMR was awarded the Upper Karnali Project in 2008 through a competitive process. However, it has struggled for over 15 years to raise the Rs 146 billion required for the project. In an effort to mitigate financial challenges, GMR sold 34% of its equity to India’s SJVN Limited and 5% to the Indian Renewable Energy Development Agency (IREDA) in September 2023, retaining 34% of the project shares. Additionally, the Nepal Electricity Authority (NEA) has received 27% of the company’s shares at no cost, as per the terms of the agreement.

Sources reveal that IREDA issued a letter of intent (LOI) on November 12, 2023, offering a loan of up to INR 65 billion (approximately Rs 104 billion). Similarly, India’s Power Finance Corporation (PFC) issued an LOI on December 31, 2023, to provide a loan of the same amount, subject to certain conditions. Together, these commitments represent significant financial support for the project.

While GMR has yet to formally inform the Investment Board about its progress, sources indicate the company is in the final stages of financial management. It has reportedly secured commitments of Rs 40 billion from Nepali banks, and both IREDA and PFC are preparing to sign agreements to invest in the project.