Sutlej expects PDA to be signed within two weeks

Indian power developer Sutlej Jal Vidyut Nigam Ltd, which is engaged in the development of Arun III hydropower project, is looking to sign project development agreement (PDA) before its survey license for the project expires on July 15.
Officials of The Investment Board of Nepal (IBN) and SJVNL have are holding PDA negotiations for the past two weeks. “The negotiation is moving ahead at a satisfactory pace,” Radesh Pant, chief executive officer of the IBN said.
The government had granted survey license to the SJVNL in July 2008.
The export-orientated project based in Sankhuwasabha district is being developed pas per the built-own-operate and transfer (BOOT) modality. The government has given the project to SJVNL for 30 years as per the BOOT Act.
The SJVNL will not have any difficulty in selling power generated by the project in India as one of its objectives is to address power deficit in India. Officials of SJVNL have said that they would export power to India even if two governments fail to sign power trade agreement (PTA).
As there is no problem in market management, the PDA negotiation being held in Kathmandu is gaining momentum.
“There lots of terms and conditions to be finalized. We want deal to be in national interest," Pant said. "We also want to ensure that the developer should not feel any obstacles while implementing the project."
SJVNL has agreed to provide 21.9 percent of the power generated from the plant free of cost to Nepal.

IBN officials to visit Malaysia

A team of officials from the Investment Board of Nepal (IBN) are all set to visit Malaysia this week to hold interaction with the officials from the Malaysian Investment Development Authority (MIDA).
"We will try to learn how the MIDA works and how it manages human resources," Mukunda Paudel, joint secretary at the IBN, said. Paudel will lead the Nepali team to Malaysia. Other members in the team include Krishna Acharya, under secretary at the IBN, Rita Regmi and Dilip Bahadur Kshetri. "The team will also try to learn how the MIDA runs promotional activities to lure fresh investment," Paudel said. The MIDA is the Malaysian government´s principal agency for the promotion of manufacturing and services in the country.

Government, Sutlej confident of inking key deal on Arun-III

The development of one of the largest hydropower projects in the country, the 900-megawatt Arun-III, has picked up momentum after 30 years of fuss and floundering, with the government and Indian power developer Sutlej Jal Vidyut Nigam Ltd (SJVNL) finally beginning negotiations on the project development agreement (PDA).
The government and SJVNL have both expressed a high level of confidence that the key agreement for commencing the project construction would be inked.
The Investment Board of Nepal (IBN) and SJVNL kicked-started the PDA negotiations last week. “We started negotiations with SJVN and things are taking a right direction,” Radesh Pant, chief executive officer of IBN, told Republica on Thursday.
Expressing confidence over developing the project, R. P. Singh, chairman and managing director of SJVNL, said there was no fear of losing the project. “Now the project is moving. The PDA discussions are on. It is right that the PDA was submitted around two years back. What can we do, this is the way with Nepal, our partners on the project,” reports Live mint, an Indian newspaper, quoting Singh. “I am quite sure, the way the negotiations are on with IBN, that it will be sorted out.”
The development of the project, which has always gotten politicized, seems finally to be happening as both the government and the developer express the same level of confidence. “I am sure the deal will be sealed. But I can’t say whether it will take just a few weeks or around a year to finalize all the terms and conditions of the PDA,” Pant said. The project based in Sankhuwasabha district was initially scheduled to be developed by the government itself with the assistance of the World Bank.
James Wolfensohn, then president of the World Bank, cancelled the project development in August 1995 in agreement with the CPN(UML)-led government, after a telephone conversation with then prime minister Manmohan Adhikari, according to a World Bank news release.
SJVNL, which has agreed to provide 21.9 percent of the power generated from the plant to Nepal free of cost, is yet to finalize different issues related to the PDA. The export-oriented project will get a generation license from the government after it demonstrates strong enough financial resources. SJVNL is targeting to utilize the energy generated from the project to meet the growing demand for electricity in the Indian market.
“SJVNL itself seems enthusiastic to take the project forward but it might just be a gesture,” said a legal advisor associated with Herbert Smith, an international legal advisory body based in London. Herbert Smith, which developed the PDA template -- a baseline document for PDA negotiations -- is also supporting IBN to negotiate with the developers.
SJVNL had already submitted a detailed project report for Arun-III in 2011. The report is still under consideration. The government has handed over the project to SJVNL under a built-own-operate-transfer (BOOT) scheme for 30 years. It is still unclear exactly how all the issues related to the project will move forward, Pant said.
Large export-oriented hydropower projects have been politicized in the past, mainly by the ultra-leftist forces. The Mohan Baidha-led CPN-Maoist is still against projects such as Upper Karnali, Upper Marsyangdi and Arun-III, in which Indian developers are involved.
Quoting former Indian ambassador to Nepal Shiv Mukherjee, Live mint has written, “Hydroelectric power and its potential have been highly politicized in Nepal. I won’t comment on specifics…”

