By Sudeshna Sarkar, IANS
Kathmandu : The ice in Nepal’s hydropower sector is finally on the verge of thawing with the government beginning negotiations with India’s GMR Group for a new venture.
The Bangalore-headquartered GMR, a private sector player with growing presence in infrastructure and agro-business, is poised to bag the contract for the 309 MW Upper Karnali hydropower project, overcoming political opposition and claims by a French company.
Nepal’s ministry of water resources Sunday began negotiations with the group, asking for 12 percent free energy.
While GMR is reportedly ready to comply with the request, it is said to be asking Nepal to settle for fewer free shares in the project than the earlier 33 percent it had mentioned in its bid.
The signing of a memorandum of understanding is in the offing, making it a heady victory for GMR, which had been fighting political intervention to enter Nepal’s hydropower sector.
After Nepal called for foreign investment to develop its hydropower sector, over 10 Indian firms bid for Upper Karnali, including Reliance and the Jindal Group.
The government formed a team under former finance secretary Bhanuprasad Acharya to evaluate the bids, and GMR was assessed the best bidder for Upper Karnali as well as the 402 MW Arun-III.
However, the first obstacle came from a parliamentary committee that directed the government not to award more than one project simultaneously to any company.
The second blow was struck by a French company, Elysee Frontier, which said it was given a “sole and exclusive” survey licence for the Upper Karnali project that it said was terminated illegally in 2001.
The French firm’s cause was taken up by Nepal’s parliamentarians, who asked the government to resolve the dispute first.
If GMR fails to bag the project, India’s KSK Electricity Financing Pvt Ltd is the next best bidder, according to the Acharya committee, while Jindal Steel and Power is also a close contender by virtue of having offered the highest amount of free energy.
Despite opposition by the Maoists, who want major deals to be signed only after the April 10 election, and protests by local NGOs, the cabinet of prime minister Girija Prasad Koirala last month decided to award both Upper Karnali and Arun-III to investors offering the maximum amount of free energy.
Nepal is currently facing an acute power crunch, with six hours of power outage daily.
In the summer months, it is feared the outage would go up to 11 hours per day.
Both Nepal’s finance minister Ram Sharan Mahat and Indian ambassador to Nepal Shiv Shankar Mukherjee have been advocating quick implementation of the projects, saying only the hydropower sector has the ability to kick start Nepal’s floundering economy.
Once the bid for Upper Karnali is wrapped up, the government will open negotiations for Arun-III.
Besides GMR, the next three best bidders for the project are Sutlej Jal Vidyut Nigam, Jindal and Reliance.