Kathmandu: Nepal's cabinet on Thursday cleared the way for Indian firm GMR to build a $1.4 billion hydroelectric plant in the northwest of the country, a cabinet minister said, the Himalayan republic's biggest foreign investment scheme.
The Nepalese government agreed to allow GMR in 2008 to construct the 900-megawatt Upper Karnali hydroelectric power plant in the northwest.
Law Minister Narahari Acharya said a cabinet meeting had approved the draft of an agreement to be signed with the Indian company. "This approval will open the way for different foreign investment projects that are in the pipeline to move ahead," Acharya told Reuters after a cabinet meeting.
Officials said GMR and another Indian firm, Satluj Vidyut Nigam, plan to construct other hydroelectric plants in Nepal with a potential to generate up to 42,000 megawatts of electricity.
The GMR plant, set for completion in 2021, will provide 12 per cent energy free to Nepal to ease a crippling power shortage.
Officials said Investment Board Nepal will now sign a Project Development Agreement (PDA) with GMR, which will construct transmission lines across the border to transmit the remaining electricity to India.
The Indian firm will give a 27 per cent stake in the plant to Nepal.
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