The Indian Renewable Energy Development Agency Ltd. (IREDA) announced on Saturday that the Reserve Bank of India (RBI) has declined its request for equity investment in the 900 MW Upper Karnali Hydro Electric Power Project in Nepal. Despite the setback, IREDA has confirmed its intention to resubmit the proposal.
Background of the Investment Plan
IREDA had received in-principle approval from its board on July 16, 2024, to invest up to 10% equity in GMR Upper Karnali Hydro Power Limited and Karnali Transmission Company Pvt. Ltd., both based in Nepal. The proposed investment, estimated at ₹290 crore, was to be made in partnership with SJVN Ltd., subject to regulatory and government approvals. The existing shareholders of GMR Upper Karnali Hydro Power Limited include GMR and the Nepal Electricity Authority.
On January 17, 2025, IREDA signed a non-binding joint venture agreement with GMR Energy Ltd., GMR Power and Urban Infra Ltd., GMR Lion Energy Limited (Mauritius), SJVN, Nepal Electricity Authority, and GMR Upper Karnali Hydropower Ltd. The agreement outlined a collaborative framework for the development, construction, and operation of the hydroelectric project.
Government Approvals and Equity Stake
India’s Department of Investment and Public Asset Management had earlier approved a 5% equity investment by IREDA in the Nepal-based entities, following a recommendation from the Ministry of New and Renewable Energy on January 15, 2025. However, the RBI’s rejection has delayed the implementation of the project.
Market Performance
Shares of IREDA closed 0.2% lower at ₹149.59 on Friday, underperforming the Nifty, which posted minor gains. Over the past 12 months, IREDA’s stock has delivered a 6% return. According to Bloomberg data, the analyst consensus price target for IREDA shares is ₹200, indicating a potential upside of 34% from Friday’s closing price.
Next Steps
Despite the RBI’s decision, IREDA remains committed to the project and plans to reapply for approval. The Upper Karnali Hydro Electric Power Project is expected to play a significant role in strengthening India-Nepal energy cooperation and advancing renewable energy initiatives in the region.
Stay tuned for updates on IREDA’s efforts to secure approval and the progress of the Upper Karnali Hydro Project.
