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Essel Clean Solu Hydropower Ltd

Nepal

Energy Energy

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.

Financing partners
Prime Commercial Bank, Nepal SBI Bank, Prabhu Bank, Siddhartha Bank, HIDCL, FMO, BIO, DEG, OFID, TRIODOS

GuarantCo guarantee
NPR 2.78 billion (USD 28.2 million)

Total transaction amount
USD 191 million

Transaction benefits

The local banking system in Nepal lacked the capacity to extend, without credit support, the around USD 30 million 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 percent 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 around 11 percent to Nepal’s electricity capacity and will reduce the severe electricity shortage in the country which sees 12 to 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.