Interest During Construction The Project shall borrow Rs. 321,632 thousands (70.

00 percent of the total project cost) from commercial banks in various installments for construction. The interest rate on bank loan is assumed to be 12 percent during construction. The total construction period of this Project shall be 36 months from the date of financial closure. The interest on borrowed capital cannot be paid during the construction period. Hence, the total project cost includes a total of Rs. 45028.45 thousands (9.2 percent) that has been capitalized for this purpose.

SOURCE OF FINANCING THE PROJECT

The total investment of Sisa Khola Small Hydropower Project (3.3 MW) is Rs. 459,473.94 thousands. Hydropower projects are capital intensive and long-term investment by nature. The promoters alone cannot finance the total investment required for the Project. Hence, it requires a proper financial arrangement between equity and loan. The Project shall be financed from promoter's capital and borrowings from the domestic banks and financial institutions. Of the total investment, Rs. 137,842 thousands (30.00 percent) shall be financed from equity and Rs. 321,632 thousands (70.00 percent) shall be financed from bank. The equity capital shall be used for the development of the Project. The bank loan shall be utilized to import machine and equipments by opening letter of credit. Likewise, letter of credit shall be opened to import steel plates to manufacture penstock pipes for the Project. Hence, extending loan for this Project shall generate additional business to the bank. The drawdown of bank loan shall be made in several installments as per the work progress which will not create crowding out effect to the resources of the commercial banks. The loan shall be repaid within ten years from the date of commercial operation.
Table Error! No text of specified style in document.-1: Capital Structure (NRs. 000)
S . N . 1 2

Particulars

Amount (NRs. 000) 137,842 321,632 Total Capital 459,474

Percent

Equity Bank Loan

30.00% 70.00% 100.00

LOAN REPAYMENT
The project shall borrow Rs.321,632 thousands from the commercial banks at 12 percent. The principal along with interest shall be repaid in ten years after the commercial operation. The monthly installment is Rs. 5,680 thousands under Equal Monthly Installment (EMI) model which brings the annual installment of Rs. 68,165 thousands.