Vol. 2 :: No. 08 July, 2000 (Asadh-Shrawan)

Sectoral

Hydro-Power Everywhere

By Ojaswi Gautam

Amidst controversies still unresolved about a number of issues in this sector, the government has once again entrusted the private sector to conduct feasibility studies and develop a horde of hydroelectricity projects.

The decision taken by the government on June 28 will see local and foreign companies develop 11 such projects and conduct feasibility studies on 6 other projects.

The India based Birla Corporation’s Cement Coordination and Planning Cell, Australia based Pacific Hydro Limited and U.S.A. based Combined Energy Companies have been entrusted with developing the 209 MW Budhi Ganga, 51 MW Likhu-4 and 101 MW Tamor-Mawa hydel projects respectively. Likewise, 176 MW Andhi Khola, 301 MW Dudh Koshi and 60 MW Kankai have been bagged respectively by USA based Trans HP Development and EurOrient Group, Canada based ASTQ Holding Corporation and France based Coyne Et Beller. EurOrient Investment Group has also bagged Arun III (402 MW), one of the most controversial hydel project of the country. The US company will also develop the 335 MW Upper Arun, while the Korean Government has taken responsibility for developing the 30 MW Chamelia. However, the 30 MW and 27 MW Kabeli A and Rahughat projects are to be developed by the World Bank.

The projects whose feasibility studies are to be conducted are the 27 MW Khimti Khola II, 308 MW Lower Arun, 660 MW Kali Gandaki-2, 300 MW Upper Trishuli, 60 MW Mai Loop and 121 MW Upper Marsyangdi. The companies that have assumed the responsibility for the studies are, Staatkraft of Norway, Braspower of Brazil, ASTQ of Canada, Australian Pacific Hydro Ltd. of Australia, Saniwal Hydro Power Ltd. of Nepal, and Sulzer Hydro Ltd. of Switzerland.

The government, however, took no decision regarding development of the 600 MW Budhi Gandaki for which Snowy Mountain Engineering Corporation (SMEC) of Australia, and Canada based ASTQ are vying.

The government has chosen not to disclose details of investments the above mentioned companies have proposed to make in the respective projects. However, a high level government source relates that the finances involved in developing the projects would be relatively higher than suggested by the feasibility studies of these projects, since the studies had been conducted, in some cases, as far back as in 1984 and 1990.

It is not for the first time that private sector participation has been sought for development of various hydel projects. Bhote Koshi, Khimti, Puwa Khola and Modi Khola Projects have already been entrusted to the private sector for developing them. However, issues like Nepal Electricity Authority having to buy electricity from these projects in dollar terms has resulted in high cost of electricity flaring up controversies.

The Arun Issue

The Arun III hydro-electricity project, whose feasibility study had been conducted through financial aid of German development agency GTZ, and Lahmyer International Consultant of Germany, was shelved after withdrawal of the main donor agency, the World Bank. Voices were also raised against the project by various NGOs as well as opposition parties of that time on grounds of environmental destruction.

However, neither the NGOs nor the opposition parties have as yet made any comment on the latest development. Experts, nonetheless, are not confident that the issue will remain free from controversies. They opine that rather than Arun III alone, developing integrated Arun (that includes the Upper Arun) would have been the right decision because that would mean cheaper electricity.

Doubts on Implementation

Where on the one hand the talks with India regarding sale of electricity has not made much headway, on the other, as per the agreement reached with the private sector companies, it is the responsibility of the private sector power developers themselves to arrange for essential finances required for completing the projects as well as to find buyers for the electricity generated. Experts relate the issue with the West Seti hydro electricity project. The government had handed over the construction of the project to SMEC of Australia based on the agreement that India would purchase the electricity generated. The project, however, could not be implemented owing to the uncertainties still looming about the power purchase agreement. But top government officials say, the present talks with India on sale of electricity are in final stage of implementation.

The position of the government is now more comfortable since, apart from the hydel projects allotted to the private sector in the first phase, the latter projects carry time span of 30 to 35 years (as opposed to 50 of the earlier projects), after which the projects will come into the hands of the government. Moreover, the government is entitled to choose not to buy electricity generated by these projects at price set by the respective project developers, informs the government official.

Project Cost of Various Hydel Projects

(Based on feasibility studies of the year mentioned)

Personal Accident Insurance

But What For?

By Sunil Gupta

Sometimes I dream that I would be a big shot (fat chance) and editor of this magazine will be featuring me on the cover. I prepare myself for mock interviews and try to anticipate the questions. One could be " what do you love the most ?" and I would not have any hesitation in croaking "my life, of course". Isn’t it true for you or anybody else? Majority of us love our lives. It may be another story that some do not highlight the fact as brightly as a neon sign.

