CWE forwards $1.5b FDI proposal to IBN

West-SetiKATHMANDU, MAR 08 – The development of the 750MW West Seti Hydropower Project has taken a step forward, with China’s CWE Investment Company forwarding a $1.5-billion foreign direct investment (FDI) proposal to Investment Board Nepal (IBN).

CWE, a subsidiary of China Three Gorges Corporation (CTGC), had signed a Memorandum of Understanding (MoU) with IBN in August 2012.

The latest proposal, which came after the CWE board endorsed the project development, has raised hopes the much-delayed project would finally take off.

With no headway in the project development since the MoU, there were doubts whether the Chinese company was serious on the project.

Lack of coordination between the Energy Ministry and IBN also impacted the project. In a bid to clear things up, the Parliamentary Agriculture and Water Resource Committee had directed the two authorities to come up with a common stance on the project.

IBN CEO Radhes Pant believes the project would now move ahead following the investment proposal from the Chinese company. “The proposal will be tabled at IBN’s next board meeting for approval,” he said.

Pant said after the approval, a company would be registered in Nepal to carry out field work.

“They will probably make incremental studies and conduct environment impact assessment (IEA) before entering into the project development agreement (PDA),” he said.

Located in Dadeldhura and Doti districts, the storage type project is meant for domestic consumption. However, Nepal Electricity Authority (NEA) has been concerned about the price of the electricity generated by the project and management of possible surplus energy. So NEA has not yet decided about signing the power purchase agreement (PPA) with the project.

A senior NEA official said as a government entity, NEA could not go against the government’s decision when it comes to singing the PPA, but it was concerned about the management of a possible surplus energy during the rainy season.

Last December, NEA Managing Director Mukesh Kafle had said at a Parliamentary Agriculture and Water Resource Committee meeting that NEA was also concerned about higher cost of electricity.

The cost of power generated by a storage-type project is higher than that of run-of-the-river types.

According to IBN CEO Pant, they were holding talks with NEA over the concerns of both the developer and NEA, the buyer.

He said given the power trade agreement (PTA) signed with India and the possibility of a regional grid connectivity in South Asia, there are options available for the management of surplus energy.

According to Pant, transmission line, land acquisition and resettlement are other concerns of the Chinese company. The government has pledged to construct the transmission line.

Pant said the Chinese company has also sought the government’s support in land acquisition and resettlement of the people to be displaced by the project.

Source : eKantipur