By Sudeshna Sarkar, IANS
Kathmandu : After Indian construction company GMR’s bid to enter Nepal’s hydro-power sector ran into trouble due to politicisation, another Indian company is likely to be dogged by bad luck in this Himalayan country.
Infrastructure Leasing and Financial Services Ltd (IL&FS), which last year proposed to develop the Upper Tamakoshi hydropower project in Dolakha district in north Nepal, is yet to get the nod of the government.
The 309 MW project is regarded as one of the most attractive projects with the feasibility study already done.
The Indian company has reportedly expressed its interest in putting up the money required for the project – which would be about $400 million – for a minority share in the equity.
It is also ready to sign a power purchase agreement in advance so that Nepal will not have to pay an enhanced tariff for the power generated, like it has to currently to some private companies.
A Norwegian company has also evinced interest in the project. However, it is said to be asking for a majority stake unlike IL&FS, that would be ready to concede a 70 percent share to Nepal Electricity Authority (NEA), with which it has already formed a joint venture company for setting up high-voltage transmission lines between India and Nepal, as part of an India-aided project.
But the anti-India feeling vis-à-vis sharing water resources has put the project back on the shelf though from this year, power and cash-strapped Nepal will be facing acute power scarcity, according to the NEA.
From November, when the dry season starts, Nepal is going to face long hours of power outage, which may go up to 11 hours daily in February-March 2008.
Every time a power crisis occurs, Nepal approaches India to buy 40-50 MW to tide over the troubled period. However, the politicisation of hydropower still ensures that bids by Indian companies to develop power projects in Nepal are not allowed to get off the ground.
IL&FS also has a 15 percent stake in another major Nepali power project, the 750 MW West Seti, for which an Australian company has been given the developer’s licence.
However, the West Seti project has been blocked as well with a Nepali NGO having filed a petition against it, opposing the decision to sell all the power generated from the project to India’s Power Trading Corporation.
Though last year Finance Minister Ram Sharan Mahat admitted that Nepal did not have the funds to develop Upper Tamakoshi and was looking at foreign investors, now a section of MPs is pressuring the government not to award it to any foreign company but to develop it with Nepali money.
Meanwhile, the NEA is reported to be set to hike hydropower licence fees, which might make some potential Indian investors re-think about trying to enter Nepal.
Indian diplomatic circles in Kathmandu however say that it is the speed of decision-making that will affect Indian investors more than anything else.
The West Seti project, for instance, has not got off the block despite signing an agreement with NEA nearly 10 years ago, due to political instability first and now due to objections to selling the power to India.
The India and Nepal governments have also not been able to further the giant multipurpose project they began discussing from the 90s – the 6,480-MW Pancheswor multipurpose project.
Ironically, though the Nepal government last year asked India to built a medium-size power project to alleviate the power crisis and New Delhi agreed, Indian officials say the Nepal side is yet to discuss the project parameters.