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

काठमाडौं, २ मंसिर: सरकारले विद्युत् महसुल बढाउने भएको छ । ऊर्जामन्त्री डा.प्रकाशशरण महतले हालको घाटा थेग्नका लागि नेपाल विद्युत् प्राधिकरणका सामु विद्युत्शुल्क बढाउनुको विकल्प नरहेको बताउँदै अब केही दिनभित्रैमा महसुल वृद्धि गर्ने तयारी भएको बताए ।

रिपोर्र्टर्स क्लबद्वारा मंगलबार राजधानीमा आयोजित साक्षात्कार कार्यक्रममा ऊर्जामन्त्री महतले विगत नौ वर्षता विद्युत् महसुल नबढाइएको जानकारी दिँदै अहिले बाध्य भएर यो निर्ण्र्ाागर्ने तयारी भएको बताए । मन्त्री महतले महसुल वृद्धि गर्दा र्सवसाधारण जनतालाई मर्का नपर्नेगरी विद्युत् महसुल बढाइने दाबी गरे । हाल  विद्युत् महसुल बढाउनका लागि अध्ययन भइरहेको बताउँदै उनले अध्ययन सकिएलगत्तै यसबारेमा निर्ण्र्ाालिइने बताए  ।

Read full texts from Rajdhani

KATHMANDU: It takes 73 days to fulfil six procedures to get an electricity connection in Nepal, according to a World Bank pilot project. The same can be done in 22 days and four procedures in Iceland but takes 424 days in Afghanistan.

Getting Electricity — the two-and-a-half-year project — presents findings on the constraints entrepreneurs around the world face in getting access to electricity and illustrates patterns in connection processes. The study also tracks all the procedures, the time, and the cost required to obtain an electricity connection for a newly constructed building.

However, in Nepal the cost of not having electricity is higher than the cost of connection, as the country reels under long hours of power outage. World Bank surveys in 89 economies of the world show that electricity tops infrastructure needs of the business entities.

Many businesses lack access to power connections and are prevented from moving into higher-value-added activities that rely on electricity-based technologies. According to International Energy Agency, in 2005 more than a quarter of the world’s population lacked access to electricity. Businesses also care about the cost of both the electricity connection and the electricity supply-because electricity-related expenditure eats up a significant share of their revenue.

Managers responding to World Bank Enterprise Surveys estimated that on average their spending on electricity amounts to four per cent of their annual sales, while combined spending on other infrastructure services like fuel, communication services and water accounts for 6.4 per cent.

Among the 140 economies surveyed for Getting Electricity, Ukraine ranks at the bottom, with 10 procedures required to get new power connection. It’s much easier to do the same in Denmark, Germany, Japan and Mauritius.

The survey details the efficiency and cost of the services provided to commercial customers by distribution utilities, the complexity of procedures, and the resources expended by businesses in obtaining a connection.

“In the 10 economies with fewest procedures, the process of obtaining an electricity connection takes only 56 days on an average, while in 10 economies with most procedures, it takes 215 days,” the report adds.

The Himalayan Times

BIRGUNJ: Minister for Energy Prakash Sharan Mahat said today that the country would face power-cuts for at least three more years.

Speaking at a press conference organised by Nepal Press Union Parsa, he said, “The dark hours will stay here as high capacity transmission line for electricity from India to Nepal won’t be in place before three years.”

According to him, the public was reeling under regular power-cuts as the internal production was not sufficient to meet the energy demands. The minister, however, informed that plans were afoot to repair the thermal plants in Hetauda and Biratnagar. “That could be some sort of a breather for the country,” he said.

He also made revelations that the government had a policy to encourage investors in hydro projects. “The government has prioritised the Upper-Seti Hydro Electricity Project in Tanahun while preparations were on for the construction of Upper-Tamakoshi as well,” he said. The minister also informed that more than a billion rupees has been allocated for rural electrification in this fiscal budget.

He, however, said that the budget deficit of the Nepal Electricity Authority had reached Rs 14 billion. Saying that the electricity in the country was being sold at a price lower than the production cost, Mahat hinted at a possible hike in the electricity tariff.

The Himalayan Times

Myrepublica.com: What was the purpose of your visit to Germany?

Dr Prakash Sharan Mahat: My Germany visit has been productive in the sense that the German government is positive towards our request for a grant to establish a thermal plant for generating 50-100 MW, which will be crucial in addressing the power-cut problem in winter. We will soon forward a proposal in this connection.

Resources are important as the thermal plant is an expensive option for Nepal. We hope to be able to install the new plant within three or four months.

Myrepublica.com: How many hours of loadshedding will people have to face this winter?

Mahat: We are looking to bring the loadshedding down to 8-10 hours a day. Three things will determine this. First, we will import an additional 50-60 MW from India besides the existing supply. Second, existing projects and thermal plants will be upgraded and maintained for optimum generation. And finally the Ministry will do its best to set up a new thermal plant under German grant.

Myrepublica.com: How will the existing problems with hydro-projects be addressed by the government?

