China follows Indian cue, enters Nepal’s hydropower sector

November 8th, 2009 - 4:08 pm ICT by IANS  

By Sudeshna Sarkar
Kathmandu, Nov 8 (IANS) Nepal’s northern neighbour China has picked up the cue from its business rival in the region India to gradually consolidate its toehold in this water-rich country’s hydropower sector.

Chinese companies are now seeking to form joint ventures with Nepal’s power producers to gain easier access to an industry that, though potentially lucrative, is fraught with obstacles in the form of political opposition.

Sinohydro, that ranks 84th among the top 500 companies in China, is forming a joint venture with Sagarmatha Power Company to develop the 50 MW Upper Marsyangdi project in western Lamjung district.

The two have signed a power purchase agreement with Nepal Electricity Authority that has agreed to buy the generated power at 5.99 cents per unit, NEA spokesman Dandapani Basyal told IANS.

The dragon has two more stakes in Nepal’s power industry.

This month, China’s state-owned Exim Bank signed a memorandum of understanding with Nepali finance ministry to softloan $200 million for infrastructure development in the nascent republic. This includes the 61 MW Upper Trishuli hydropower project in Nuwakot district.

The Exim Bank is also funding 75 percent of the 750 MW West Seti, the biggest hydropower project in Nepal so far awarded to a consortium. The Bank of China is also one of the sponsors.

India began the trend of international joint ventures in Nepal’s hydropower sector when infrastructure major GMR tied up with Nepali company Himtal Hydropower Ltd when Nepal’s parliament decided not to award more than one project at a time to one company.

GMR has already been licensed to develop the 300 MW Upper Karnali project.

Noida-based Bhilwara Energy Ltd has a tie-up with Nepal’s Triveni Group while this month Tata Power signed an exclusive deal with Norway’s S.N. Power to develop hydropower projects jointly in India and Nepal.

S.N. Power holds a little over 50 percent stake in Himal Power Ltd, the largest independent power producer in Nepal that holds survey licences and concept studies of the Tamakoshi 2 and 3 projects with an overall estimated capacity of 500 MW, and other projects with the potential of an additional 340 MW.

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