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Portfolio/Essel Clean Solu Hydropower LTD (“ECS”)

Essel Clean Solu Hydropower Ltd (“ECS”) won a tender to develop the 82 MW Lower Solu Run-of-the- river hydropower project, and targeted funding it with a mix of local and foreign currency debt.

Essel Clean Solu Hydropower A
Essel Clean Solu Hydropower B
Essel Clean Solu Hydropower C

Overview

Date of Transaction

December 2014

Country

Nepal

Financing Partners

PRIME COMMERCIAL BANK, NEPAL SBI BANK, PRABHU BANK, SIDDHARTHA BANK, HIDCL, FMO, BIO, DEG, OFID, AND TRIODOS

GuarantCo Guarantee

NPR 2.78 billion (USD 28.2 million)

Sector

Energy / Power

Total Transaction Amount

USD 191M

GuarantCo Benefits

However, the local banking system in Nepal lacked the capacity to extend, without credit support, the 16.5 yr c. USD 30m equivalent local currency debt that the project required in order to align the currency profiles of its revenues and debt obligations. GuarantCo’s credit guarantees, covering 90% of the local banks’ exposures, enabled ECS to raise the required local currency funding and achieve financial close in a timely manner.

Development Benefits

The Lower Solu project will add c. 11% to Nepal’s electricity capacity, and will reduce the severe electricity shortage in the country, which sees 12-16 hour daily power cuts in winter months. The project is the largest private sector plant in Nepal, and the first project to have both local and international debt. The project is also the first in Nepal to involve an international financial guarantor and introduces Nepalese banks to long tenor project finance, incorporating international best practices. The project is expected to have a significant demonstration impact for future projects.

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