SN Power, IBN holding second round of neogitation today

SN Power, the Norwegian firm involved in the development of Tamakoshi III (650 MW) hydropower project, and Investment Board of Nepal (IBN) are holding second round of negotiation for project development agreement (PDA) on Thursday.
The first round of negotiation between the two parties had ended without any conclusion after the Norwegian firm sought sovereign guarantee for the project.“The meeting scheduled for Thursday will be focused more on market arrangement for power generated by the project," a source privy to the issue told Republica on Wednesday.
The IBN, a high-level government agency formed to facilitate the implementation of large scale infrastructure projects on a fast track mode, has suggested to the SN Power to find market for power generated by the project on its own.
The source said officials of SN Power have already held talks with Nepal Electricity Authority (NEA), requesting the latter to purchase power generated by the project. “The NEA, however, has turned down their request,” the source added.
The PDA negotiation, which is supposed to scrutinize all the issues related to project development, is taking place based on the PDA template developed by the Herber Smith -- an international legal advisory body based in London.
“This time also the IBN will suggest the officials of SN Power to find market for power on its own,” the source said.
Radesh Pant, CEO of IBN, will lead the government side in the meeting, while SN Power will be led by Dr Sandeep Shah, vice president and country director of SN Power and Stale Rustad, project director for Asia of SN Power.
The first meeting of PDA negotiation was held on May 27.
Baikuntha Aryal, joint secretary at the finance ministry, who is also a member in the government´s PDA negotiation team, declined to divulge details of the ongoing negotiation with SN Power, saying that he has signed a ´non-disclosure agreement´.
The IBN and SN Power had signed the PNA almost a month ago. The document abides the developer to complete PDA negotiation within 18 months of the signing of PNA.
The government had granted survey license of the project to the SN Power in 2007. It has already approved environment impact assessment (EIA) report of the project, which is estimated to cost Rs 120 billion, prepared by SN Power.

Himal Hydro receives generation license for Middle Modi hydro project

The government has granted generation license to Middle Modi Hydropower Project (15.1 MW) based in Parbat district.
The Department of Electricity Development (DoED) decided to issue generation license to the project after its developer expressed commitment to achieve financial closure within a year of receiving generation license.
According to Gokarna Raj Pantha, senior divisional engineer at the DoED, the Middle Modi Hydropower Limited (MMHL), a subsidiary of Himal Hydro and General Construction Limited, is developing the project.
"The DoED has decided to grant conditional generation license as the developer has assured us that it would demonstrate bank guarantee within a year,” Pantha told Republica.
The run-of-the-river type project that is estimated to cost Rs 2.3 billion has already signed power purchase agreement (PPA) with the Nepal Electricity Authority (NEA).
According to Pantha, the project has agreed to sell power generated by it at Rs 4.80 per unit during wet season and Rs 8.40 per unit during dry season.
The power generated by the project can be linked to the national grid by developing a 4-km 132 kV single circuit transmission line from the plant site to NEA sub-station at Patichaur in Parbat.
Meanwhile, sources privy to the development told Republica that banks are reluctant to invest in the project. “But the developers are trying to get financial sources for the project," a source said.
Himal Hydro, which has already developed more than a dozen small hydropower projects, including Tinau Hydropower (1 MW) and Tatopani Small Hydro Project (2MW), has already completed environment impact assessment (EIA) study of the project.

