Green Bonds for Nepal Hydro

ISSUES 

• 42 GW  Hydro Potential ( Most of the project are ROR ) 

• Only 700 - 800 MW harnessed 

• Investment of about $7 to 8 billion each year

• Limited capacity of Local Banks to finance all the capital required 

• Non recourse project financing still not being tried by Local Banks 

Possible Solution

• Similar to Indian Masala Bonds 

• Rupees Denominate  offshore issue bond 

• For example: Comps like GMR issues INR Bond in offshore (London, New york), proceed use to finance hydro project in Nepal. PPA in NPR. Less foreign exchange risk  
• Backstop by DFIs including IFC and ADB

RISK

• No sovereign Credit rating of Nepal 

• Local Law limits Interest rate charged for foreign Debt - LIBOR + 5.5 

• Counter party risk 

• Dropping Energy prices in India..