KATHMANDU, APR 14 – The Investment Board Nepal (IBN) on Monday approved a proposal from China’s CWE Investment Corporation for West Seti Hydropower Project, paving the way for the development of the 750 megawatt project.
The CWE Investment got final approval for the Rs160 billion project almost three years after it signed a memorandum of understanding with the IBN. The CWE, a subsidiary of China Three Gorges Company, had inked the MoU in August 2012.
Endorsing the proposal, the IBN board meeting chaired by Prime Minister Sushil
Koirala also decided to form a joint venture between CWE and the Nepal Electricity Authority (NEA) for development of West Seti and gave permission to the Chinese company to conduct geological studies at the project site before monsoon.
The IBN decision has ended the uncertainty over the Chinese company’s commitment to the project. Amid sharp differences of opinion between the IBN and the Ministry of Energy regarding the project, the Agriculture and Water Resource Committee of Parliament had directed the IBN and the Energy Ministry several times to come up with a common stance on the project. While the IBN insisted that the project was on course, ministry officials often doubted the commitment of the Chinese developer.
According to IBN Chief Executive Officer Radhesh Pant, a joint agreement between the IBN, NEA and the CWE will be required for setting up a joint-venture company. According to the MoU, the Chinese company makes 75 percent investment while the remaining 25 percent would be generated within Nepal.
“The project is in a good shape to accelerate. Financial and technical studies have been over,” said Pant, adding that the Project Development Agreement is likely to be concluded after monsoon this year.
Following the decision, the Chinese developer on Monday corresponded with the IBN saying that it will immediately start the further process.
The project envisioned two decades ago had received a much needed impetus during the Nepal visit of Three Gorges Chairman Lu Chun in March. Lu had met with PM Koirala, Finance Minister Ram Sharan Mahat and Energy Minister Radha Gyawali. The Chinese side had put forward its commitment and also expressed its desire to begin works such as drilling and geological and hydrological studies before monsoon.
The first study on West Seti was conducted in 1987. Two decades ago, the Snowy Mountain Engineering Corporation (SMEC) had shown interest in developing the project. An agreement between the government and the Australian company was signed but the licence was revoked as the SMEC did not start work on time.
Meanwhile, the IBN board also decided to charge $1,500 per MW in negotiation fee for projects that it implements. A seven-member negotiation team to be coordinated by the IBN CEO was also formed.
The team has joint-secretaries from the Finance, Energy and Law ministries, Director General of the Department of Electricity Development and the NEA managing director as members. In case of projects apart from hydropower, two members from the ministries concerned will be accommodated in the negotiation panel.
The IBN board also decided to amend the project negotiation agreement for Tamakoshi III Hydropower Project and has authorised the IBN CEO for the job. The board decided to form an expert committee to review the tasks undertaken by Pant. The committee will be coordinated by the finance minister and includes National Planning Commission vice-chairman, and former secretary Bimal Wagle as members.
750 megawatt project
– CWE Investment gets final approval for the Rs160 billion project almost three years after it signed a memorandum of understanding
– Joint venture to be formed between CWE and Nepal Electricity Authority for project development
– Chinese company permitted to conduct geological studies at the site before monsoon
– Developer corresponds with IBN that it will immediately start the further process
Source : eKantipur