DoED may develop Budi Ganga hydro project

he government is mulling over handing over the task of implementing Budi Ganga (22 MW) hydropower project to the Department of Electricity Development (DoED).
“We are preparing to hand over the task of implementing the project to the DoED through the fiscal policy for the upcoming fiscal year 2013/14,” an official at the Ministry of Energy (MoE) told Republica on Friday.
This is the first time that the department, which has been assigned the task of issuing hydropower licenses, is getting the task of implementing a hydropower project after Nepal Electricity Authority (NEA) came into being.
“Few months ago, we had submitted a proposal to the ministry requesting it to give us project implementation task as well,” Madhu Prasad Bhetwal, senior divisional engineer at the DoED, said. “The project will be handed over to us once the government adopts the policy of investing on hydropower projects on its own through the fiscal policy for 2013/14.”
The government has decided to seek loan assistance from the Saudi Fund for Development (SFD) and Kuwait Fund for Arab Economic Development (KFAED) to implement the project that is estimated to cost around US$ 55 million.
The SFD has agreed in principle to provide loan assistance to the government for the project. "The government signed $18 million loan assistance agreement for the project with KFAED in March,” added Bhetwal.
The government is yet to allocated funds for the project based in Achham district in the far-western region.
“If everything goes as planned, the government will allocate necessary amount for the project in the upcoming budget,” said Bhetwal.
The project is among the many hydropower projects identified under the medium-scale hydropower project study conducted in 1998. The DoED aims to complete the project by 2019.
“We will conduct environment impact assessment (EIA) study once the project is formally handed over to us," Bhetwal said.
However, sources at the energy ministry say Nepal Electricity Authority (NEA) is against the idea of allowing the DoED to implement the project. “NEA fears that if the DoED is allowed to implement projects, it will not let the former implement the comparatively better projects in terms of cost and rate of return,” an energy ministry source said, quoting NEA officials.

Industrial sector pleads for energy, favorable environment

At a time when the election-government is not in a position to make big changes in economic policies, the private sector which has been hit hard by different adversaries has high hope of getting some relief from the upcoming budget.
Finance Minister Shankar Koirala and other ministers have been publicly announcing that the government, whose prime mandate is to hold the proposed elections for the Constituent Assembly (CA), is not coming up with new populist programs like previous governments would.
But, representative organizations have been putting pressure on the government to roll out at least a few programs that will create a conducive environment for doing business by instilling a sense of confidence among business people.
As the government is working on drafting a budget for the upcoming Fiscal Year 2013/14, business people have intensified their lobbying and interaction programs with government officials to get their suggestions incorporated in the government’s upcoming policies.
Two representative organizations of the private sector, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI), have been separately holding pre-budget discussions seeking a host of incentives, including rebate in taxes as well as industrial facilities for bringing the slowing industrial sector back on track.
The business community has requested the government to increase the income tax threshold to Rs 400,000 for individuals and Rs 500,000 for families from the current threshold of Rs 160,000 and Rs 200,000, respectively.
Additionally, CNI has asked the government to scrap the additional 40 percent tax that is imposed on corporate firms having disposable income of more than Rs 2.5 million. “Our request is to make Nepal a country with low income tax so that business can flourish. Though the government is mandated mainly with holding the upcoming election, it must try to address the problems facing the Nepali private sector,” Hari Bhakta Sharma, the vice-president of CNI said in a pre-budget discussion.
The government itself has formed a committee at the Ministry of Industry (MoI) to come up with recommendations that can be instrumental in stimulating economic activities and boosting investment in the country. The committee led by the chief of Industrial Promotion Division (IPD) at the MoI has submitted a proposal to the government with a bundle of recommendations.
Finance Minister Koirala is been publicly making clear that the government will focus on energy, infrastructure, agriculture, tourism and export in coming fiscal year. Private sector organizations have demanded government support for reviving the industrial sector. “We request that the government provide a 50 percent grant to install an alternative energy plant in the firms that have been badly hit by the acute power shortage,” reads the written suggestions that CNI has presented to the government.
The businessmen have also put forth their suggestions on infrastructure development, export promotion, customs duty revision, VAT reform, financial sector management and the capital market.
The first and only Forbes billionaire Binod Chaudhary, who is also President Emeritus of the CNI, has suggested the government to not just focus on revenue collection.
“The government should put more effort on increasing development expenditure in the country so that economic activities would happen,” Chaudhary said. “Our economy is heavily dependent on remittance and revenue, which is not good for prosperity in the long run.”
Meanwhile, businessmen have also asked the government to introduce multiple VAT rates. Among other demands, industrialists have requested for different customs duty rates on import of raw materials and finished products. “It’s unfair to pay the same rate on import of raw material and finished products,” Sharma said.
Finance Minister Shankar Prasad Koirala has clarified that the government would not change the threshold of VAT. “It would not be possible to introduce a multiple-VAT system in the budget for upcoming fiscal year,” Koirala said.
Highlighting the importance of having adequate power available for industrial development in the country, Koirala said the government would allocate a substantial amount of budget in developing transmission lines to evacuate power from the hydropower plants. “The government, through the budget, will also push for signing power purchase agreements (PPAs) for different small, medium and large-scale hydropower projects,” Koirala said, interacting with the businessmen.
MoI, which is assigned to facilitate industrial development in the country, has also suggested that the government take different measures to uplift industrial advancement. “The MoI has recommended that the government announce subsidies and waive-off income tax and rebate VAT in a bid to leverage industrial development and attract fresh investment from the private sector,” Bishnu Dhakal, under secretary at MoI said.
The committee at MoI has also asked the government to provide subsidy on seeds to jute farmers. Other suggestions include: provision of VAT rebate for dairy firms, customs duty waiver on imports of machines by small and cottage industries and subsidized loan to factories aiming to substitute import of meat and meat products.
The moribund economy that desperately needs sufficient power has been announced as a first priority of the govern-
ment and businessmen are looking for it.

