IFC may lend up to $26M to Cross Border Power Transmission Company

International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, is looking to lend up to $26 million to Cross Border Power Transmission Company Ltd (CPTC) for its Nepal-India electricity transmission and trade project (NIETTP).

Total cost of the project is estimated to be around $37 million and in the next two years, 70 per cent of the cost is proposed to be debt-financed while the remaining will be raised as equity from shareholders. IFC is expected to lend the money in two tranches – an A loan up to $13 million and a B loan up to $13 million as well.

The current project is part of a cross-border transmission line between Nepal and India, between Dhalkebar and Muzaffarpur, to facilitate up to 1,000 MW of power trade.

CPTC is a joint venture among four companies – Power Grid Corporation of India Ltd (26 per cent), Satluj Jal Vidyut Nigam Ltd (26 per cent), IL&FS Energy Development Company Ltd (38 per cent) and Nepal Electricity Authority (10 per cent).

As there is limited energy trade in Nepal, the project can set a precedent for the region and can be a best practice, to be followed by potential inter-regional interconnections.

In 2011, the World Bank approved a $99 million package for NIETTP to help Nepal mitigate the ongoing energy crisis and back in 2009, it also decided to provide a loan to Nepal for the construction of 400 KV cross-border electricity transmission lines. But the project has been stalled for the last three years due to financial constraint.

(Edited by Sanghamitra Mandal)

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