New Nepal energy rule to shake up Indian investors

August 23rd, 2011 - 3:15 pm ICT by IANS  

Kathmandu, Aug 23 (IANS) A new power regulation by Nepal that came into effect from Monday will now reshuffle over 70 hydropower projects capable of generating nearly 20,000 MW and galvanise Indian investors.

Nepal’s new Energy Minister Gokarna Bista Monday unveiled the new power policy of the caretaker government that has ended the provision of awarding hydropower projects to developers on a first-come, first-served basis.

Instead, now all hydro projects capable of generating over 10 MW will be awarded through competitive bidding.

The new policy has special implications for Indian companies seeking to invest in hydropower projects in Nepal.

Indian investors dominated the list of applications seeking to develop 42 projects capable of generating between 110MW and 1,300MW. But now, all these 16 Indian companies have had their applications terminated.

Companies predominantly from Andhra Pradesh, New Delhi, Maharashtra and West Bengal had been trying since 2006 to enter Nepal’s hydropower sector. However, they will now have to wait longer.

Mumbai-based Larsen and Toubro Power Development Ltd had led the pack, having applied for five hydropower projects. They ranged from the 180MW Andhikhola storage project in Syangja district to the mega 1,200 MW Ande Pipal Arun project in Sankhuwasabha.

Some had formed joint ventures with Nepali partners to enter the sector, like Kolkata’s Hanurang Projects Ltd allying with Bhat Bhateini Power Pvt Ltd of Nepal for the 303 MW Arun 4 project in Sankhuwasabha, and AES India Pvt Ltd that had teamed up with Nepal’s Chaudhary Group for the 1,300 MW Dudhkhola project in Khotang district.

Even an Indian joint venture bank, Everest Bank partnered by Punjab National Bank, had applied to develop a 150 MW storage project in Syangja.

Interestingly, the now cancelled applications also include a show of interest by infrastructure major GMR Group’s GMR Energy, that has already been given a licence for the 900 MW Upper Karnali project.

GMR Energy had also applied to develop the 184 MW Karnali Gutu in Dailekh district, which now stands scrapped due to the new regulation.

The new energy policy says the government will ask for the first lot of tenders within 90 days. Except for state-owned entities, no promoter will be awarded more than three projects.

Sanjay Singh, deputy director at the Department of Electricity Development, said that the government is expected to keep some of the power projects for Nepali investors and open the larger ones to foreign investment.

The official said the policy should trigger greater interest from Indian investors as they could now stake claim to projects that they once thought had already been allotted to other applicants.

Two Indian companies have had their survey licences cancelled after the time allotted to them lapsed.

They are Hyderabad’s Pioneer Genco Ltd, that had the licence for the 58 MW Seti Nadi project, and Navayuga Engineering, also from Hyderabad, that had sought to develop the 164 MW Dudhkosi project.

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