Govt to hand over Upper Arun hydro project to NEA

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    KATHMANDU, FEB 18 –

    Arun HydropowerThe Cabinet has decided to hand over the Upper Arun Hydropower Project to the Nepal Electricity Authority ( NEA ) for construction. The decision was taken as per the recommendation made by the Ministry of Energy (MoE). Prime Minister Baburam Bhattarai holds the energy portfolio as well.

    The Cabinet led by the then Prime Minister Pushpa Kamal Dahal, however, had decided to develop the project through open competition.

    Energy Secretary Hari Ram Koirala said his ministry had asked the Cabinet to hand over the ‘attractive’ project to the NEA as per the latter’s demand. The state-owned power utility has also applied for the construction licence.

    The project, with installed capacity of 335MW, will add 2,050GWh energy annually to the national power grid. This is expected to play a crucial role in fulfilling the power demand of load centres of the Eastern Region, minimising transmission loss, according to the project’s feasibility study report.

    Koirala said an MoE committee had recommended handing over the project to the NEA and the ministry tabled the proposal in the Cabinet on February 10. “As the government has to build a 68 km link road to the project side even if the project is awarded to other contractors through open competition, we decided to have the project developed by the NEA .”

    He said the decision was also taken in order to minimise the project cost and delay in construction, which is likely if it is developed through open competition.

    MoE officials said the ministry will formally hand over the project to NEA , asking the latter to directly develop the project without forming a development company.

    The cost for the run-of-the-river project located some 10km away from the Nepal-China border in Sankhuwasabha district is estimated at around $500 million ($1,500 per KW). NEA had completed the feasibility study in 1991 with help from the World Bank and United Nations’ Development Programme.

    Even during the dry season, the project will generate not less than 250MW energy — 75 percent of the installed capacity. The project is expected to complete within four and half years after the beginning of construction.

    NEA applied for the survey licence for generation on July 20, 2008. However, the licence has not yet been issued, forcing the NEA to delay the environmental and detailed engineering studies.

    The government has requested the Chinese government to provide soft loans worth $633 million for the project. As per the MoE request, the Finance Ministry has written to the Chinese government asking for the help.

    The request for the soft loan was made as per the interest shown by the Chinese government for the same.

    Source : The Kathmandu Post