September 19: Banks and Financial Institutions (BFIs) have expressed concerns regarding the return of their investment in the hydropower sector. The banking sector has realized that their investment might be in trouble due to the delay in loan payment against the agreement.
Around 70 to 80 percent of investment in the hydropower sector is funded by the banking sector. However, most of the hydropower projects have not been able to pay the interest, forget about the loan, due to various reasons.
Stakeholders revealed the grim scenario during an interaction organized by the Independent Power Producers Association of Nepal (IPPAN) on Wednesday, September 18. Energy producers said they have been facing losses.
After listening to the views of the participants, chairman of Nepal Bankers Association Gyanendra Prasad Dhungana said that he felt insecure about their investment in the hydropower sector.
“The banking sector invests in hydropower projects after looking into the annual production of electricity and income generation as well as VAT and tax rebate provided by the government,” said Dhungana. “However, bankers are in doubt about investing in this sector due to low production of electricity and the government not providing adequate support,” he added.
Electricity producers also blamed that their projects have suffered serious setbacks due to the ever increasing interest rate of banks. They demanded stable rate of interest.