West Seti deal with Chinese company likely to be scrapped

Kathmandu, October 11

With the Chinese company dilly-dallying over implementiation of the 750-megawatt West Seti Hydropower Project, the government has hinted it may scrap the deal with the China Three Gorges Corporation.

In a discussion with senior officials of the Ministry of Energy today, Energy Minister Mahendra Bahadur Shahi expressed frustration at the preconditions put forth by the CTGC before initiating the project — the agreement for which was signed five years ago.

“The government is mulling scrapping the deal with the CTGC and offering the project to Nepal Electricity Authority for implementation,” he told The Himalayan Times.

The CTGC and the NEA had signed a joint venture agreement to develop the project, under which the CTGC would have 75 per cent stake in the joint venture company and NEA would hold the rest.

However, the CTGC has delayed kick-starting the project by putting forth a number of conditions that need to be met before it begins any work.

As per the memorandum of understanding signed between Investment Board Nepal and the CWE Corp — a subsidiary of CTGC — in February 2012, construction of the project was supposed to begin in 2014.

CTGC recently asked the government for capitalisation of expenses incurred by the CTGC in conducting necessary studies of the project and sought assurance of market for the electricity generated. It has also said that since NEA is a joint venture partner in the project, the authority should step in as guarantor to obtain loan (from Exim Bank of China or any other Chinese bank) for investment in the project.

The Chinese company has also asked for special consideration in share allocation for locals. As per the rules, allotment of 10 per cent share to locals of the project site area is mandatory for hydel projects. However, the CTGC has said it will not allot shares to locals.

According to IBN officials, CTGC is pressing for all of its demands to be fulfilled before it sits for further discussions.

Nevertheless, NEA recently invited CTGC for talks between October 23 and 25 in Kathmandu to discuss execution of the project. However, the latter has not conveyed any confirmation about its participation in the meeting.

“The government is seriously considering scrapping the deal with CTGC if the company intends to buy more time,” said Energy Minister Shahi. “The conditions put forth by the Chinese company clearly show its reluctance to develop the project.”

The CTGC and the NEA had signed the joint venture agreement on January 17 this year. After signing the joint venture agreement, the project was expected to gather pace. However, the only thing that has transpired till date is that numerous demands have been put forth by the Chinese company.

Talking to THT, Minister Shahi said he would take forward the proposal to scrap the West Seti deal with the Chinese company if the latter refused to budge from its stance and did not come for talks to form a joint venture company for project execution.

Source: The Himalayan Times