Bhotekoshi in political problem

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    KATHMANDU, Nov 30

    bhotekoshiThe 45 MW Upper Bhotekoshi Project has been shut down for four months with local leaders of political parties stopping erection of towers demanding 35 percent of shares 14 years after the project has come into operation. The government has not taken any initiative to resume operation of the project.

    The project has been affected after the landslide flood in Jure of Sindhupalchowk on August 2 destroyed four towers. The project has not come back into operation after local leaders of Nepali Congress (NC), CPN-UML and UCPN (Maoist) obstructed repair from September 19 demanding shares to locals. A Bhotekoshi Struggle Committee has also been formed under Constituent Assembly (CA) member Mohan Bahadur Basnet.

    “The country is facing acute energy crisis. But the government has not taken initiative to resume operation of the project by ensuring start of repair works,” Chief Executive officer (CEO) of the project Narendra Prajapati rues. “Which foreign investor will invest on hydropower if the government cannot guarantee security of investment?” he questions. He complains that the Energy Ministry and local administration have not cooperated despite repeatedly drawing their attention toward problems at the local level. He claims that request to Prime Minister (PM) Sushil Koirlaa also did not make any difference. “PM Koirala had assured to take initiative to address the problems after conclusion of the SAARC Summit. We are waiting for his decision,” he adds. He says shutdown of the project has sent negative message to both domestic and foreign investors and clams that questions have been raised about the government’s capabilities due to its failure to provide security.

    The Energy Ministry has evaded the issue calling the problem a political issue that needs to be addressed at the political level. “The ministry cannot do anything when CA members from the ruling parties are against the project. The political leadership should come forward,” Energy Secretary Rajendra Kishore Chhetri argues. He claims the ministry has already requested the Home Ministry to provide necessary security arrangements for the project. Prajapati contends that load-shedding could have been minimized as 27 MW could be added to the national transmission system even during this season if the project were to be in operation. He argues that shares cannot be provided to the locals as the company is a private limited company, and the Article of Association does not have such a provision.

    The four towers can be erected within three weeks, at a cost of around Rs 70 million. The project had started commercial generation since 2001. He claims that over 150 million units of electricity has gone in waste due to closure for four months, and the project has suffered a loss of almost Rs 1 billion during the period. The project generates 293.20 million units of electricity a year, and sells 40 million units out of that to the Nepal Electricity Authority (NEA) at the rate of Rs 1.62 per unit. It sells the remaining electricity at a commercial rate of 10.50 cents (over Rs 10).

    The power purchase agreement (PPA) for the project is highly controversial as it was signed in US dollar. The NEA had signed the PPA for the project when the exchange rate was Rs 52 per unit of dollar. “The rate would only have been Rs 5 if the exchange rate were still Rs 52,” he argues attributing the hike in PPA rate to appreciation of the US dollar. Claiming that the government is to blame for obstruction in operation of the project after September 19, he says the project can even claim compensation from the government as per safe measure.

    President of the Independent Power Producers’ Association, Nepal (IPPAN) Khadga Bahadur Basnet also blames the government’s weakness for obstruction in operation of the project. “The government has not taken initiative to resume it even when it has been shut down for four months,” he states. He claims that the project has agreed to provide five percent of shares but the struggle committee has refused to agree.

    American company Panda Energy has developed the project in build-own-operate-transfer (BOOT) model, and its generation license is for 40 years. The project was developed with foreign assistance after abortion of Arun III project in the 1990s. Tara Management of Nepal procured 95 percent shares of the project in 2007 while American company Harja International has five percent stake.

    Fifty percent of the project’s ownership will be transferred to the NEA in the next 12 years, and a new PPA will be signed after expiry of the current one. Prajapati reveals that the project will have to pay five times more in royalty (around Rs 270 million a year) from 2016.

    Source : Karobar Daily