Chinese firm gets IBN nod to develop West Seti Hydro Project

A meeting of the Investment Board Nepal chaired by Prime Minister Sushil Koirala today paved the way for a Chinese company to develop the 750-megawatt West Seti Hydroelectric Project in joint venture with Nepal Electricity Authority (NEA).

The permission was granted on the basis of permission sought by CWE Investment Corporation, a subsidiary of China’s Three Gorges Corporation (TGC), to build the project, at a cost of Rs 160 billion.

With today’s decision, TGC can now form a special purpose vehicle jointly with NEA, the state-owned power utility. The joint venture has also been allowed to conduct geological tests before monsoon, says a press statement issued today by IBN.

“Soon after completion of geological and hydrological tests, we will begin negotiations on Project Development Agreement with the Chinese company,” IBN CEO Radhesh Pant told The Himalayan Times. “If everything goes according to plan, the project will start generating power in 2023.”

The government formally handed over the West Seti project to CWEI in February 2012. Since then, IBN — which deals with hydro projects over 500 MW — has held several rounds of meetings with the project developer.

However, not much came out of these meetings because the Chinese company was concerned about the potential market for the power generated by the project. NEA, the sole energy buyer, did not show interest in signing a power purchase agreement with CWEI, saying it had roped in adequate number of power developers, who could generate enough power to meet the wet season’s power demand by the year 2017.

“The situation changed with the Power Trade Agreement between Nepal and India, which allows both countries to buy and sell electricity. So, the Chinese company is optimistic about finding a market for the energy it will generate, even if Nepal fails to consume it,” an IBN source said.

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