FDI in Nepal’s hydropower sector : Press Release

Hydropower experts have stressed on the need for Nepal to attract foreign direct investment (FDI) for the development of its hydropower sector. Speaking at a forum titled “Foreign Direct Investment in Hydropower” jointly organized by International Finance Corporation (IFC), Independent Power Producers’ Association of Nepal (IPPAN) and Nepal Water and Energy Development Company (NWEDC), they highlighted that Nepal was already late in terms of attracting FDI.

Speaking at the forum, Minister for Energy, Janardan Sharma said that its high time Nepal attracted FDI to exploit its rich water resources. “We have both natural and human resources. What we do not have is enough investment. Therefore, the importance for FDI is very high for Nepal,” said Minister Sharma. Stating that Nepal has already signed a Power Trade Agreement (PTA) with India, a huge market for Nepal’s hydroelectricity, Minister Sharma said this agreement is going to encourage FDI in Nepal’s hydropower sector. He further said that it takes years for hydropower promoters to get license and sign Power Purchase Agreement (PPA) and Power Development Agreement (PDA) which is discouraging to the foreign investors.

Similarly, speaking at the program, Maheshwor Neupane, Director General of the Department of Industry, said the government has a policy of prioritizing the hydro sector for FDI. He also said that FDI in hydropower sector has been increasing, though slowly.

panel discussion

Stating that the Korean government has built fundamental industries and developed Korea’s economy through foreign loans and foreign direct investment, Choe Yong Jin, Korean Ambassador to Nepal said, “Nepal has one of the largest potentials in generating hydropower. But such great potential can only be materialized into reality through investment. And this investment will be made possible through discussions involving all the stakeholders and decisiveness and strong will of the leaders.”

Envoy Jin expressed hope that the Upper Trishuli One Project, which is being developed by the international consortium NWEDC composed of Korea South-East Power (KOSEP) and IFC, will make significant contribution to increasing total hydropower generation of Nepal.

Heo Yup, CEO of KOSEP, shared Korea’s FDI-funded development story. “Realizing that borrowing foreign funds and inviting FDI were essential for infrastructure development, Korean government took various measures to protect foreign capital and as a result, it attracted large amounts of foreign capital.” As a result, Yup said, Korea was able to build a base for a sharp economic growth that surprised the whole world. “At last, after 30 years of receiving FDI, Korea became one of the top 10 exporting countries in the world, with its export volume of 2,000 billion USD. Now, it is Korean who makes FDI in other countries”, he further explained.

Comparing Nepal and Korea, he said both the countries have similar geography, and that Nepal can learn from Korea’s experience.

Similarly, speaking at the program, Khadga Bahadur Bisht, President of Independent Power Producers’ Association Nepal (IPPAN), said that the policy makers of our country should seriously pursue FDI. “We have been seeking FDI since 1981. But there have been only a few hydro projects funded through FDI. Nepal hasn’t done well in terms of attracting FDI”, said Bisht.

A panel discussion was held in the second session of the program. The panelists were Suman Prasad Sharma, Secretary of Ministry of Energy, Khadga Bahadur Bisht, President of IPPAN Iqbal Munawar, Project Manager PPIB, Pakistan, Kamal Dorabawila, Principal Investment

Officer of IFC, Michael Boyd, USAID, Energy Policy & Strategy Advisor. The panel discussion was led by session chair Dr. Swarnim Wagle, former National Planning Commission member.