NEA delaying decision on West Seti JV agreementNepal Electricity Authority (NEA) has been delaying decision on signing a joint venture agreement with China’s CWE Investment Corporation to develop the 750MW West Seti Hydropower Project.
Nepal Electricity Authority (NEA) has been delaying decision on signing a joint venture agreement with China’s CWE Investment Corporation to develop the 750MW West Seti Hydropower Project.
As per the memorandum of understanding (MoU) signed between the IBN and the Chinese company in August 2012, the latter will hold a 75 percent stake in the joint-venture, while Nepal will hold the rest. The government has decided that NEA will hold Nepal’s stake.
NEA officials said they received the draft JV agreement some six months ago, but they were yet to take a decision. “We are still not clear how we will invest in the project in which we will have 25 percent stake,” said NEA Managing Director Mukesh Kafle. “We don’t have resources to invest ourselves.”
The project is estimated to cost $1.6 billion. The Finance Ministry in April 2014 had written to the Chinese government seeking $400 million in soft loans to invest as an equity partner and to build a transmission line to evacuate power. But there has not been any headway on this front.
NEA said it did not have the guidelines to sign power purchase agreement with a storage-type project. Almost all of Nepal’s hydropower projects are run-of-the-river type.
It said it was also not clear about the actual electricity demand in the country. As NEA is the sole power buyer, it worries about possible losses due to surplus electricity.
Meanwhile, IBN officials said drilling machines brought by CWE Investment had been stuck at the Rasuwagadhi customs point for nearly three months as the customs office refused to let the goods in, stating the importer was not registered in Nepal. “There was no clarity about the importer because the supposed joint venture company has not been registered yet,” said Ghan-ashyam Ojha, senior manager - communications and political affairs at IBN. “But the machines are now being transported to the project site under a different importer.”
However, customs officials said they were unaware about the imported machines. Kedar Paneru, chief customs officer at Rasuwagadhi Customs Office, said some goods imported by a hydropower company were cleared, but added he was unaware about the company importing the goods. “We do not stop goods clearance as long as the importer declares the products,” he said.
IBN officials say the delay in registering the JV company could delay construction work. The Chinese company has already started collecting necessary data and construction of housing facilities to staffers.
In April 2015, IBN had approved CWE Investment’s investment proposal three years after signing the MoU. Endorsing the proposal, the IBN board had also decided to form a joint venture between CWE and the Nepal Electricity Authority (NEA) for the development of West Seti and gave permission to the Chinese company to conduct geological studies.
GMR-ITD proposes two options
GMR-ITD Consortium, developer of 900MW Upper Karnali Hydropower Project, has assured it will either construct the regulating dam or close the turbines, according to Investment Board Nepal (IBN). The Indian developer, while signing project development agreement (PDA) in September 2014, had agreed to build a re-regulating dam itself to ensure no hamper to downstream irrigation projects. After studying possible impacts on downstream projects as per the PDA, the developer is now holding talks with the Department of Irrigation on the matter, according to IBN officials. It has pledged it will not hesitate to cut power output to ensure the downstream projects are not affected, said IBN CEO Radhesh Pant. “It, however, is yet to submit its report about its study on possible impact on
the downstream projects.” Ranijamara Kulariya of Kailali
is among the irrigation
projects that could face shortage of water following the development of the project, according to government officials. (PR)