The CWE Investment Corporation of the China Three Gorges Corporation has proposed for dialogue after finding the reservoir based 750 MW West Seti Hydropower Project financially lucrative.
“It has proposed dialogue sending a letter after the financial and technical reports have come positive,” Chief Executive Officer (CEO) of the Investment Board (IB) Radhesh Pant said. “We are confident that the project will be constructed in time as CWE is positive about taking the project forward,” he added and revealed that the financial analysis of the project will be revealed soon. Joint Secretary of IB Mukunda Prasad Poudel said the date and place for dialogue have yet to be decided. He revealed that CWE has raised the issues of PPA, transmission line for the project, and resettlement of the affected locals and land acquisition. The estimated financial analysis of CWE 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. The rates are lower than that determined by the government.
CWE has concluded that the annual inflation should be three percent, and loan period 18 years out of which six years have to be grace period for the project to be financially viable. Agreement on the issues including PPA will be decided only through a bilateral dialogue despite CWE completing financial analysis. The Nepal government, meanwhile, is determining a rate of return of 18 percent for the promoters of reservoir based projects. A report prepared by the Ministry of Energy has proposed that the rate of PPA for reservoir based projects during the dry season five years later should be 10.66 cents.
The Memorandum of Understanding (MOU) states that CWE will help in construction of transmission line but the Nepal government should invest in it. Stating that resettlement of affected locals and land acquisition will be challenging it has proposed that the Nepal government should lead the processes. Its technical proposal states that constructing the transmission line will cost around US$ 404.80 million. CWE and IB had signed an 18-point MOU at the end of August incorporating the directives of the then parliamentary committee on natural resources and means.
The Snowy Mountain Engineering Corporation (SMEC) of Australia had estimated the cost of the project to be US$ 1.60 billion excluding construction of transmission line around 17 years ago. The project will be built in Public Private Partnership (PPP) model. The locals will be provided up to 10 percent shares in the project that will have 65 percent shares of CWE and 25 percent of Nepal government, according to the MOU. The MOU further states that study will be started to make the project multi-purpose without affecting electricity generation and returns, and making arrangements for resettlement of the locals who will be displaced as per the prevailing laws and paying attention to the humane and security aspects.
IB will assist in security, getting government permission, land acquisition, resettlement, and environmental impact assessment (EIA) for the project that will be built in Doti, Dadeldhura and Bajhang districts of the far west region. The project’s 150 MW energy will be spent in economic development of the far west region and a joint company will be established for construction of the project as per the MOU.
Source : Karobar