India ready to help Nepal raise $20 bn for hydropower sector

September 23rd, 2008 - 5:16 pm ICT by IANS  

Kathmandu, Sep 23 (IANS) The third Power Summit, with “harnessing power” as its theme, kicked off here Tuesday with India pledging to help Nepal develop its potentially rich hydropower sector and Nepal providing an assurance of security and investment protection.The new Maoist government’s intention of generating 10,000 MW of power in the next decade would require about $20 billion, Indian Minister of State for Commerce and Power Jairam Ramesh said at the inauguration of the summit, which has brought over 300 investors, mostly from India.

“It is not a difficult task,” the Indian minister said. “However, the private capital market is unlikely to come up with the entire amount. You need public-private partnership and the government of Nepal must play its role.”

Ramesh said India, which was a clear market for the export of power generated in Nepal, did not believe in dominating the neighbouring country.

“The remote switch is in the hands of the Nepal government,” Ramesh said. “If Nepal presses fast forward, India will go along with it. If Nepal presses pause, we will pause. But I hope Nepal doesn’t press rewind.”

Ramesh said that Nepal’s new Maoist Prime Minister Pushpa Kamal Dahal Prachanda’s recent visit to India had generated a lot of interest in Indian investors, especially in the hydropower sector.

However, the struggle of some major Indian investors in Nepal, like Dabur Nepal, the wholly owned subsidiary of Dabur India, had caused concern.

Dabur Nepal remains closed since end-August after a wildcat strike by the Maoist labour union.

“Dabur is a big company and occupies a lot of media space in India,” Ramesh said. “If the West Seti project gets going in the next six months or geological work starts on Upper Karnali in the next three months, it will restore the confidence of the Indian investor.”

The 750 MW West Seti project, which is the focus of investors in India and Europe, is being developed by Australian Snowy Mountain Engineering Corporation with a Chinese EPC contractor for sale of power to India. India’s IL&FS also has a stake while the Power Trading Corporation of India has signed a power purchase agreement to sell the generated power to India.

The other case, being closely watched by the Indian investor, is the 402 Arun III that is now the baby of India’s public sector undertaking Sutlej Jal Vidyut Nigam.

“In the past, the bilateral agenda focused on mega projects,” Ramesh said. “It is better to start small.”

Ramesh reminded Nepal, which is wary of exporting power to India, that Nepal’s power export to India would be “just a drop in the ocean”.

By 2020, India would be set to buy 10,000 MW from Bhutan and generate 50,000 MW by 2025 from its own states.

However, power exports to India would be a big leap for Nepal, raising its GDP substantially like it did for Bhutan.

To facilitate Indo-Nepal power trade, the two countries are building a 140 km link between Muzaffarpur in Bihar and Dhalkebar in Nepal at an estimated cost of over Rs.1,500 million for transferring around 200-250 MW.

Nepal’s Home Minister and Deputy PM Bamdev Gautam, who inaugurated the two-day summit, said that the new government of Nepal regarded hydropower as the key resource to develop the national economy.

“Be it the West Seti or Upper Karnali or Arun III or Sunkoshi project, we will dedicate our efforts to providing security as a short-term measure and (investment) guarantee as a long-term measure,” Gautam said.

Both West Seti and Upper Karnali were obstructed by protests by local organisations who finally moved Nepal’s Supreme Court, asking for the scrapping of the licences.

However, in a landmark judgment, the apex court recently ruled in the West Seti case that the granting of the licence did not require a two-third approval vote in parliament, thereby easing legal hurdles and paving the way for the entry of other foreign companies.

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