Govt restores survey licence of Upper Trishuli Hydrproject-1

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    The government has restored the survey licence of Nepal Water and Energy Development Company (NWEDC) for the 216MW Upper Trishuli Hydrproject-1.

    The government had scrapped its licence a month ago for not completing the assigned tasks on time, particularly for its failure to sign connection and Power Purchase Agreements (PPA) with the Nepal Electricity Authority and conclude the Environmental Impact Assessment (EIA).

    A meeting of the Cabinet’s Economic Infrastructure Committee (CEIC) on Sunday decided to restore the license for the next two years.

    The committee concluded that it was not fair to scrap the license as the company completed most of the assigned tasks, according to Finance Minister Barsha Man Pun and the committee’s coordinator. “Considering the negative message the scrapping of the license could give to international investors, we decided to let the same company to continue the project development,” said Pun.

    Another member of the committee said the decision of annulling the company’s licence was biased as no action was taken against other under-performing developers.

    On August 15, the CEIC’s meeting had not been able to decide on the fate of the company’s license, with the committee divided over the matter. The meeting had also sought the company’s detailed progress report.

    Prior to the annulment of its survey licence, the company on July 3 had applied for a generation license, which the ministry rejected.

    The survey license is given for a maximum validity period of five years. During the period, the licence holder should complete PPA, connection agreement and EIA. And if it fails to do so, the licence is automatically scrapped.

    The issue turned complicated after IDS Energy and China Hydro submitted applications at the Department of Electricity Development, seeking licences for the same project two days after NWEDC’s license was scrapped on June 29.

    The company then began lobbying for the restoration of its licence. Donor agencies like International Finance Corporation, the private sector lending arm of the World Bank also meet political leaders the prime minister, requesting the restoration of the licence.

    Following the pressure, Prime Minister Baburam Bhattarai asked the ministry to review its decision to scrap the company’s license. Energy Secretary Hari Ram Koirala then forwarded the file to the Cabinet for a final decision a couple of weeks ago.

    The company had acquired the survey license on January 8, 2007. The cost of the project scheduled to complete by 2018 is estimated at Rs 45.50 billion.

    Ministry officials, however, opposed CEIC’s decision saying that it violated the country’s electricity act. “The electricity law does not allow restoring the license of a company that has not been serious in project implementation,” said a senior ministry official. He added that it was a ‘matter of shame’.

    The company said the Korea South East Electric Company will have 50 percent stake, Daelim Industrial Company 15 percent and Kyeryong Construction 10 percent in the project.  Similarly, Nepali Investors will have 10 percent and IFC 15 percent stake in the project. It will be constructed under the Build-Own-Operate-Transfer model.

    Source : Ekantipur