PTC stands by Nepal’s giant power project

August 8th, 2008 - 2:47 pm ICT by IANS  

By Sudeshna Sarkar
Kathmandu, Aug 8 (IANS) India’s leading public-private partnership agency PTC India Ltd has agreed to stand by Nepal’s biggest but becalmed power project, re-inking a deal to buy electricity for power-starved north Indian states. The West Seti Hydroelectric Project (WSHP) in remote farwestern Nepal, the biggest energy project in the Himalayan state with the capacity of generating 750 MW, has signed a new memorandum of understanding (MoU) with PTC, re-negotiating the tariff.

“In 2003, when the negotiations started, PTC had agreed to buy power at 4.95 cents per unit,” Bill Bultitude, managing director of the project company, West Seti Hydro Ltd (SWH), told IANS.

“However, due to delays in getting the project off the ground, costs went up considerably. Now the estimated cost is $1.6 billion instead of the earlier $1.2 billion. A tariff for the sale of electricity to PTC has been re-negotiated at a significantly higher rate,” Bultitude said.

As a confidentiality clause prevents SWH from disclosing the new figures immediately, Bultitude said they would be made public once the final agreement was signed.

Though negotiations on Nepal’s biggest hydropower project started in the 1990s, West Seti remained becalmed due to political instability and local opposition.

Nepal’s political parties and local groups opposed the project since it intended to sell the generated power entirely to India at a time Nepal was suffering from an acute funds crunch.

Consequently, SWH re-negotiated its agreement with the government of Nepal recently and will now offer 10 percent of the power free to Nepal. Of the generated 3,636 GWh of electricity per annum, 90 percent will be routed to India through a 230km transmission line that will go to Atamanda in India.

Besides New Delhi, northern states like Rajasthan, Haryana and Punjab will benefit from the project. Bultitude said work is expected to start at the end of monsoon and the first power generation from end-2013.

SWH is a multinational project with stakeholders from Nepal, Australia, China and India as well as the Asian Development Bank.

Australian company SMEC Developments Pvt Ltd, the main sponsor, will hold 26 percent equity, China’s state-owned China National Machinery and Equipment Import and Export Corporation 15 percent, ADB another 15 percent and India’s Infrastructure Leasing and Financial Services an additional 15 percent. The remaining 30 percent will be raised by Nepal as well as Nepali financial institutions.

Built under the BOOT (Build Own Operate Transfer) scheme, SWH will have a 30 year licence to own and operate the project after which it will be handed over to Nepal. Nepal can then choose to continue to sell energy to India or use it domestically.

The project requires the construction of a 195m high dam that is expected to provide winter irrigation benefits to both India and Nepal.

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