The Asian Development Bank (ADB) has shown interest in financing a detailed feasibility study and detailed project report (DPR) for the 762 MW Tamor Hydropower Project, the Nepal Electricity Authority (NEA) said.

However, the ADB has told the state-owned power utility that it will go ahead only if it can convince the developers of the two under-construction hydropower plants downstream to accept compensation and abandon their projects.

The 37.5 MW Kabeli-A and the 21.5 MW Lower Hewa hydropower projects are located downstream of the proposed plant on the Tamor River in eastern Nepal. These two schemes will be inundated by the reservoir of the storage-type Tamor Hydropower Project.

If the NEA is successful in convincing them to drop their plans, the multilateral lender will provide a $6.5 million grant to conduct the feasibility study. The power utility has started negotiations with the promoters of Kabeli-A and Lower Hewa.

“We have started talks with them and they are positive about our proposal,” said a senior NEA official. “We will soon sign a memorandum of understanding with them and forward it to the Energy Ministry. The Energy Ministry will then write to the Finance Ministry which will accept the multilateral lender’s proposal.”

This will allow the power utility to conduct the study and prepare the DPR. “If the study shows that the project with an installed capacity of 762 MW is feasible, we will pay compensation to the promoters of the two hydropower projects and proceed with the construction of Tamor,” said the source. 

The NEA holds a permit from the Department of Electricity Development (DoED) to conduct a feasibility study for the storage-type project with an installed capacity of 200 MW.

Further surveys showed that the project could be upgraded to generate 762 MW of electricity.

The NEA has applied for a survey licence to conduct a feasibility study with the increased installed capacity. The DoED has also asked the NEA to obtain consent from the two projects downstream that they will abandon them.

In 1985, the Japan International Cooperation Agency (Jica) had proposed to build a 696 MW hydroelectric project on the Tamor River by building a 153-metre-high dam. However, the government did not show much interest in the proposal at that time.

The NEA management is very keen on developing the project with the increased installed capacity. It believes that upgrading the Tamor project and paying compensation to the smaller schemes is a better option. The plan

means a significant rise in energy production that will help the country become self-sufficient in electricity and a net exporter.

Even though enlarging the Tamor Hydropower Project to 762 MW will directly

impact the projects being built downstream, experts say that the larger national interest should be taken into account before reaching a final decision.