Mahat: There are surely problems in the run-of-river projects which will not generate even 50 percent of total capacity. For this the technical problems will be addressed by replacing equipment and carrying out due maintenance.

Myrepublica.com: It is said that on average there is 20 percent leakage in the supply system. How can this be controlled?

Mahat: Controlling leakage is important from the revenue point of view. There are two parts to this. If we can stop technical leakage, we can provide additional power for households and industries. Another problem is theft through hooking onto the mains. For this, the NEA board has formed a committee which will report to the government within a month. The government will act according to the report.

Myrepublica.com: What progress has been made in developing transmission lines?

Mahat: There is no alternative to power purchase agreements with India. For this, infrastructure development is vital. This is necessary for future power export and also for immediate purchase.

There has to be a modality, which we have to agree with India. We are doing the required homework for this. We will hold talks soon to reach an agreement.

Myrepublica.com: There seems to be confusion on whether your ministry or the Ministry of Irrigation will head the talks with India.

Mahat: There is no confusion at all. If the energy part is dominant, MoE will lead and if irrigation is dominant, MoI will do the needful. Even for the upcoming talks, the team will comprise members from both ministries.

Myrepublica.com: How far have the negotiations reached on the Pancheshwar Multipurpose Project with India?

Mahat: The meeting of the Joint Commission on Water Resources is scheduled for the first week of November and is to be followed soon after by ministerial-level talks that will take up all issues relating to the setting up of the Pancheshwar Development Authority and reach a conclusion.

We have informally agreed to locate PDA headquarters in Nepal.

Myrepublica.com: Why is the UCPN-Maoist against Pancheshwar now?

Mahat: They were ready to go ahead with the project when they were in government, but now they are protesting against it. This is pure politicization. Since there are no ideological differences, we must go ahead with it.

Since India is ready to accept Nepal´s proposal, the time is apt and we must capitalize on this opportunity. The people should know that we will sign the project in the interest of the country. Time is favoring us, so we must not let it go, and if we do, we will prove our own ignorance.

Myrepublica.com: What can be done to address local problems faced at the project sites?

Mahat: There are many policy and institutional problems. But since we have serious investors, both domestic and foreign, the government will play the role of facilitator.But we need to develop a mechanism to involve the locals as partners. Just as with the Upper Tamakoshi, where 10 percent of share is being given to the locals, a similar mechanism can be worked out. We need to deal with legal aspects and we will take care of them. People should feel the projects are in their interest and will benefit them.

The share can be determined as per the nature of the project. Also, it is necessary to develop compensation mechanisms to give some relief to the people if it involves their large-scale uprooting.

Myrepublica.com : West Seti is under parlimentary investigation; what went wrong?
Mahat: The problem was that the promoters could not generate the required finances. The Public Accounts Committee is investigating so we cannot conclude anything before the findings are in.

West Seti is an important project in the far-western region and it can play a lead role in the development of that region along with Mahakali and Pancheshwar.

Myrepublica.com: In the budget announcement, it was said the government would initiate some storage projects. What is the progress here?

Mahat: The budget has been allocated for the Upper Seti in Tanahun. Some foreign investors have shown interest in Aandhi Khola and we are looking for suitable investors in the Budhi Gandaki. And for Jajarkot´s Naxalghat, a loan proposal has been forwarded.

Myrepublica.com: Is it true that there are financial problems with Upper Tamakoshi?

Mahat: We have alternatives. The Nepal Army and Nepal Telecom have shown interest in investing in Upper Tamakoshi. We also want private banks to come forward. They have shown interest too, but there are conditions.

The NA is also building the access road as per our request, and it will be completed by February-March.

Myrepublica.com: There were news reports that the Asian Development Bank is hesitant to issue a loan for transmission line construction. Is this true?

Mahat: I recently spoke with the ADB South Asia representative, and the bank is positive and is also interested in giving a loan for Upper Seti.

Myrepublica.com: How will the government reach its target of generating 25,000 MW? Is it a sensible target?

Mahat: The time factor is very important. Even a medium-size project takes seven or eight years. So if we can initiate say 1000-2000 MW projects like the Mahakali, which are in the pipeline now, we can achieve the target in 20 years.

A committee has also been formed by the Cabinet, which will recommend to the government what needs to be done to meet that target.

Myrepublica.com: You had said when you took over that alternative energy is in your policy guidelines. What progress has been made in this regard?

Mahat: I spoke of three objectives. First, the steps to be taken to address the immediate power crisis. Second, working for encouraging serious investors to expedite the hydropower projects. And third, to look for alternative sources of energy and explore solar, bio-gas and wind power on a commercial basis. Wind energy is a serious alternative option since India and China are also opting for it on a large scale.

Myrepublica.com: How will the government control misuse of licenses?

Mahat: We want to issue licenses only to serious investors and discontinue the first-come-first-served policy. Then we hope to engage in strict monitor of progress. Those who do not make satisfactory progress within the given time will have their licenses canceled.

But for those who complete the work on time, the power purchase agreement should be made available immediately. This will be done promptly.

Coutesy: Myrepublica.com