EPF Refuses To Invest Without Shares For Staffers

KATHMANDU, Feb 9

sharesThe Employee Provident Fund (EPF) has withdrawn from Trishuli 3B Hydropower Project after the proposed 42 MW project took policy decision to not provide shares to the EPF staffers. Some projects are facing uncertainty due to such bargaining by the EPF that has funds to invest on big projects. The EPF has also been criticized in the past for misusing the money collected by cutting certain proportion from monthly salary of governed and institutional staffers.

Promoter Trishuli Hydropower Company Limited will now start discussions with different commercial banks after the EPF decided not to invest. The EPF put a condition of providing shares to the institution and staffers, according to Managing Director (MD) of the company Damodar Bhakta Shrestha. “It said it will not invest when we said we will not provide shares. We could not accept its proposal as we had made policy decision to not provide shares to the lending company and its staffers,” he says.

The company had planned to borrow from the EPF, Citizen Investment Trust (CIT) and Hydropower Investment and Development Company Limited. The detailed report prepared by the company has put the project cost at Rs 7.74 billion. There will be equity investment of 30 percent and loan investment of 70 percent in the project as per its investment structure. The company is borrowing Rs 5.42 billion to develop the project.

The project is being developed with joint investment of the Nepal Electricity Authority (NEA) and Nepal Telecom (NT) that will make equity investment of 30 percent each. NT has already invested Rs 550 million in equity for the project. Commoners will have 15 percent shares, locals of Nuwakot and Rasuwa districts to be affected by the project 10, local bodies five, other institutions in the districts five, and NT and NEA staffers five in the project.

The EPF will get shares for Upper Tamakoshi, Rasuwagadi, Sanjen, Lower Sanjen and Mid Bhotekoshi for making loan investment. Shrestha says the policy decision was made as there were controversies about share allocation in these projects, and providing shares in Trishuli 3B would set a precedent. The company was preparing to start civil construction from coming March after completing all pre-construction works including making financial arrangements, signing power purchase agreement (PPA) with the NEA and selecting contractor. The company has prepared a working schedule to complete the project in 2018 four years after starting construction. Its schedule now will be affected as some works including investment arrangements have yet to be completed. But the company still is selecting consultant to move the project forward. Construction of building and digging of audit tunnel is starting.

The Energy Ministry has issued generation license for just 37 MW to the company and the company has yet to acquire one for 5 MW. Connection agreement has already been signed with the NEA. There is also dispute about area with 55 MW Trishuli Ganga Project. The company has proposed a rate of Rs 5 per unit for PPA. Study has put the rate of return for the project at 15.6 percent. The company plans to repay all the loans within eight years of starting generation. The project, according to the study, will generate 337.88 million units a year.

The company plans to bring the water from tail race of 60 MW Upper Trishuli 3A directly through a tunnel. Trishlui 3A Project, therefore, should be completed in schedule for that. The project cost will be low as dam and descender basin to sift sand need not be constructed for this project. The project is situated in Laharepouwa and Manakamana VDCs.

Energy Minister steps back due to opposition by staffers

The decision to not offer shares of Upper Trishuli 3B to NEA staffers could not be implemented after strong opposition by the staffers. The Energy Ministry had made policy arrangements to not allow share investment by NEA staffers on this and other projects and was preparing to implement that. A ministry official says the proposal, however, could not be implemented as employee unions put intense pressure on Energy Minister Radha Kumari Gyawali. NEA staffers have already been provided shares for Chilime, Upper Tamakoshi, Rasuwagadi, Mid Bhotekoshi and Sanjen projects.

“We were preparing to implement the provision as staffers were focusing more on individual benefits than institutional benefits due to practice of offering shares. Minister had to step back due to pressure by unions,” the official adds. The official argues that policy provision barring NEA staffers from investing on projects to be developed by subsidiary companies is necessary.

Source : Karobar Daily