KATHMANDU, July 29 :
Investment Board Nepal (IBN) is organizing a consultation meeting with the chiefs of the energy departments of about a dozen political parties and former energy ministers on Wednesday to collect their opinions on the content of Project Development Agreement (PDA) of Upper Karnali Hydropower Project (900 MW).
IBN plans to sign PDA during the visit of Indian Prime Minister Narendra Modi next week.
A source at IBN said handouts with summary of PDA will be distributed to the participants of the meeting. “It won´t be practical to share the PDA document to all the participants. Therefore, we are preparing to disclose some essential components to the leaders,” the source added.
The PDA document elaborates all details of liabilities of the developer and the government and addresses possible risks and protection from the change in policy, among others. This document is important to convince financing companies as it provides them a sort of assurance in project development.
Along with three major parties – Nepali Congress, CPN-UML and UCPN (Maoist), representatives of CPN-Maoist, Rastriya Prajatantra Party, Rastriya Prajatantra Party Nepal, Janamorcha Nepal and Madhesi parties have also been invited for the meeting.
“Preparations are underway to sign PDA with the project during Modi´s visit. This would be a major breakthrough for the development of the project,” the source said.
The process of signing PDA with Indian company GMR – the developer of the project – began one and half years ago. But it started to gain pace after the budget for fiscal year 2014/15 addressed some of the concerns raised by the developer including income tax holiday.
The source also said the provision for resettlement will be in the standards of World Bank and the Asian Development Bank. We have also removed a clause from the PDA document that made it mandatory for the government to seek permission from the developer while building any projects upstream and downstream from Upper Karnali, the source added.
According to IBN officials, the government will have to decide soon if it wants to purchase energy by signing PPA with the developer.
GMR has offered Nepal 12 percent of the energy generated by the project for free and free equity of 27 percent in the project.
“The consultation meeting will be important to give direction to the PDA signing process,” the source said, adding that IBN will get a clear picture by Wednesday evening.
Signing PDA with GMR will pave the way for IBN to sign PDA with the developer of Arun III. The project is being developed by another Indian company Sutlej Jal Vidyut Nigam.
Source : Republica