Mar 9, 2017- China Three Gorges Corporation (CTGC), the Chinese developer of the West Seti Hydropower Project, has expressed its commitment to endorse the joint venture (JV) agreement signed with the Nepal Electricity Authority (NEA) last January.
CTGC wrote to Investment Board Nepal (IBN) saying that its board was reviewing the agreement and would approve it ‘very soon’ following a reminder from IBN last month to endorse the deal.
The planned West Seti Hydropower Project will be one of the largest reservoir type hydro projects in Nepal.
IBN had warned CTGC that the memorandum of understanding (MoU) signed with CWE Investment Corporation, a subsidiary of CTGC, would be terminated if the JV pact was not approved soon.
“We have clearly said in our letter that we will not wait very long for the Chinese developer to endorse the pact and expedite the project,” said Madhu Prasad Bhetuwal, joint secretary at IBN.
“We will wait for a few more weeks before sending another letter containing a timetable showing when the Chinese developer should endorse the JV pact and start work on the project.”
On January 17, NEA Managing Director Kulman Ghising and CTGC Vice-President initialled the JV agreement to be followed by ratification by the boards of the respective organizations.
The NEA board immediately approved the agreement but the Chinese developer has been dillydallying.
“The delay by the Chinese developer is holding up the incorporation of the JV company which will develop the 750 MW storage type hydropower project,” said a senior official at Energy Ministry.
“Energy Minister Janardan Sharma is also unhappy with the Chinese developer, and it was actually Sharma who directed IBN to write a warning letter to CTGC.”
In August 2012, the government and CWE Investment Corporation signed an MoU to construct the hydropower project located in the country’s Far Western Region. As per the MoU, the Chinese company will have a 75 percent stake in the JV company while the NEA will hold the rest of the shares.
Out of the 75 percent equity, CWE will allot 10 percent to locals residing around the project site. CWE also holds the right to float shares to the public in Nepal. However, it must keep at least 51 percent of the company’s shares, according to the JV pact.
The amount of funds that NEA needs to inject into the company will be determined on the basis of past studies, while CWE has also promised to help NEA find funding sources.
The project was originally designed to have an installed capacity of 750 MW, however, the actual capacity remains uncertain as the Chinese company has proposed a downward revision saying that the water level in the river has dropped in recent years.
The project’s installed capacity will be decided jointly by the two partners, according to IBN.
Source: The Kathmandu Post