The Government of Japan has agreed to extend a loan assistance up to fifteen billion, one hundred and thirty-seven million Japanese yen (¥15,137,000,000), equivalent to one hundred fifty-seven million three hundred and fifty-three thousand US dollars (US$157,353,000), or about thirteen billion six hundred and fifty-three million Nepalese Rupees (NRS13,653,000,000), to the Government of Nepal for the implementation of the TANAHU Hydropower Project in Japan’s Fiscal Year 2012. The loan carries a 0.01% interest rate per annum on the loan amount withdrawn and will be re-paid in 30 years, after the grace period of 10 years.

The Notes to this effect were signed and exchanged by His Excellency Mr. Kunio TAKAHASHI, Ambassador of Japan to Nepal, and Mr. Shanta Raj Subedi, Secretary of the Ministry of Finance of the Government of Nepal, on behalf of their respective Governments. In the meantime, Mr. Masataka NAKAHARA, Director General from JICA Headquarter, Tokyo, and Mr. Madhu Kumar Marasini, Joint Secretary of the International Economic Cooperation Coordination Division of the Ministry of Finance, also signed and exchanged a separate Loan Agreement for the implementation of the said project.

Under the Notes, the Government of Nepal will utilize the loan assistance to purchase the products and/or services required for the construction of TANAHU Hydropower Project located near Damauli, about 150km west of Kathmandu.

TANAHU Hydropower Project is a storage type hydropower project, with the total storage capacity of 295 millionM3, and an electricity generation capacity of 140mW even during dry season. The basic objective of this Project is to meet the growing energy demand in Nepal in general and to address the severe load shedding due to the production and demand gap during peak hours in particular. This will be achieved by harnessing water resources to generate renewable energy with minimal environmental and social impacts.

It is expected that TANAHU Hydropower Plant will generate 585gwH electricity per annum contributing significantly to mitigating severe load-shedding. As a result, almost all consumers of Nepal Electricity Authority (NEA) connected to the National Power Grid will be directly or indirectly benefited from this Project. In addition, it is anticipated that this Project will help extensively to address the growing energy demand of the industries.

On the occasion, Ambassador Mr. TAKAHASHI has noted the past projects being implemented under the Japanese Official Development Assistance (ODA) in the energy sector. Ambassador Mr. TAKAHASHI said that, since 1976, Japan has been extending Japan’s ODA to Nepal in the energy sector in the form of Grant and Loan Assistance. A total of 15.653 billion Japanese Yen in Grants, and 39.265 billion Japanese Yen in Loans, have been extended so far to Nepal in this sector. (A separate sheet of paper on Japan’s Contribution to the Energy Sector in Nepal from JFY 1975 to date is attached herewith)

Expressing his happiness, Ambassador Mr. TAKAHASHI reiterated that Japan’s contribution to the energy generation sectors in Nepal is still considerably high, up to 236mW, which is still about 33% of the present total installed capacity of Nepal, a combination of NEA and Independent Power Producer (IPP), to date.

Ambassador Mr. TAKAHASHI further said that after completion of this TANAHU Hydropower Project, the total power generation capacity of storage type hydropower projects will increase to 232mW from the current level of 92mW (jointly from Kulekhani I and II Hydroelectric Project). He said, we could expect that this Project will certainly contribute to reducing load-shedding hours significantly during the dry season when the generation capacity of other run-off-river type power plants is substantially lower than their installed capacity. Hence, he expressed his belief that this Project will certainly strengthen economic activities in Nepal. Because, as we know, energy is considered a lifeline for sustainable industrial growth. Easy access to uninterrupted energy attracts investment which ultimately generates employment and business opportunities contributing to the GDP growth.

The TANAHU Hydropower Project is one of the most promising projects to be implemented under the loan assistance of the Japanese ODA, after 12 years of long interval since the extension of the Melamchi Water Supply Project.  Expressing his deepest concerns on the Project, Ambassador Mr. TAKAHASHI said that, the Government of Japan would like to request the concerned authorities of the Government of Nepal for a smooth, timely and transparent implementation of the Project based on the implementation guidelines to be set by the donors and recipient. Since this Loan is generated from the Japanese tax-payers’ money, Japan do hope that the Government of Nepal will certainly maintain a high-level of accountability towards both the Japanese and Nepalese people. The Government of Japan believes that the Loan extended today will pave the way for creating an environment conducive to the peace and prosperity of the Nepalese people. Ambassador Mr. TAKAHASHI also expressed his belief that this project will create ample employment opportunities during the construction.

Japan, as a close friend and sincere development partner of Nepal, is committed to extend all possible assistant to help Nepal in the country’s endeavor for socio-economic development, so Ambassador Mr. TAKAHASHI expressed his happiness to be a part of realizing the outstanding dream of the Nepalese people.

Ambassador Mr. TAKAHASHI has also expressed his confident that this Japanese ODA Loan for the TANAHU Hydropower Project will certainly be yet another cornerstone in enhancing the cordial relations between our two countries.