Upper Trishuli-1 Hydropower project (UT-1) is the recipient of the ‘DFI Deal of the Year 2019’ award announced by PFI Asia. Synergy Consulting would like to congratulate the Project Company NWEDC, Sponsors, Lenders, and other stakeholders on this achievement.
UT-1 achieved this key milestone in October 2019 with the signing of USD 453.2 MN loan agreements with a consortium of nine (9) lenders. This has been the largest FDI undertaking that Nepal has received, with the overall transaction being path-breaking on multiple aspects, including the following:
- Diverse Lender Group: The financing itself is notable for containing 13 individual loan tranches via nine international lenders, and for the explicit coordination and cooperation of a suite of multilateral development banks, including mandated lead arranger the IFC, the Asian Development Bank, the Asian Infrastructure Bank and the Export Import Bank of Korea.
- Innovative Financing Mechanisms: In addition to receiving commercial project financing from nine (9) international lenders, UT1 will also benefit from a suite of blended finance concessional funding instruments from IFC, K-EXIM and ADB. The project also received support in form of a subordinate deferrable debt tranche extended under IDA18 IFC-MIGA Private Sector Window and administered by IFC.
UT-1 has helped in ironing out many critical issues and processes in the Nepal power sector that would ensure smooth execution of future deals, such as investment friendly regulations, clarity around Power Purchase Agreement (“PPA”) policy including PPA in US dollar terms, and a ‘hedge fund framework’ to further mitigate foreign currency exposure. The numerous unforeseen events under which the project and financing documents have been executed is unprecedented and sets a new benchmark for project finance deals in the region.
Please see < PFI Award Link – http://www.pfie.com/pfi-asian-extra/21415522.article?sm=21415522 > for further details on the transaction, co-authored by Synergy deal team members. Synergy Consulting is the financial advisor to NWEDC for UT-1 Hydropower project.