Industry

By Ramesh Lamsal

Nepal's 40-year old dream project is finally set to take off.

Investment Board of Nepal (IBN) and India's state-owned NHPC Limited signed a memorandum of understanding (MoU) on Thursday to develop the 750 MW West Seti Hydropower Project sprawling across Sudurpaschim province's four districts – Bajhang, Doti, Dadeldhura and Achham.

NHPC with a track record of developing projects up to 7,300 megawatts capacity in Himachal Pradesh and other areas of India has also agreed to develop the 450-MW Seti River-6 Hydropower Project under a “bundling model”.

Prime Minister Sher Bahadur Deuba was amongst the high profile attendees assembled to witness the signing of the MoU by IBN's Chief Executive Officer Sushil Bhatta and NHPC Chair–cum-Managing Director Abhay Kumar Singh.

The development of the storage type project - listed as the project of national pride - has been a dream of Nepal for around forty years.

Confusion over the implementation of the project was looming large with international companies, including SMEC from Australia and Three Gorges from China abruptly abandoning the contracts to develop it.

As pledged by NHPC Chair Singh during the MoU signing ceremony, the Project will find its tentative shape within a year. Australian Snowy Mountain's Engineering Corporation (SMEC) had prepared a detailed project report  for the West Seti and China's State-owned China Three Gorges Corporation had also carried out re-study on the DPR.

The decision to take the West Seti ahead is itself a significant achievement. The Arun III Hydropower Projects reports above 50 percent physical progress. Likewise, processes are ahead to develop the Lower Arun and Arun IV Projects in partnership with the Indian company Sutlej Jal Vidyut Nigam, known as SJVN, the developer of the Arun III.

Prime Minister Sher Bahadur Deuba who was present to grace the MoU signing-in ceremony said the Project is crucial not only for the development of the Sudurpaschim but also for overall economic and social development of the nation.

The next steps

An understanding has been reached between NHPC and HIDCL regarding collaboration in the energy sector in the course of Investment Summit organised by the Board in 2019. The proposer has to file an application for West Seti Hydropower Project survey permission within 45 days after signing the MoU.

There is a provision that applications should be filed within six months for the Seti-6 project. An arrangement has been made where the company has to submit its report  to the Board after carrying out a detailed project report within two years from getting survey permission. It might not take such a long time as all preparatory activities of the project have already been completed.

The MoU has mentioned that different issues including estimated cost, market assurance, and guarantee of financial sources should be incorporated in the report. The two sides would hold discussion for the Project Development Agreement (PDA) and the Board would facilitate it.

NHPC has already constructed hydropower projects generating more than 7,000 MW power. The company has expressed commitment to complete the project on time.

NHPC’s task

The Board's meeting on August 8 this year had assigned NHPC to take charge of Project's works.

The Indian company had proposed to seek a market in India for electricity produced in Nepal apart from making arrangements for financial and technical management of the Project. Following the visit of Nepali's Prime Minister Sher Bahadur Deuba to India in last April, the Project which was on 'hold' of the French, the Australian and Chinese companies from time to time is now bound to proceed in a new manner with a clear framework.

The NHPC Limited has submitted an application to the Board to implement the Project through dialogues, the Board said. Board's 47th meeting had formed a committee coordinated by vice-chairperson of the National Planning Commission Bishwanath Poudel to prepare a draft on the modality of development and investment of the West Seti and Seti River-6 Joint Hydropower Project. The Board had decided to implement the recommendations furnished by the Committee on the Project.

‘Best company’

Former Energy Secretary Anup Kumar Upadhyay viewed that there was no other better option than this Company which was owned by the Indian government and had specialization on the hydropower project. Upadhyay further expressed, "This project will proceed now onward since NHPC is technically and economically sound and can provide a market to the electricity produced here."

The locals in the project sites were waiting forever to see the Project, initiated since 2036 BS, come to fruition. Lack of clarity on modality of construction, lack of decision on construction of transmission line, settlement of the displaced ones and no determination on market for the produced electricity among others had pushed the Project in limbo for a long time.

Now the Sudurpaschim folks are confident that the Project works will move ahead. The Chinese company- Three Gorges – had also cited the same reason when it pulled out of the project. According to officials involved in the project, the Australian company, Snowy Mountain Engineering Corporation (SMEC), which was engaged in preparing the detailed project report (DPR) of the project since August 1989, submitted its report in 1992.

The agreement signed with SMEC on the build-own-operate-transfer (BOOT) model was never implemented. SMEC kept the project 'on hold' for 18 years although it kept on saying it was constructing the project. Deciding that 'enough is enough', the government itself took ownership of the project in 2011.

SMRC had stated that it will sell the electricity produced from the project to India and transfer the project in its current condition to the government 30 years from the date of starting power production. From frying pan to fire The project was given to the CWE Investment Corporation, a subsidiary of the Three Gorges Company of China, in 2011.

The Nepali people were confident that the Chinese construction company would take ahead the project as this same company had built the 22,500 megawatts capacity Three Gorges Hydropower Project in China. An agreement was reached to set up a joint company with 75 percent share of the Chinese company and 25 percent share of Nepal Electricity Authority (NEA).

Project costs

The total estimated cost of the project was Rs 180 billion and it was also agreed to bring in Rs 150 billion foreign loan for the project. Had the works been carried out as per the agreement, the project would have already started generating electricity last year alone. The Chinese company also kept the project 'on hold' for a total seven years which is the project completion period.

In the end, the Chinese company abandoned the project citing lack of market for electricity, disagreement on resettlement and rehabilitation issues and uncertainty over who will construct the transmission line.

The government had been even allocating a budget each year for this project until 2018. Although it was said that the construction of the project would be started by fixing an appropriate modality for it after that, it was inconclusive.

It is stated in the government's policies and programmes for the current fiscal year unveiled by President Bidya Devi Bhandari on May 24, 2022 in the joint session of both houses of the Federal Parliament that the construction of the West Seti and the Seti River-6 projects would be started.

Similarly, the budget for the current fiscal year which the government announced on May 29 also clearly mentions the project. This also has given a basis to believe that the project will make progress in one way or the other.

The Seti River originates from the Saipal Mountain in Bajhang district and it joins the Karnali River when it reaches Achham after flowing through Baitadi, Dadeldhura and Doti. The two projects are based on the Seti River. Hydropower experts and planners are of the view that Nepal should now concentrate on deriving maximum energy and benefit from both the projects and facilitate their construction. (RSS)