There are so many ways, methods, styles and things to take care of about one’s life. I cannot even touch them in this article’s space, but one small thing or way is Personal Accident Insurance, about which I’ll give some explanation. Every professional has his favourite tool or trick. You can see many doctors wearing a stetho., even when there is no need to tap a chest. It is the same with me, I can not refrain myself from explaining P.A. (Personal Accident and not a postreio anterior) policy, even when nobody has mood or time to listen.

Insurance is broadly divided into two segments - Life and Non Life (General). Life Insurance, you all know what it is. Plainly speaking, it covers a human life and pays monetary compensation in case of death from any cause whatsoever, let us leave aside maturity and other complicated issues at the moment. General insurance deals with everything else in the world except human life. But we felt dejected because, what is this world without human life. Therefore, we devised means like Personal Accident Insurance, Mediclaim Insurance etc. to look after human life.

Personal Accident insures life against death or disability, arising out of any accident. It does not cover diseases and natural causes. In insurance jargon the P.A. policy says, that " if any time during the currency of the policy, the insured dies or sustains bodily injury resulting solely and directly from accident caused by external violent and visible means, the policy will pay compensation depending upon the sum insured, nature of disablement/injury etc." In simple terms, it means that an insured person or his family is taken care of financially in case of disablement or death due to an accident. The term "accident" covers very wide range like road or air accidents, fire, flood, poisoning, bullet or knife injury, snake or insect bite, terrorist attack, drowning etc. There can be freak and fatal accidents. I sadly remember the tragic demise of my colleague, Y.B. He was in his thirties; successful and built up like a bull. One fateful morning he was in shower, when he received a client’s phone call. In a hurry to attend, he slipped in the bathroom and could never get up. A person goes, but hospital bills remain to be settled by the family. In case of accidents, these bills for ICUs, specialists and operations, can run into few lakhs, in no time.

P.A. policy pays compensation upto the full amount of selected sum insured, in case of insured person’s death, to the nominated person. In case of permanent disability, insured person himself is financially compensated by prescribed percentage of the sum insured, depending upon the seriousness of the disability. For disablement which are temporary, but hamper the insured person from earning his livelihood, there is provision for weekly compensation upto 104 weeks. In addition to the above, there are special benefits given by the insurance companies, such as taking care of the expenses incurred for the carriage of body and education to the children the deceased person (children upto specified age limits). Medical expenses arising out of the accident can also be covered, by paying some additional premium.

My 12 years career as an insurer has witnessed many incidents but some are never forgettable. Let me narrate one.

A young man came to me for the insurance of his new Tata Truck and I insisted upon him for a P.A. policy. After a long thought, he purchased a P.A. for the sum insured of two lakhs, paid the premium and filled up the form. Alas, after few days, he made his last journey. The loss for truck was paid to the bank, but his P.A. was assigned to his wife. We went to his native place, but his parents had turned the widow out of their home, blaming her for his untimely death. We found her in her native village and presented the claim cheque. I still vividly remember the scene, the young illiterate widow and her old parents started weeping incessantly. She kept saying, "I know he loved me and he would send the message some day. This is his message. Oh God! You’ve saved us from shame."

How to take a Policy? First of all you have to select a sum for insurance (Sum Insured) which will take reasonable care of you or your family, in the case of accident. I suggest approximately five years gross income. Other criteria are occupational and social status, living standard, life cycle stage etc. Once your policy is issued, insurer cannot dispute the amount unlike in other insurances, You can take as many policies you like and all the policies will pay in full, but you’ve to declare them in your proposals. Please, do not forget to fill up nomination column in your proposal form.

Cost

Is anything free in this world? We insurers also charge something on a policy, known as premium. The rate is usually 0.05% to 0.50% of sum insured per year depending upon the occupation of the person insured and benefits covered. The fund raised from the collection of the premium is used for the payment of claims. You can get a policy of one lakh rupees for as low a premium as Rupees fifty only. It is one of the cheapest insurance policies all over the world. Who can take this insurance? Any individual or group like employer, school, college, club, association, who have interest in the welfare of the insured can take a policy. Most of the insurers give discounts in the premium proportionate to the size of the group. Some give special benefits to special groups. What is not covered? All the insurance policies contain exclusions. P.A. Policy does not cover death/disablement due to some reason like suicide, intoxication, drugs, and criminal activities. We do not want you to destroy your precious life. Should we?

Therefore, if you love your life as much as I do and have not taken any personal insurance policy, call your insurance representative immediately and if, there is no one, do not delay in finding a good insurer.

(Gupta is the Assistant Manager for Nepal of National Insurance Company Ltd. India)

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