POWER SUMMIT

Increased Interest

There is now an increased interest to exploit the hydro power resources of the country

By A CORRESPONDENT

Two months after a major Power Summit was organized with wide participation of Indian officials and private companies, another summit called “Powering Nepal – Connecting Markets” was held in Kathmandu last week with the participation of Indian as well as American officials and investors.

At the Finance Minister Dr. Ram Sharan Mahat urged for Foreign Direct Investment (FDI) in the hydro power sector of the country. Addressing the seminar, Dr. Mahat said there were three clear benefits to investors if they come to Nepal, "First, they can enjoy the access to market as Nepal is located between world's two big markets, India and China; the second, there is tremendous amount of natural assets including hydro power and diverse climate; and third, our policies are quite encouraging since our tariff slabs are some of the lowest in the region and Nepali currency is fully convertible in current account."

Dr. Mahat said that the government understands that there are still a lot that needs to be done to lure the investors. "We plan to develop around 5000 MW of power in next 10-15 years for which we will need foreign investment," he said.

Likewise, US ambassador to Nepal James Moriarty said harnessing of Nepalese hydro power potential was needed not only for meeting Nepal 's own needs but also to address the energy security concerns of this region. Ken Ohashi, country director of World Bank, said he was concerned by tendency to defer decisions among Nepalese officials. He said that with the new change in the country, he hoped that the country will seize the moment and face up the difficulties head on including its relations with India so that the potentials of exporting power can be tapped.

Deputy Prime Minister and Foreign Minister KP Oli also emphasized Nepal government's willingness to harness power for prosperity.

The seminar was organized by the US Embassy and USAID/Nepal, in association with the Nepal-USA Chamber of Commerce, the American Chamber of Commerce in India , and the International Resources Group.

The seminar brought together US companies and other foreign investors with key officials from relevant government agencies in Nepal and India to highlight the substantial opportunities to invest in Nepal 's hydropower sector.

At the end of the summit among the officials and business community of Nepal , India and the United States , a ‘champion team’ has been formed to lobby for facilitating investment in this sector. The team led by Independent Power Producers Association of Nepal (IPPAN) will recommend to the governments of Nepal and India about the economic, technological, financial, market and political aspects and problems of the sector.

According to IPPAN president Dr. Sandip Shah, the team will focus on increasing investment and expanding market for hydro power. Dr. Shah said representatives of banking sectors of Nepal and India , Nepal Electricity Authority (NEA), Power Trading Company (PTC) of India and Power Grid Corporation of India are included in the team. The Confederation of Indian Industries (CII) will also be represented in the team.

This seminar was held two months after the first ever Power Summit was held jointly by the IPPAN and Power Trading Company (PTC) of India . During that summit, the Indian ambassador to Nepal Shiv Shankar Mukherjee had pledged to fund a 100 to 150 MW project in Nepal . The Indian envoy said that consultations were on to help fund a project that could help in internal consumption of Nepal .

Addressing the summit, president of IPPAN, Dr. Sandip Shah said that investment of $100 billion is required to harness 40,000 MW from Nepalese rivers. “This money cannot be raised by the government or the donors as they have other pressing socio-economic priorities. It is the private sector that has to be allowed to invest in this field on commercial basis,” he said.

Earlier, speaking before the parliament, the Secretary at the Ministry of Water Resource had said that the government is working to generate 1000 MW of power in next six years.

Secretary Tika Dutta Niraula told the members of Natural Resources Committee at the House of Representatives that the government was engaged in homework to develop three mega projects to generate 1000 MW of electricity in six years.

In response to queries by the MPs regarding the load-shedding and government’s plan to overcome the crisis, Niraula said the government is studying to develop 402 MW-strong Arun project in the eastern region; 309 MW-strong Upper Tamakosi in the central region; and 300 MW-strong Upper Karnali in the western region.

He further informed that government was considering developing Tamakosi project by mobilizing domestic resources while it would accept foreign investment in the other two. He said that the government had received attractive proposals on foreign investment on all three projects. “Since the Upper Tamakosi project is relatively an economical one, the government is considering mobilizing investments from domestic organizations such as Employees Provident Fund, Citizen Investment Fund and so on,” Niraula said.

Indian companies including the reputed Reliance company is learnt to have shown interest in investing in Upper Karnali and Arun projects. Indian companies have also invested in big hydro projects in neighboring Bhutan .

There are also discussions going on to involve China in the development of 60 MW-strong Upper Trisuli A project and 14 MW-strong Upper Modi projects. Besides, the NEA, on its own resources, has started the construction of 30 MW-strong Chameliya and 14 MW-strong Kulekhani III projects from this year. Secretary Niraula informed that within three four years, additional 300 MW of electricity will be generated.