MoI makes slew of recommendations for upcoming budget

The Industry and Investment Promotion Sub-Committee (IIPC) at the Ministry of Industry (MoI) has made slew of recommendations to the Ministry of Finance (MoF) to incorporate in the budget for the fiscal year 2013/14.
“The IIPC has, among others, recommended to the government to announce subsidies and waive off income tax and VAT in a bid to give leverage to industrial development and attract fresh investment in infrastructure development,” Bishnu Dhakal, under secretary at MoI, told Republica on Tuesday.
The IIPC has asked the government to provide subsidy on seeds to jute farmers. Other suggestions include provision of VAT rebate for dairy firms, customs duty waiver on imports of machines by small and cottage industries, and subsidized loan to factories aim to substitute import of meat and meat products.
Similarly, the IIPC also requested to the government to allow sick industries to sell property pledged as collateral to get bank loans and slap one percent customs duty on import of machines used for measuring standard and quality of goods and import of coal by cement factories.
Dhakal said the IIPC, however, has suggested that the government increase customs duty on import of clinker by cement factories. “The MoI wants the domestic cement factories to source raw materials locally,” he added.
The IIPC has suggested that the government waive off income tax for firms operating inside IT Park in Banepa and Special Economic Zones different parts of the country. It has also proposed VAT rebate for firms that utilize garbage to produce different goods.
Likewise, the IIPC has asked the finance ministry to provide discount on income tax to firms that process medicinal herbs.

Govt, ADB, WB prioritize investment in energy sector

Realizing that acute power shortage is affecting people´s daily life and inflicting huge loss on industrial sector, the government, Asian Development Bank (ADB) and the World Bank (WB) have put investment in hydropower sector in their first priority.
“Investment in hydropower sector is the top priority of the upcoming budget for fiscal year 2013/14,” Finance Minister Shankar Prasad Koirala told Republica about a week ago while interacting with a team of business journalists from Nepal Republic Media.
Asian development Bank (ADB), a multilateral development partner working in the Asia-Pacific region, has declared that its first priority will be in the energy sector in the coming days. "Our priorities have been changed; we are totally focused on the energy sector in Nepal," Kenichi Yokoyama, country director of ADB Nepal Resident Mission, said at a program organized in the capital last week.
The ADB, which is currently working on identifying viable hydropower projects for investment, has already decided to invest US$ 150 million in Tanahun Hydropower project (140 MW) -- the second reservoir type project in the country after Kulekhani.
Moreover, the Manila-based multilateral lender is also pushing for reforming and restructuring of the Nepal Electricity Authority (NEA) - the state-owned energy monopolist.
“ADB´s country strategy paper (CSP) has put energy sector in the first priority. Development of transmission lines and distribution of power is more important," Yokoyama said in his keynote speech delivered in a seminar on ´Wind Energy Development and Use: Nepalese Perspective´ in Kathmandu last Friday.
Similarly, the World Bank has also hinted that it is interested to invest in the energy sector. The World Bank´s investment in the development of cross-border transmission lines, especially in 400 kV Dhalkewar-Majjafarpur transmission line, speaks volumes about its interest in the energy sector.
The government also has also said that it would allocate substantial amount of budget in development of transmission lines in the country to evacuate power generated by different hydropower projects.
“The government will encourage private sector to invest in the hydropower sector by developing adequate infrastructure to evacuate power generated by their projects,” Finance Minister Koirala said.
Meanwhile, Minister Koirala also said that the government would expedite the process of signing power purchase agreement (PPA) with different hydropower projects.
At present, the government has put around 52 hydropower projects with total installed capacity of more than 4000 MW in its priority basket.
"The government is ready to invest in these projects on its own,” Gokarna Raj Pantha, senior divisional engineer at the Department of Electricity Development (DoED) said. "It can hand over these projects to the private sector, including domestic and foreign investors, if need be."

