Norway’s Statkraft pulls plug on Tamakoshi-IIINorwegian company Statkraft has notified the Investment Board Nepal (IBN) of its decision to discontinue the development of the Tamakoshi-III Hydroelectricity Project.
Norwegian company Statkraft has notified the Investment Board Nepal (IBN) of its decision to discontinue the development of the Tamakoshi-III Hydroelectricity Project.
Issuing a statement on Tuesday, the company said that its decision follows of a thorough assessment of all aspects of the project, including commercial, technical and regulatory factors.
“These factors include a lack of viable power off-take option, lower electricity price forecasts, insufficient transmission capacity for power evacuation and absence of necessary policies and regulatory framework for operationalising power sales,” said Sandip Shah, Vice President and Country Director Nepal for Statkraft. “It also reflects the increased bureaucratic hurdles for foreign investments, a fragile political situation and a geo-political situation leading to a non-conducive project development environment.” In its notification to the IBN, the company had expressed concerns, including on operationalisation of power trade agreement with India signed in 2014, operationalisation of regional market as per the agreement signed during the Saarc Summit, lack of progress in power sector reforms, uncertainty over federal structure, share demands for locals and negotiation fee for project development. The Statkraft had notified its decision to IBN on January 5.
The statement added that Statkraft is still interested in further power development in Nepal, but the projects need to demonstrate attractive returns on investment and stable long-term conditions in which to operate. Tima Utne Iyer, Senior Vice President at Statkraft and Chairperson of Himal Power Limited, said, “As majority owner of Himal Power Ltd (HPL), Statkraft has a long-term commitment to Nepal, as the license agreement for the 60-MW Khimti hydropower plant runs until 2045.’’ She added that the decision is purely linked to the Tamakoshi-III Project and does not influence Statkrafts’ other activities in South Asia.
Statkraft obtained a survey license for the Tamakoshi-III project in 2007 and conducted both Feasibility Study and Environmental and Social Impact Assessment of the project.
Based on the requirements of the Integrated Nepal Power System, export possibilities to the Indian electricity market and to other countries of the South Asian region, the project was optimised to be developed as a peaking run-of-river project with an installed capacity of 650 MW.