Promoter China Three Gorges International Corporation is facing problem in moving technical work of the proposed West Seti Reservoir Project forward due to delay in formation of a local joint company.
The company has not been able to import essential equipment including that for drilling for additional study of the project in lack of the joint company. The Chinese technical team is at the project site but the technicians have not been able to work in lack of equipment.
Three Gorges had sent proposal to the Nepal Electricity Authority (NEA) through the Investment Board (IB) four months ago for formation of the joint company. The IB accuses the NEA of not cooperating in formation of the joint company. Three Gorges is preparing to import the equipment by paying customs duty due to lack of cooperation by the NEA.
Three Gorges does not have to pay customs duty for equipment as they are taken back after completing work. Managing Director (MD) of NEA Mukesh Raj Kafle said homework is being done for formation of the joint company. “Decision on that will be taken within a few days. The process of forming the company will start after it is passed by the board,” he added.
The Memorandum of Understanding (MOU) signed between the IB and Three Gorges mention about formation of the joint company with participation of the NEA. Three Gorges will have 65 percent stake, NEA 25 and the locals affected by the project 10 as per the investment structure. But the NEA is not positive about the issue of investment.
Three Gorges had proposed for approval of foreign investment and formation of the joint company last year. The government has already given permission to it to bring foreign investment. The estimated cost of the project is around Rs 250 billion. The technical team of Three Gorges has already studied about the demand and supply of energy in Nepal after 2025. Three Gorges has planned to complete the project by the end of 2021 but work has been delayed due to different procedural reasons. Cost of the project will rise along with delay.
The project for domestic consumption will be developed in build-own-operate-transfer (BOOT) model as per the MOU. There was talk about formation of a new working schedule soon at the time of signing MOU but there has been no preparation. The government has already expressed commitment for construction of transmission line, land acquisition, resettlement and rehabilitation of the displaced.
Three Gorges has already submitted financial and technical reports to the IB and both the reports have showed the project to be financially attractive. The estimated financial analysis of Three Gorges states that the rate of PPA should be 5.40 cents during the rainy season and 9.50 cents during the dry season for the project to be financially lucrative. Three Gorges has concluded that the annual inflation should be three percent until 10 years, and loan period 18 years out of which six years have to be grace period for the project to be financially viable.
The feasibility study of the project has showed that 3.33 billion units of electricity can be generated annually. The project will be constructed in Doti, Dadeldhura and Bajhang districts of the far west region.
Source : Karobar Daily