Chinese-Nepali consortium to build Upper Marsyangdi


    Nov 23, 2018-

    A consortium comprising Chinese and Nepali companies have stepped forward to build the 600 MW Upper Marsyangdi Hydroelectric Project after the original developer Indian infrastructure giant GMR pulled out.

    Chinese firms SCIG International, Xingcheng International Investment and QYEC International, and Nepali firm Butwal Power Company have bought all of the project’s shares from GMR and asked Investment Board Nepal (IBN) to start negotiations to sign a project development agreement (PDA). IBN is the project implementing authority for the Upper Marsyangdi scheme located in north central Nepal.

    Butwal Power CEO Uttar Kumar Shrestha told the Post that they had sent an informal message to IBN to start PDA negotiations. “As the consortium is yet to complete the ownership transfer of the 600 MW project to be developed on the Marsyangdi River in Lamjung and Manang districts, we have communicated with the board informally,” said Shrestha. “As soon as the transaction is completed, we will start formal negotiations with IBN and sign a PDA.”

    The PDA is a contractual document which will bind the government and the developer to certain terms and conditions. It contains the obligations that the government and the developers have to fulfill. The PDA will list the benefits like free electricity and equity and the royalty that Nepal will receive from the developer. The PDA will also categorise force majeure and termination compensation.

    Earlier, IBN had signed two separate PDAs with GMR and SJVN, developers of the Upper Karnali and Arun 3 hydropower projects respectively. Indian state-owned SJVN has begun the construction of Arun 3 while GMR is yet to start work on Upper Karnali.

    Butwal Power and the Chinese companies bought all of the shares of Upper Marsyangdi a few months ago and are seeking approval from multiple government agencies for the ownership transfer. IBN has approved the transfer of the shares.

    Nepal Rastra Bank (NRB) is preparing to give clearance to the Chinese developers to bring funds into the country and the Indian developer to take back the proceeds from the divestment.

    Although Upper Marsyangdi was originally planned to be an export-oriented project, the consortium is planning to develop it with an eye on the Nepali market. “Our plan is to sell the electricity generated by the project in the country,” said Butwal Power CEO Shrestha.

    Upper Marsyangdi is a peaking run-of-the-river project with a 3.1 hours minimum peaking capacity.

    It is a high head scheme with a storage capacity envisaged for the installation of four 150 MW generating units, giving a total installed capacity of 600 MW.

    Source: The Kathmandu Post