Joint Economic Council Meeting: PDA template does not reflect ground realities: Indian power developers

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    NEW DELHI, JAN 31 –

    With the government making preparations for power development agreement (PDA) negotiations with foreign power developers, Indian power developers have said the PDA template forwarded to them does not reflect the ground realities.

    Such concerns were voiced during a crucial meeting of the Joint Economic Council (JEC) of the apex business bodies of the two countries—Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Indian Industry (CII)—held here on Wednesday. “Indian investors were concerned if the PDA reflects the ground realities and does suit the political situations in Nepal and India,” said Suraj Vaidya, president of FNCCI.

    In reply, the Nepali side expressed their readiness to address the problems faced by the Indian investors. “What are the specific problems you are facing in the PDA, we are ready to do a follow up on that,” asked Chief Secretary Lilamani Poudel to the Indian investors during the meeting. Poudel is also the chairman of the Nepal Electricity Authority.

    The Nepali side, however, told the Indian investors that they were ready to bring changes which could be a win-win situation for both the parties, sources said. “At least we can start the projects now and bring changes gradually, sorting out the weaknesses. This could also start attracting more investment into Nepal,” Vaidya argued.

    Four large hydro projects—Tamakoshi 3 (880 MW), Upper Karnali (900 MW), Upper Marsyangdi (600 MW) and Arun 3 (600 MW)—are awaiting PDA with the IB. Except for Tamakoshi 3, all three projects are being developed by Indian power developers—GMR Energy (Upper Karnali and Upper Marshyangdi) and Sutluj Jal Vidyut Nigam (Arun 3). PDA is an important contract between the government and investors. In the agreement, the government assures the investors that it would avert any possible social, economic or policy-level uncertainties during the construction phase. Generally, issues related to taxes, licence period,free energy, royalty, repatriation rights and parties’ obligations are included in the PDA.

    The issues related to the investment in educational sector, intellectual property and easy availability of land to start an investment, among others, also featured during the meeting. “The Indian side was of the view that intellectual property trademark registration and production mechanism, including copyright, should be prudent,” Poudel told the Post.

    The Indian side, represented by eminent industrialists and investors along with top government officials, also queried about the investment climate in Nepal. “All system may not have worked as we are in a transition, but it does not mean that Nepal has not an investment-friendly environment,” Poudel told the meeting.

    Poudel also informed the Indian investors about a separate entity under the Armed Police Force for the purpose of industrial security. Apart from Poudel and Vaidya, the Nepali included Investment Board Chief Executive Officer Radhesh Pant and JEC Co-Chairman Padma Jyoti, among others.

    Source : The Kathmandu Post