PDA talks with GMR on two mega projects ongoing

The government is holding project development agreement (PDA) negotiations with GMR, an Indian infrastructure developer, for two large scale hydropower projects, namely 900 MW Upper Karnali and 600 MW Upper Marsyangdi.
Nepal Investment Board (NIB), a high level government entity that facilitates the implementation of large scale infrastructure projects (of 500 MW and above), is engaged in the PDA negotiations with the developer since last week.
"A taskforce comprising members from NIB, British legal consultant firm Herbert Smith, and the developer has been formed to sort out some of the issues that have been raised during the first round of negotiations," a high level source told Republica.
According to the source, the taskforce has been given two weeks to identify a common point that both the government and the developer can agree on. "The taskforce that has been having its meeting in a row has already spent almost a week," the source revealed.
NIB, which was formed almost one and half years ago in a bid to carry out the implementation of large scale projects in fast track mode, has formed a PDA negotiation team with Radhesh Pant, NIB chief executive officer as coordinator. Other members of the team include representatives from the Ministry of Energy (MoE) and Ministry of Finance among others.
"PDA talks are going on," Keshav Dhwaj Adhikari, joint secretary at the MOE, who is also a member of the team, said declining to divulge the details. "We are not allowed to talk to the media."
The government had allowed GMR Upper Karnali Hydropower Company and Himtal Hydropower Company - subsidiaries of GMR - to increase their capital and set up offices in New Delhi in December 2012.
GMR, which has applied for power generation license of Upper Karnali, has not signed the project negotiation agreement (PNA) so far. NIB has been asking GMR to sign the PNA for the last one month. Normally, PDA is signed within 18 months of signing a PNA.
The survey license that the government granted to GMR for Upper Karnali in May 2008 expired in last May. The developer should apply for a power generation license if it wants to secure the project in hand.
Similarly, the two subsidiaries of GMR have increased their authorized and issued capital from Rs 450 million to Rs 1.9 billion for each of the companies.
Additionally, NIB is also working to start PDA talks with Sutlej Jal Vidyut Nigam, another Indian state-owned power developer, for 900 MW Arun III. According to a source close to the developer, Sutlej is arguing that it does not want to sign PDA as it is an Indian government-owned company.

SN Power looking for clients to sell power

SN Power, which is developing Tamakoshi III (650 MW) hydropower project, has started looking for potential clients after the government declined to ensure market for the energy generated by the Dolakha-based project.
“The Norwegian power developer has started negotiation with the Nepal Electricity Authority (NEA) after the Investment Board Nepal (IBN) said that that the government wouldn´t provide sovereign guarantee for the project," a source privy to the development told Republica.
The IBN and SN Power held first round of power development agreement (PDA) negotiation for Tamakoshi III a couple of weeks ago.
Meanwhile, the SN Power is also working on exploring potential clients in India to sell generated by the project as some Norwegian firms are involved in development of transmission lines in India, the source further revealed.
However, the SN Power is pushing to get sovereign guarantee for the project as it would not be able to export energy to India because of the absence of sufficient cross-border transmission lines.
“The issue of power trade agreement (PTA) between Nepal and India becomes crucial here,” a government official involved in the PDA negotiation with the SN Power shared.
The IBN has said that it would also try to find out potential client for the energy that the project will generate.
"But, IBN has made clear that it would not be able to guarantee anything that is related to power purchase agreement (PPA) with the NEA," the official said. "NEA is an autonomous body and IBN can not push for anything."
The NEA has said that it would buy the energy in dry season. "The state-owned power monopoly, however, has denied to purchase power during wet season, arguing that its project would generate sufficient energy during west season,” the source revealed.
According to the source, IBN and SN Power would sit for another round of PDA negotiation after the latter finds buyer for energy generated by the project.
The SN Power has already signed the power negotiation agreement (PNA) with the IBN. The PNA document binds developer to complete PDA negotiation with the authority concerned within 18 months of the signing of PNA.
The SN Power and IBN signed PNA more than a month ago.

