Trade deficit can be lowered by increasing hydropower exports: Govenor Adhikari

KATHMANDU: Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari has said that trade deficit can be lowered significantly by increasing hydropower exports.

Talking to the delegation of the Independent Power Producers Association of Nepal (IPPAN) on Tuesday, Adhikari said that the central bank would provide needful facilitation for the development of the hydropower sector which holds the potential to lower the country’s trade deficit.

Speaking on the occasion, IPPAN President Ganesh Karki requested the central bank to make it mandatory for commercial banks to direct 20% of their total lending toward the hydropower sector. In response, Governor Adhikari said commercial banks were in a comfortable liquidity position and that there won’t be a shortage of financing even if there were projects to generate 20,000 MW in the next 10 years.

IPPAN told the central bank that Rs 3,750 billion would be needed to generate 25,000 MW as declared in the ‘energy decade’ plan. Likewise, Rs 2,055 billion needs to be invested to generate 10,000 MW which India has agreed to buy over the next decade.

IPPAN also sought uniform lending rates for all hydropower projects. NRB has directed commercial banks to add only 1% interest on the base rate for hydropower projects above 200 MW.