Project Finance

Project finance has become a preferred alternative to conventional lending for infrastructure projects worldwide, and Nepal is no exception — it's increasingly the structure of choice for long-term energy, infrastructure, and industrial projects, where the project's own future cash flows, rather than a sponsor's general balance sheet, carry the financing. Bhandari Law has built considerable experience in this space, advising on the legal and regulatory framework a project finance deal actually has to be built around.

 

The Legal Framework

Security and lending in project finance transactions in Nepal run primarily through the Secured Transaction Act, 2063 (2006), which governs how security interests are created, registered, and enforced over both movable and immovable assets, alongside the National Civil Code, 2074 (2017) and, for licensed lenders, the Bank and Financial Institution Act (BAFIA), 2073 (2017). Security over movable property is registered through the Secured Transaction Registry Office, while security over immovable property follows separate registration requirements — and unregistered security generally isn't enforceable against third parties, which makes getting registration right at the outset a genuinely load-bearing part of the transaction, not paperwork to handle later.

 

Foreign lending into Nepal is further shaped by Nepal Rastra Bank's regulatory framework — the Foreign Exchange Regulation Act, NRB's Foreign Loan By-laws, and its Unified Directives — which govern how foreign lenders can extend and enforce financing here. It's worth being candid about where Nepal's secured transactions framework still has real gaps: academic and practitioner analysis has flagged inconsistencies around securing non-monetary contractual claims, concession agreements, and step-in rights — exactly the kind of security project finance lenders typically expect as standard. That gap is precisely why structuring security packages for Nepali project finance deals takes genuine local expertise rather than simply importing a standard international term sheet.

 

Syndicated lending — common in larger project finance deals involving multiple lenders — is governed additionally by NRB's consortium lending directives and BAFIA, which shape how a syndicate of banks can lend jointly and share security.

 

What We Do

 

Legal and regulatory advisory

We advise on the legal and regulatory framework governing a project finance transaction, including the specific NRB and sectoral rules that apply to the project in question.

 

Legal due diligence

We prepare legal due diligence reports covering a project's existing contracts, licenses, and regulatory standing before financing is committed.

 

Financing and security documentation

We draft and review the documents that underpin financing and security arrangements — loan agreements, security documents, and the registration filings needed to make that security enforceable.

 

EPC and O&M contracts

We draft and review Engineering, Procurement and Construction (EPC) contracts, Operation and Maintenance (O&M) contracts, and the other high-value agreements a project depends on through construction and operation.

 

Permits and licenses

We assist in obtaining the permits and licenses required from government agencies for project development.

 

We advise clients across every stage of a project — the tender process, contractual structuring, drafting and negotiating agreements, construction, completion, and ongoing operation.

 

Our Experience

We've worked with project developers, private equity sponsors, investors, banks and financial institutions, debtors, creditors, government agencies, and other major parties on both domestic and cross-border project financing. Bhandari Law has an outstanding reputation for delivering on complex transactions of this kind, regularly advising sponsors and developers across the full project lifecycle — from acquisition or development through financing, construction, completion, and operation.

 

The law firm has the best project finance lawyers in Nepal.