FNCCI condemns NEA withdrawal

The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the apex body for the private sector, has condemned the Nepal Electricity Authority’s (NEA’s) move to bow to critics’ pressure and withdraw from its earlier decision to upgrade the capacity of the Upper Trishuli 3A hydropower project from 60 to 90.
Issuing a statement on Thursday, FNCCI said the government had to assess all aspects of the project before taking any decision.
“It is not appropriate that the government keeps changing its decision under the influence of some people,” reads the FNCCI statement.
FNCCI, which had earlier brought all major political parties together to agree on the common agenda of developing hydropower projects in the country, said government decisions should be made based on the larger interest of the nation.
FNCCI said the government should have acted in a more mature manner regarding the upgrading of the project capacity in the beginning.
“These kinds of activities send a negative message to the global market,” FNCCI said. “We urge the government, and specially the Ministry of Energy (MoE) and Nepal Electricity Authority (NEA), to be confident about its decisions and activities.”
The NEA board had decided to upgrade the capacity of the project on May 31 but then withdrew the decision on Wednesday after protest from the employees’ unions at the NEA.

Trishuli 3 'A' upgrade decision withdrawn

Following widespread criticism, the Nepal Electricity Authority (NEA) board on Wednesday withdrew its earlier decision to upgrade the capacity of Upper Trishuli 3 ´A´ from 60 to 90 megawatts.
However, the NEA board of directors has not acknowledged that the capacity upgrade decision was not in the interest of the country. “The struggle by the employees unions at the NEA disturbed normal life of the people and day-to-day operation of NEA,” reads a press statement issued after the NEA board meeting.
The NEA board had taken a decision to upgrade the capacity of the project on May 31. Following the decision of the NEA board, senior leaders of the major political parties, except UCPN (Maoist), had urged the government to revoke the decision. They had also handed over a memorandum to Chairman of the Interim Election Council Khil Raj Regmi demanding withdrawal of the decision.
Similarly, trade unions at NEA had launched series of protest programs against the capacity upgrade decision.
Earlier, NEA had published a press statement in the favor of the upgrade decision in most of the major dailies. “The decision to upgrade the capacity of the project is in the interest of the country,” reads the statement released on Wednesday. “But we have been forced to withdraw the decision due to protests by trade unions that badly hampered normal life and NEA operations.”
The run-of -the-river type project is being developed by Chinese contractor China Gezhouba Company Group at a cost of US$ 89.18 million through soft loan from Exim Bank of China.
Trade unions and leaders of various political parties had claimed that the decision involved huge corruption. “It is illegal to upgrade the project that is contracted under the EPC (engineering, procurement and construction) model,” said politburo member of the CPN-UML Gokarna Bista. “Now, the Chinese contractor should focus on developing the project on time.”

Govt enforces minimum pay for workers

The government has enforced the newly announced minimum remuneration for workers in the formal sector from Monday.
The Minimum Wage Fixation Committee, which comprises of representatives from trade unions, concerned government offices and employers, had recently fixed minimum monthly remuneration of Rs 8,000, including Rs 2,900 allowance, and daily wage at Rs 318. Before this, workers were drawing minimum salary of Rs 6,200 per month and Rs 231 per day.

Trade unions of employees at NEA cut power supply to ministers' quarters

rade unions of employees at Nepal Electricity Authority (NEA) cut power supply to ministers´ quarters in Pulchowk for two hours on Sunday as part of their protest against the NEA board´s decision to upgrade the capacity of the Upper Trishuli 3 ´A´ hydropower project from 60 to 90 MW.
“We will continue to cut power supply to the ministers´ quarters on Monday and Tuesday as well,” Ram Prasad Rimal, chairman of NEA Employees´ Union, told Republica.
All four trade unions of employees at NEA -- NEA Employees Association, NEA Employees Union, NEA Employees Council and Nepal National Employees Association - are protesting the decision.
The unions on Saturday turned away the NEA management´s proposal for talks. They reached the talk venue on Sunday only to find the coordinator of the board´s talk team absent.
“Our demand is clear. We won´t withdraw protest until the NEA board scraps its decision to upgrade capacity of the project,” added Rimal.
The run-of-the-river project, which is being developed by Chinese contractor China Gezhouba Group Company Limited, is courting controversy after the NEA board decided to upgrade the capacity by violating the existing rules.
Meanwhile, NEA employees staged pen down protest in NEA head office on Sunday.

