This is a great move towards Nepal's hydro power development....

Govt woos FDI in hydro-projects totaling 14,000 MW
BY BIKASH SANGRAULA
(kantipuronline.com)

KATHMANDU, Dec 4 - The government has officially sought foreign investment in eight hydropower projects in Nepal with a total generating capacity of 14,000 megawatts (MW) for power export to India. The investors targeted, including US and Indian business giants, are scheduled to engage in meetings with Nepal Electricity Authority (NEA), Department of Electricity Development (DoED), Independent Power Producers' Association of Nepal (IPPAN) and US embassy officials on Saturday or Sunday.
The government made its pitch during a power meet jointly organized in the capital Friday by the US embassy, the American Chamber of Commerce in India (AMCHAM-India), International Resource Group (IRG), Nepal-USA Chamber of Commerce and Industry (NUSACCI) and USAID-Nepal.

Representatives of US business giants General Electric and Alcoa Inc. as well as Indian power giants Reliance Energy Ltd and Tata Power Company Ltd. were present at the meet. Indian power sector regulators like PTC India Ltd. and Power Grid Corporation of India Ltd. as well as IL&FS Infrastructure Development Ltd. that specializes in building power transmission links were also represented at the meet.

DoED, Nepal's power regulator and promotional entity, offered investors the 308 MW Lower Arun, 402 MW Arun III, 335 MW Upper Arun, 300 MW Dudh Koshi, 600 MW Budhi Gandaki, 660 MW Kaligandaki II, 300 MW Upper Karnali and 10,800 MW Karnali (Chisapani) projects, all for power export to India.

Damodar Bhattarai, DoED's deputy director general, said that Foreign Direct Investment (FDI) is welcome in all these projects. "We have 126 hydropower and multipurpose projects of various types in our inventory, ranging from 6 MW to 10,800 MW in size and 2.3 cents to 11 cents per unit in cost. These are the most attractive projects among them," he added.

While these projects are solely for power export, the 309 MW Upper Tamakoshi and 61 MW Upper Trishuli will be built by NEA with internal funds and Chinese concessional credit respectively for meeting domestic demand. To attract FDI in hydropower generation, officials from the Ministry of Water Resources (MoWR), NEA and DoED gave briefings to potential investors on Nepal's regulations for large-scale power generation and export, as well as the features and costs of the projects on offer.

Earlier, Deputy Prime Minister and Minister for Foreign Affairs K P Sharma Oli assured the investors that the government of Nepal would be cooperative. "We remain committed to act as facilitator in developing necessary infrastructure and a policy framework," Oli said.

Similarly, Finance Minister Dr Ram Sharan Mahat highlighted Nepal's liberal policies on FDI. "The customs duty for importing plants, equipment and even construction material has been reduced to just 1 percent. One hundred percent foreign ownership is allowed. As part of the FDI policy, the government has entered into investment protection agreements with Germany, France and UK and agreements for avoiding double taxation have been signed with a number of countries," he said.

"The range of size of projects for FDI in Nepal right now in terms of generation capacity and/or the size of investment is very wide, from relatively small hydropower generation schemes to very large hydropower projects" Mahat added. "There is thus a wide range of investment opportunities."

Similarly, US ambassador James F Moriarty said that Nepal has the hydro resources to meet its own needs and contribute at the same time to energy security in the broader South Asian market. "Particularly now, with the prospect of lasting peace in Nepal after 10 years of insurgency, I have hope that Nepal can meet these challenges," he said. Ken Ohashi, country director of the World Bank, expressed concern over the tendency of Nepalese government officials to defer decisions, and hoped that Nepal would seize the moment.

Projects on offer
Lower Arun 308 MW
Arun III 402 MW
Upper Arun 335 MW
Dudh Koshi 300 MW
Budhi Gandaki 600 MW
Kaligandaki II 660 MW
Upper Karnali 300 MW
Karnali (Chisapani) 10,800 MW

Four Nepal-India transmission corridors mooted
For purposes of trading power with India, four high voltage transmission corridors will be built. These include Butwal-Gorakhpur, Dhalkebar-Muzaffarpur, Duhabi-Purnima and Anarmani-Siliguri transmission lines. All will be 220 KV lines. Due to insufficient transmission linkage, Nepal-India power exchange is currently limited to 50 MW.

"We attach the highest priority to the construction of cross-border high voltage transmission lines," Jawed Ashraf, counsellor at the Indian Embassy, told the Post. "We recognize that Nepal would require huge quantities of power in the coming years. We understand that government of Nepal has identified 3-4 corridors. On the Indian side, concrete steps are being taken to create the links upto the border," Ashraf said.

Ashraf also said that Nepal could use an Indian line of credit to build the links on the Nepalese side of the border, or invite investments from India for that purpose. "It would be a India-Nepal joint venture," he added.