New Hypes on Hydropower

Nepal’s hydropower sector once again is in sub-continental development discourses for more than one reason. The government is awarding the construction contract of projects of more than 10 MW capacity through tender calls. Nepal Rastra Bank (NRB) has allowed certain power projects to issue bonds in foreign currency. Chinese authorities have reportedly proposed a tripartite mechanism involving Nepal, India and China to develop Nepal’s hydropower, ostensibly for the mutual benefit of all the parties. Yet, sense of insecurity in the potential foreign investors, read Indians, has not allayed, as recently expressed by Indian infrastructure giant GMR Group in the capital last week.

By special correspondent

The government has announced that it would invite tenders to award the project development contracts for six projects that would add 106 MW of power to the national grid. A new policy introduced in Mid-August by the Ministry of Energy (MoE) has said that construction license for hydropower projects of more than 10 MW capacity would be awarded through free competition. “After scrapping applications for hydropower projects over 10 MW, we are inviting private power developers to bid in six new projects,” said Shreeranjan Laukal, Joint Secretary at MoE.

The six projects that the government is planning to invite tenders for are Khimti (26 MW), Lower Hangu (23 MW), Inakhu (20 MW), Shiwa (15 MW), Maiwa (13 MW) and Madi (12 MW). The estimated cost of these projects amounts to be Rs 16 billion.

NRB has recently issued a new directive allowing hydropower companies to issue bonds in foreign currency. Though the hydropower experts are not instantly receptive to the new offer, the provision is expected to be helpful to get loans for upcoming hydropower projects. “We have introduced this provision to make it easy for the hydropower projects to secure loans,” said Nepal Rastra Bank’s (NRB) Spokesperson and Executive Director Bhaskar Mani Gyawali.

The hydropower companies can now sell their bonds to national banks in foreign currency.  The companies that have received approval for the construction of hydropower project or transmission lines can issue bonds through Merchant Banks or subsidiary companies of the financial institutions. However, this provision applies to the companies that have signed Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA) in US dollar. “This provision is only for the companies that have their source of income in dollar and are going to pay their principal and interest in the same currency,”  said Gyawali.

If recent media reports are anything to go by, Ai Ping, Vice-Minister of International Department of the Communist Party of China has opined that the tri-lateral understanding in developing Nepal’s hydropower would be appropriate. He has already consulted the Indian Ambassador in China S Jaya Sarkar and Chief Minister of Bihar Nitish Kumar. Reportedly, they are positive to the Chinese proposal.

But, Nepali officials are tight-lipped on the issue. “It is indeed a good news as the Nepal’s hydropower development has largely been a victim of regional geo-politics with competing interests of two giant neighbours. But we are unaware of any development in this direction. Therefore, we are unable to comment,” said a high-level Foreign Ministry official.

But all these putatively positive developments are dumped by the bottom-rocked confidence of the investors - both domestic and foreign. At the core of the problem are the disruptive activities of the cadres of ruling UCPN-Maoist Party and its inclination to politicise the development projects, particularly those developed by Indian investment, in the name of ‘nationalism’.

The concerns expressed by the GMR Group, which now claims to be almost ready to enter into the construction phase of two projects Upper Karnali (900 MW) and Upper Marsyangdi (100 MW), are the true challenges in the sector. The Upper Karnali site offices were vandalised by the Maoist cadres last May. Since then the company which says has invested more than a billion rupees is apprehensive about the very motive of the Party.

The platitudes from Prime Minister Dr Bhattarai and Finance Minister Barsha Man Pun to encourage foreign investment are proving hollow at the face of what their Party is actually doing on the ground.

“The fact is obstruction in the site is still continuing,” Harvindar Manocha, Chief of GMR Nepal operations, told The Corporate on Friday.

Nepal to Host Int’l Climate Meet

The Alternative Energy Promotion Center (AEPC), Ministry of Environment, and the Center for Energy Studies (CES), Institute of Engineering, Tribhuvan University, are planning to jointly organize an international conference on climate change, in Nepal. The "Third International Conference on Addressing Climate Change for Sustainable Development through Up-scaling Renewable Energy Technologies" (RETRUD-11) will be held in Kathmandu from October12-14.

According to the Director of CES and Chairman of the Conference Organizing Committee, Dr Triratna Bajracharya, the conference to be participated by 250 to 300 including national and international climate change experts will focus on 14 themes including economics of climate change, up-scaling of the renewable energy, glacier melting and issues of Mountain Alliance Countries, water resource management, and many other issues.