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.. 


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