GMR seeks to widen portfolio in Nepal (Supersedes earlier version)September 26th, 2008 - 6:16 pm ICT by IANS
Kathmandu, Sep 26 (IANS) The GMR Group, India’s upcoming infrastructure company, is seeking to widen its portfolio with four hydropower projects in neighbouring Nepal.The group’s GMR Energy division became the first private Indian company to enter Nepal’s thorny hydropower sector with the acquisition of the licence for the 302 MW Upper Karnali hydel project in May 2008.
Last year, the group bought 80 percent stakes in Nepali hydropower company Himtal Hydropower. It will now also develop the 250 MW Upper Myarsangdi project in the Himalayan republic under imtal Hydropower Company Pvt Ltd.
In addition, GMR Energy has also applied for licence to develop two more projects that are located in the Karnali basin so that there could be greater synergy.
The 184 MW Karnali-Gutu lies downstream of the Karnali river while the 500 MW Tila project is in the same basin.
“We are already developing hydropower projects worth 800 MW in India’s Uttaranchal, Himachal Pradesh and Arunachal Pradesh (states),” GMR Energy’s associate vice president Harvinder Manocha told IANS.
“We wanted to increase our portfolio but all the large projects in India have already been allocated to public sector units. Only the B category projects are left for the private sector. Jammu and Kashmir alone has possibilities but because of the security situation, it is under watch. So we decided to try Bhutan and Nepal.”
GMR pipped almost a dozen competitors, mostly Indian companies, to acquire Upper Karnali. However, an obstruction came in the form of a public interest litigation filed by a NGO in Nepal’s Supreme Court that asked for a stay on the project.
The PIL also contended that hydropower being a national resource, the licence would have to be approved by two-third of the sitting legislators in the interim parliament.
“The court’s refusal to grant a stay was a very positive movement,” Manocha said. “We are also heartened by the recent West Seti verdict.”
The 750 MW West Seti project, being developed by a consortium that is led by Australian company Snowy Mountain Engineering Corp and includes India’s IL&FS, is regarded as a test case by foreign investors who want to enter Nepal’s hydropower sector.
Blocked for years due to political turmoil in Nepal, the company finally announced progress this year but then came across a similar PIL.
In a landmark judgment for hydropower companies, the Supreme Court recently ruled that a two-third vote in parliament was not needed.
“Our PIL verdict is to come after the West Seti judgment,” Manocha said. “We are hopeful of a positive outcome.”
With Nepal’s new Maoist-led government having announced that it would develop 10,000 MW in the next decade, Manocha feels that the country’s legal structure should be changed.
“All PILs get registered in the Supreme Court,” he says. “That should be changed.”
Foreign investors, he adds, should also feel reassured if there is an assurance of continuity.
Right now, companies applying to develop hydel projects are first given a licence for survey which has to be completed in 30 months. After that, they have to apply again for power generation which creates delay and some uncertainty.
Manocha says topographical survey on Upper Karnali will begin after monsoon. After the survey, detailed project report and environment impact assessment is completed, it would take about five years to complete the project.
For Upper Myarsangdi, he estimates it will take about five and a half years after the DPR is completed by 2009.
The GMR Group, which also specialises in highways and airports, has other long-term infrastructure plans in mind for Nepal. However, it will give serious thought to them only after Upper Karnali takes off.