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Germany pledges additional funds
KATHMANDU, NOV 14 - The German government has agreed to provide about 80 million euros in additional funds to cover the deficit in the 70-megawatt Middle Marsyangdi Hydroelectric Project.
Earlier, Germany had asked the Nepal Electricity Authority (NEA) to raise the amount through its own resources while stating its inability to finance more than the amount initially pledged in the agreement,
Now the German Federal Ministry of Economic Cooperation and Development, in a letter sent to NEA on Tuesday, has pledged additional funding for the development of the project, Dr Janak Lal Karmacharya, the NEA managing director, told The Kathmandu Post.
The project was initially estimated to cost US$190 million, of which the German government had pledged 85 per cent in grant assistance with NEA committing to bear the rest of the project costs.
However, project works were disrupted owing to the country’s deteriorating security situation, largely triggered by the Maoist insurgency, thus pushing back the project’s initial completion deadline of December 2004 by an additional two years.
According to Karmacharya, the German Federal Ministry in its letter to NEA has pledged to provide with more amounts than the previously committed fund towards the development of the project. In the letter, Dr Raschen of the Federal Ministry has asked NEA to undertake certain measures tied up with committing new funds.
The NEA will have to furnish US $15 million as per its commitment made in the agreement signed in 1998.
In its letter to the NEA, the German govt has also asked the state-run power utility to substantiate its commitment during the forthcoming KfW progress review meeting scheduled at November end. The German govt has also asked the NEA to immediately settle all payments overdue to Dywidag-Dragados-CWE JV (DDC JV), the project’s civil works contractor. The contractor is claiming about 15 million euros in outstanding payments, according to a source.
With only 35 per cent of the project works believed to have been completed as of date, the deficit is expected to increase further. Sources inside the NEA point at the inflation of the single European currency since the time of the signing of the initial agreement as the main cause leading to the deficit. The exchange rate for a Euro stood at Rs 70 at the time of the initial agreement in 2000 while its value has made a significant stride since, trading now at Rs 85.Posted on: 2003-11-13 09:17
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