EDF keen to acquire stake in Upper Karnali hydro project

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    Upper Karnali HEPTHAKHEK: Électricité de France (EDF), a French state-owned power utility company, is keen on acquiring a stake in 900-megawatt Upper Karnali hydroelectric project and is holding talks with India-based GMR Energy on the matter.

    “We have held several rounds of serious talks with GMR to purchase certain portion of (the Indian company’s) shares in the Upper Karnali project,” a reliable source told a group of Nepali journalists in Laos, where EDF is a stakeholder in 1070MW Nam Theun 2 hydro project.

    The confirmation was made around five months after Indian media reported about the deal that was in the making between the French and Indian companies. However, the stake that the French utility company is seeking in the hydro project is still not known.

    “GMR is currently in the process of signing project development agreement (PDA) with the Nepal government. We will be able to give you more information on the matter after the agreement is reached,” the EDF source said.

    EDF’s Southeast Asia Regional Business Development Director, Gerard Szabason, who was also present on the occasion, neither confirmed nor refuted the matter.

    “We’re keen to invest in Nepal’s hydropower sector and are currently looking at four major projects,” Szabason said, referring to Upper Karnali, Arun III, West Seti and Upper Marshyangdi II hydropower projects. “But nothing has been confirmed (on EDF’s involvement in these projects) yet and I can’t comment on the matter.”

    Earlier, the International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, had also expressed interest to acquire a stake in the 900-megawatt Upper Karnali project. However, the stake that the IFC is planning to acquire in the project is also not known.

    “We are not allowed to acquire more than 20 per cent stake in any project … but we won’t buy a stake that wouldn’t allow us to sit in the board,” IFC Country Manager for Nepal, Bangladesh and Bhutan Kyle F Kelhofer had told selected journalists in March. 

    The Upper Karnali hydroelectric project, developed by a consortium of GMR Energy, GMR Infrastructure and Italian-Thai Development Project, is a project of national importance.

    The project, which will export most of the electricity to India, will give away 12 per cent of power that it generates to state-owned Nepal Electricity Authority (NEA) for free. Also, 27 per cent stake in the project will be extended to NEA free of cost and the project’s ownership will be transferred to the government within 30 years from the date of commencement of power generation.

    Despite these benefits, the country has not been able to create an environment to expedite the project construction process due to delay in signing of the PDA. 

    The PDA signing process was earlier stalled due to demands of income tax concession placed by the project  developers. The government has said such discounts can be extended after promulgation of the new Financial Act at the beginning of the next fiscal.

    “Apart from this issue, most of the other matters have been solved and we are giving final touches to the PDA  document,” said a high ranking official of Investment Board Nepal, which is facilitating in implementing the project. 

    Source : The Himalayan Times