Upper Trishuli I developer waiting for PDA, PPA to kick-start construction works


    RASUWA, Dec 11 : Officials of Nepal Water and Energy Development Company (NWEDC), the developer of Upper Trishuli I Hydroelectric Project (216 MW), have said they would begin construction works right after signing Project Development Agreement (PDA) and Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA).

    Fourth round of PDA negotiations between NWEDC and NEA is scheduled for Monday. The project site is situated in Haku VDC of Rasuwa.

    Baburam Bhardwaj, general manager of the project, said they were hopeful that Monday´s negotiation will finalize the PDA.

    The government has already extended the project´s license by three times (to a total of 30 months) due to delay in signing PDA.


    According to project officials, they have already completed construction of 4.5 km stretch of the 15 km access road. Similarly, the project has already established its office at the project site, completed land acquisition works, and has received permission to fell 1,617 trees. The project has also completed Social Impact Assessment and Environmental Impact Assessment studies and dug a 150-meter test tunnel.

    Keshav Dhwaj Adhikari, spokesperson of the Ministry of Energy, said the PDA template for Upper Trishuli I will be more or less similar to the PDAs of export-oriented projects Upper Karnali and Arun III. “The developer will enjoy income tax benefits and lump sum subsidy on VAT as approved by the parliament. But we are yet to agree on the developer´s demand for payment guarantee by the government as there is no clear policy decision on such provision,” added Adhikari, who is also a member of the PDA negotiation team.

    Through the budget for the current fiscal year, the government announced VAT subsidy worth Rs 5 million per MW for the project that starts generation by 2022/23. It has also announced 100 percent income tax holiday for first 10 years and 50 percent income tax waiver for the next five years for such projects.

    Bhardwaj told Republica that the project cost has been revised to US$ 590 million from the previous estimate of $550 million. “The project cost has been revised as we need to build additional structures like intake gravel trap and under sluice as well as gravel trap basin in desander,” he added.

    As per the project design, the water of Trishuli River will be diverted to the powerhouse through a 9.25 km tunnel. It will have three generation units of 72 MW each. The project will generate 1456.4 GWh of energy annually. The energy generated by the project will be evacuated via the proposed substation of NEA at Trishuli 3B project downstream.

    The project has proposed PPA at 6.9 cent per unit with annual escalation rate of 3 percent for the first 10 years of generation. But NEA cannot decide on PPA in US dollar right now, as PPA in foreign currency is under discussion at the Public Accounts Committee (PAC) of legislature-parliament for the past six months.

    Project officials said they would allocate 10 percent of the shares in the project to locals of six affected village development committees (VDCs).

    NWEDC is a consortium of Nepali and Korean Companies — KOSEP (50 percent), DAELIM (15 percent) and KYERONG (10 Percent). Bikesh Pradhanganga, a local entrepreneur, and International Finance Corporation (IFC) holds 10 and 15 percent shares, respectively.

    Source : Republica