The protracted progress of West Seti Hydroelectric Project in absence of financial arrangement is again taking a move ahead.

One of the senior project officials informed to start 10 km long access road, connecting project’s site and Seti Highway, to encourage the investors. “To trim down the project’s uncertainty existing among locals, government and investors, we are constructing access road with investment from SMEC,” the official told the Rajdhani.

According to an official at the Ministry of Energy, the promoter, which failed to kick-start the construction works even after a decade of acquiring the project’s license, is going to construct access road in the project’s site when the government started looking for a new investor.

The Energy Minister, Prakash Sharan Mahat informed that the project could not go ahead since the company failed to make financial closing. “The government is not going to delay the project if the construction company approaches us with an official letter regarding financial closure,” he said.

The Minister Mahat admitted the continuity of the same company in the project, although he hinted some preliminary discussions regarding the new investor. “We are analysing some clauses for amendment in the agreement with the existing company,” he said. 

Mahat also informed that the agreement was forwarded to officials at Ministry of Finance and Ministry of Law for giving a second look at some clauses.

Nepal bears a great loss since the construction company failed to make financial arrangement, said Mahat, “The government is committed to begin West Seti soon.”

The project with 750 MW installed capacity exports 90 percent of electricity to India while remaining 10 percent will be granted to Nepal free of cost.

As per the past agreement, 1.6 billion US dollars project engrosses share investment from Australian Construction Company SMEC (26 %), Government of Nepal (15%), Asian Development Bank (15%), China Machinery Imports and Exports Corporation CMEC (15%), Infrastructure Leasing and Financial Services –IL&FS (15%) and the Nepalese financial institutions (14 %) including four percent from the far western local people. The project will have 25 percent equity share and 75 percent as loan investment.

“Investments from others will flow as soon as ADB gets ready,” said the source accusing ADB for its negligence for delayed investment.

Unofficial translation from Rajdhani daily Kathmandu, Nov 17, 2009

KATHMANDU, June 1: Nepal Electricity Authority (NEA) is under tremendous pressure to take an immediate decision regarding a 250-MW power purchase from India. A decision in this connection, according to NEA sources, would have to be taken within the next two weeks as the Power Trading Corporation (PTC) of India is becoming ´impatient.´

“A bold decision has to be taken in this regard within two weeks as we are already facing pressure from PTC,” an NEA official told Republica.

NEA is currently undertaking an impact study for the power purchase, which may range anywhere between 200 MW and 400 MW on a long term basis, with the power to be made available by April 2012, the official said.

A high-level agreement between the two countries is also likely before the purchase deal materializes.

“We have said for quite some time now that an agreement on the grid system at government-to-government level should be in place for the project to materialize soon. The government of Nepal can even request the Indian government to construct the 39 km transmission line on the Nepal side of the Dhalkebar-Muzzafarpur corridor,” the source added.

The project is contingent upon completion of the high voltage cross-border transmission lines. As per the proposal, India will construct 140 km of transmission lines up to the Nepal border and Nepal should construct the 39 km this side of the border.

The cost of the proposed project is estimated at Rs 16 billion. Infrastructure Leasing & Financial Services (IL&FS), which had taken the initiative for development of the Indo-Nepal transmission project, is now facing difficulty getting the project financed. Two joint venture companies - Cross Border Power Transmission Company Pvt. Ltd. and Power Transmission Company Nepal Ltd. - were incorporated for implementation of the project.

Asked to comment on the issue, PTC officials said that they are still waiting for a response from NEA. “NEA has not responded to the proposal yet. We are waiting for a final answer soon,” Harish Saran, Vice-President of PTC, told Republica.

500 MW tale:
Meanwhile, the much-talked about import of 500 MW of power from India has turned out to be just rumor, as NEA had never approached PTC with such a proposal.

“PTC has not been approached for the 500 MW power purchase,” an Indian embassy official confirmed.

NEA first corresponded with PTC in October 2008 for the import of 200 MW from India for a period ranging from five to 25 years. PTC then proposed 200 MW for five to 15 years. The cost quoted was IRs 4.50 for five years and IRs 3.25 for 15 years.

“All talk of 500 MW for a period of 25 years has been limited to date to the Internal Development Board of NEA. We never made a formal request in that regard to PTC,” the NEA official said.