Kathmandu: Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari has stated that exporting power worth Rs 130 billion annually could effectively eliminate the country's trade deficit. This assertion was made during a meeting with the Independent Power Producers' Association, Nepal (IPPAN), where Governor Adhikari emphasized power exports as a strategic measure to address the trade imbalance.

Governor Adhikari expressed the NRB's commitment to providing necessary support for the development of the hydropower sector, recognizing its potential as a significant source of export revenue.

IPPAN President Ganesh Karki urged Governor Adhikari to introduce a provision mandating banks and financial institutions to allocate 20 percent of their total investments to the energy sector. In response, Governor Adhikari assured that there would be no shortage of investments from banks, even if Nepal were to produce 20,000 megawatts of electricity in the next decade.

However, IPPAN pointed out that around Rs 555 billion would be required within five years for projects generating approximately 3,700 megawatts of power. Additionally, over Rs 2,055 billion would be needed in a decade if power export agreements with India were included, and more than Rs 3,750 billion would be necessary if the ambitious goal of producing an additional 25,000 megawatts of electricity, as declared in the Energy Decade, were pursued.

IPPAN requested the NRB to implement its existing arrangement of providing loans to projects with a capacity of producing over 200 megawatts by adding only one percent to the base interest rate to all hydropower projects.

The association also voiced concerns that banks and financial institutions were reluctant to invest further in hydropower projects due to NRB directives, which prohibit the distribution of interest income during the construction phase. IPPAN called for the continuation of bonus sharing for interests generated during the construction phase and urged the government to facilitate new financial instruments, such as green bonds, climate bonds, or sovereign bonds, from the international market.

Additionally, IPPAN requested the NRB to ensure refinance in clean energy, citing high interest rates for investments by financial institutions in the energy sector. In response, the NRB governor noted that bond-related matters fall under the jurisdiction of the Finance Ministry but expressed the central government's willingness to facilitate such initiatives.

Furthermore, IPPAN called for provisions allowing banks and financial institutions to invest in energy production as capital. They also urged for the simplification of rules and provisions related to investment, bonuses, and investment withdrawal for international investors to achieve the ambitious goal of generating 25,000 megawatts of electricity and importing 15,000 megawatts in the next decade.

During the meeting, NRB Deputy Governor Bam Bahadur Mishra and executive directors Dr. Gunakar Bhatta and Dev Kumar Dhakal were present, along with the IPPAN delegation, led by President Ganesh Karki, Vice President Mohan Kumar Dangi, and former President Shailendra Guragain, among others.