Government plans to scale down capacityThe government is planning to allow China Three Gorges Corporation (CTGC), the potential developer of the West Seti Hydropower Project, to revise down its installed capacity if the Chinese company shows adequate commitment to execute it.
The government is planning to allow China Three Gorges Corporation (CTGC), the potential developer of the West Seti Hydropower Project, to revise down its installed capacity if the Chinese company shows adequate commitment to execute it.
Investment Board Nepal (IBN), the state agency which is implementing the 750 MW project, is planning to put forth the government’s proposal before the Chinese developer during a meeting scheduled to be held later this month, according to a highly placed source at the board.
CTGC officials are expected to arrive in Kathmandu later this month to hold final talks with IBN to expedite the implementation of the reservoir-type project located in the far western region.
CTGC had requested IBN to slash the installed capacity of the project to 600 MW citing a drop in the water level in the river during a meeting held more than a year ago. It had said that, if the installed capacity was not cut, the project would not be able to fulfil the minimum energy production requirement of 35 percent of the total energy during the dry season to qualify as a reservoir project and get a higher rate for its electricity.
As per the government’s power purchase rate, a reservoir-type project will get Rs12.40 per unit during the dry season, which lasts from December to May; and Rs7.10 per unit during the wet season, which lasts from June to November. Non-reservoir projects get a much lower rate ranging from Rs4.80 to Rs10.55 per unit for their electricity.
However, the Nepal Electricity Authority (NEA), the venture partner of the Chinese company in the project, had rejected CTGC’s proposal saying that the project must be built with its originally planned installed capacity. Subsequently, the Chinese developer informed IBN that it would not go ahead with the scheme with the installed capacity of 750 MW if the power purchase rate was not increased. A recent meeting of the IBN board of directors mandated its management to allow the Chinese developer to proceed with the project with the slashed installed capacity if it shows enough commitment to execute the project. “The upcoming meeting with CTGC officials will decide the fate of the project,” said the source.
West Seti has been in limbo since CTGC subsidiary CWE Investment Corporation and IBN signed a memorandum of understanding to construct the hydropower project in August 2012. It took more than five years for CTGC and the NEA to sign a joint venture agreement.
As per the pact, the Chinese company will have a 75 percent stake in the joint venture company while the state-owned power utility will hold the rest of the shares. The West Seti Hydropower Project will extend across Baitadi, Bajhang, Dadeldhura and Doti districts, and is expected to generate 2.8 billion units of electricity per year.