On February 6, 2020, Arun-3 hydropower project, the 900-MW export-oriented project, which is the largest hydro project as of now in Nepal, secured more than Rs 101 Billion from a consortium of Nepali and Indian banks for its construction.
India’s Satluj Jal Vidyut Nigam (SJVN) through its wholly owned subsidiary SJVN Arun-3 Power Development Company is developing this project.
The project inked financial closure agreement five banks from India and two from Nepal. From India, the banks involved were State Bank of India (SBI), Export-Import Bank of India (EXIM), Punjab National Bank (PNB), Canara Bank, Union Bank of India from India and Everest Bank and Nabil Bank were involved from Nepal. The seven banks have pledged a total of Rs 101.34 billion to the project in the form of structured debt. The Indian banks will levy interest rate of 8.35% whereas Nepali banks are charging 8.80% interest rate.
Pioneer Law Associates ("PLA") acted as a legal counsel on behalf of all the lenders for financing of the project, which is the highest private sector lending in the history of Nepal till date. The team from PLA was led my Mr. Anup Raj Upreti, the managing partner of PLA followed by Ms. Lajula Maharjan, Senior Associate, Mr. Sameep Khanal and Mr. Sahadev Khatri, Associates of PLA.
PLA was involved in (a) preparing legal due diligence report of the documents (b) working along with Cyril Amarchand Mangaldas, the lenders legal counsel India for comments on their due diligence report (c) review the financing and security document governed by Indian law from Nepalese law perspective (d) drafting of the Master Security Agreement (e) managing the signing ceremony of whole transaction on behalf of all parties.
Deal Date: February 6, 2020
Deal Value: Rs. 101.34 Billion