National 7 (Spotlight Weekly)

New Power On The Block

The much-touted 144 MW hydro-electricity project is all set to enter the central grid

By SANJAYA DHAKAL

After one and a half years of delay caused by variety of reasons, the 144 Mega Watt (MW) Kali Gandaki "A" (KGA) project is finally set to be completed within a few months. In fact, the project started conducting test transmissions recently.

A run-of-the-river project with daily pondage system (for storage of water), the KGA is the flagship project undertaken by the Nepal Electricity Authority (NEA) with cooperation from bilateral and multilateral agencies.

As most of the civil construction of the KGA is now on the verge of completion, the project has started to test its capacity. "Turn by turn, we have to test all the machines and turbines," said Dr. Jivendra Jha, director, civil and planning department at the NEA's KGA project. According to him, the KGA will start regular transmission to the national grid within the next two to three months.

The KGA has a daily peaking capability during adverse hydrological conditions. Because of the provision of pondage system, its capacity does not fluctuate in the dry and wet season. "Even during dry or lean season, the project can run with full capacity during peak hours of power demand," said Dr. Jha.

Another significance of KGA lies in its financial layout. While the NEA had reached into take-or-pay agreement with projects like Bhotekosi, and, that, too, in US dollars, KGA has no such problems. Besides, unlike projects like Bhotekosi (36 MW) and Khimti (60 MW), whose capacity come down by more than 50 percent during dry/winter/lean season when power demand is considerably higher, KGA provides power consistently.

The KGA project is located on the Kali Gandaki river in Syangja district in the western development region. A diversion dam constructed 500 meters down the meeting point of Kali Gandaki river and Aandhi river makes its water flow through a six-kilometer-long tunnel (with 7.4 m diameter) to the power house located in Beltari.

In Beltari, there are three turbines, each with the capacity of 48 MW. After generating the electricity, the water is again flown back to the river. The pond is spread over 65 hectares area.

The project will feature an installed capacity of 144 MW and generate about 842 GWh of electrical energy per annum. The power from this project is connected to the central grid through 132 KV single circuit transmission lines to sub-stations in Pokhara and Butwal.

The KGA traces its origins to 1977-79, when a Gandak Basin Master Plan was undertaken by an Australian company called Snowy Mountaineering Engineering Company (SMEC — the same company that is currently looking at the prospects of developing the 720 MW West Seti project) with financial assistance from the United Nations Development Program (UNDP).

The SMEC had put KGA as the most attractive hydel project in the whole Gandak basin. However, the project could not be developed then owing to various reasons. Meanwhile, the development of Kulekhani I and II and Marsyangdi took off.

For more than a decade, KGA remained in limbo. But in 1990s, when the Arun project of the Koshi basin was getting all the attention, the KGA was silently being re-introduced. In 1991, UNDP once again provided financial assistance for its detailed feasibility study, which was done by NorPower, a Norwegian company.

The NEA reached into agreement with an Italian company Impregilo SPA in 15 July, 1997 for the civil construction. Although the project was originally scheduled to be completed by the end of 2000, it was delayed by more than one and a half years.

"Previously, the wet test transmission target was scheduled for 1 July, 2000 and electricity generation for September 2000, but the wet test itself could take place only in 10 January 2002 and electricity generation in March 2002," said Dr. Jha.

A number of reasons resulted in the delay, which raised the cost by up to Rs 7 billion from the amount the Impregilo originally agreed for construction. While the engineer's total estimate for the KGA was put at US$ 452.8 million, Impregilo SPA won the civil construction contract for much less. Authorities now expect the project to cost nearly $384 million.

"The project had to undertake the tough river-diversion twice owing to various technical complications. It had to suffer around 60 days of labor strikes. It encountered problems in jet-grounding. During the tunnel construction, rock was found considerably weaker than our guess. Furthermore, a big landslide occurred while the excavation for surge shaft was going on," Dr. Jha recounts the reasons for the delay.

The delay in time meant a proportional rise in project cost. As 89 percent of the cost had to be paid in foreign exchange to the contractor, the continuous depreciation of Nepalese rupee (from Rs 56.30 per $1 in 1997 to more than Rs 75 now) did not help matters. "The justification of the cost rise would become clear only after the project is completed and its finances audited properly," said Dr. Jha.

At a time when the country is suffering from power shortages, the connection of KGA to the national grid would certainly provide a much-needed respite. The country can now look forward to generating electricity aimed not only at its domestic market but abroad as well.

Financial Plan

Engineers' Estimate (total):

US$452.8 million (including price contingency, physical contingency, loss reduction component, project management and interest during construction)

Assistance:

ADB: $160 million loan (C1, C3, consultancy fee, experts' fee and environment mitigation cost)

JBIC (formerly OECF): $160 million loan (C2, Lot 4, 5, 6 and 7)

HMG/N: $32.8 million equivalent

NEA: $100 million equivalent