KATHMANDU, July 14: The UML-led government has set an ambitious target of generating 25,000 MW of hydroelectricity in the next two decades, much above the past Maoist-led government´s target of generating 10,000 MW of power in 10 years. Towards that target, the government has allocated a budget of Rs 14.69 billion for the electricity sector for the coming fiscal, up by 131 percent from the revised budget for the sector in the current fiscal.

Private sector entrepreneurs termed the government´s announcement a baseless target sans any concrete plan.

“It is a baseless target which lacks concrete plans and study,” said hydropower entrepreneur and expert Gyanendra Lal Pradhan.

While unveiling the budget for the next fiscal in the parliament on Monday, Finance Minister Surendra Pandey announced to start the construction of 130-MW Upper Seti Hydro Project under government´s investment as a national priority project.

The construction of 456-MW Upper Tamakoshi Hydropower Project will be continued from the domestic resources. The project is expected to complete by 2012-13.

The under-construction medium scale projects such as 14-MW Kulekhani III, 30-MW Chameliya, 60-MW Upper Trishuli-A, 27-MW Rahughat and Lower Solu Hydroelectricity Project will also be expedited, the minister said.

Independent power producers, however, appreciated the announcement to establish an Infrastructure Development Bank under the investment of the government and private commercial banks by mid-December, and the concept of issuing “Infrastructure Development Bonds” to use remittance for infrastructure development, according to Pradip Gangol of Independent Power Producers´ Association of Nepal.

Pandey proposed issuing bonds worth Rs 7 billion by Nepal Rastra Bank for Nepalis working abroad as a part of domestic borrowing for the coming fiscal year.
 
The government also decided to exempt VAT and customs duty on construction materials, machinery, equipment, tools and spare parts of hydro projects to provide incentive to investment in hydroelectricity projects. Last year, the government had given similar exemption but only on electro-mechanical portion of hydro projects. “This is taken as positive step because IPPAN was lobbying for it,” Gangol said, adding, “But, the private producers´ demand for tax holiday for 10 years has not been addressed.”

Transmission line

Construction of three main cross-country transmission lines of 400 KV as a joint venture by Nepal Electricity Authority and the private sector has been proposed. Construction of Butwal-Sunauli and Duhabi-Jogbani transmission lines will be initiated next year.

The minister has allocated budget for the construction of 30 KV Dhalkebar-Bhittamod transmission line.

Rs 1.57b for rural electrification

The minister has allocated Rs 1.57 billion for community and rural electrification program. He said rural electrification program will be given top priority through ´Bright Nepal Campaign.

Altogether 27,480 households will be benefited from rural electrification program by promoting projects up to 1 MW. Rs 601.4 million has been allocated for small hydropower projects.

Last year, government had introduced Rukum light up program, which will be given continuity and the Bright Nepal Campaign will be initiated by replicating it in other districts.