NECT-HYM loses Kali Gandaki Gorge hydro project

The 164 MW Kali Gandaki Gorge hydroproject has slipped from the hands of NECT-HYM after it failed to get power generation license from the Department of Electricity Development (DoED).
The Department of Electricity Development (DoED) on Sunday wrote a letter to NECT-HYM, notifying it about the cancellation of its application for generation license.
“The company failed to demonstrate strong financial sources to develop the project. It also couldn´t prepare a satisfactory environment impact assessment (EIA) report for the project," Gokarna Raj Pantha, senior divisional engineer and spokesperson at the DoED, told Republica.
The company had also approached the department for project development agreement (PDA).
"But it hadn´t paid application fee for PDA negotiation,” Pantha said. “We can´t issue generation license before the EIA study is completed.”
The government decision to cancel application license for power generation has pushed the Rs 25 billion-project into uncertainty.
"We are hopeful that other genuine developers will come up with strong financial sources to develop the project," Pantha said.
The project based in Mustang and Myagdi districts needs to develop 155-km 220 kV transmission line to connect the power generated by it to the national grid.
"There developer has no proper plan for the transmission line as well," added Pantha.
Hydro Solution, a domestic firm, was supported to provide assistance to develop the project. Gyanendra Lal Pradhan, chairman of the Hydro Solution, said investors from India, USA and Canada are interested to put their money in the project.
As a part of discouraging the trend of holding license of hydropower projects but without intention of developing them, the government raised the survey and generation license fee in November.
“The upward revision in survey and generation lice
nse fee has helped us identify the genuine developers,” said Pantha

ADB shows interest to invest in Sunkoshi II, III hydro projects

After providing soft loan worth US$150 for the development of reservoir-type 140-megawatt Tanahun hydropower project, the Asian Development Bank (ADB) has expressed interest to invest in development of two large hydropower projects, namely, Sunkoshi-II (1,110 MW) and Sunkoshi-III (536 MW).
´A team of the ADB completed field studies of the two projects this week,´ a source at the Department of Electricity Development (DoED) told Republica on Saturday. ´The ADB and the DoED are also holding preliminary-level discussions on development of the projects.´
According to the source, the DoED had shared proposals of the two projects with the ADB few weeks ago. ´Since then, the ADB has conducted field studies,´ the source said.
The source also informed that the investment modality and loan amount for the two projects based in Ramechhap district would be finalized in the near future.
Confirming the development, Gokarna Raj Pantha, senior divisional engineer and spokesperson at the DoED, said the ADB has principally agreed to develop the projects.
´The DoED and the ADB will sit for negotiations in the near future,´ Pantha said. ´The ADB is also interested in investing in the renewable energy sector in the region.´
The government has included Sunkoshi-II and Sunkoshi-III projects in its Hydropower Master Plan. Both the projects are classified as run of the river.
The ADB, which has already expressed commitment to extend a soft loan to develop Tanahun hydropower project, has said it would be interested in increasing its investment in the country"s hydropower sector, according to Pantha.
Meanwhile, the government has started conducting studies of eight other projects. These projects include: Bheri Babai (48 MW) in Surkhet, Budhi Ganga (22 MW) in Accham, Chepe Khola (8.27 MW) in Lamjung, Dotighad (5.78 MW) in Dadheldhura, Ikhuwa Khola (8.1 MW) in Shankhusawa, Kabeli-III (12 MW) in Taplejung, Madi Khola (12.25 MW) in Rolpa and Nalsyaugad (400 MW) in Jajarkot.

NEA unions protesting Upper Trishuli 3A upgrade reject talks

The four employees union of the Nepal Electricity Authority (NEA) that have launched protest against the NEA decision to upgrade the 60 MW Upper Trishuli 3A Hydropower Project to 90 megawatts refused to sit for talks with the NEA management Saturday. The unions say they will not stop the protests until the upgrade decision is scrapped.
´We have just one demand and the NEA management cannot fulfill it,´ Ram Prasad Rimal, chairman of the NEA Employees Union, said. ´We demand that the decision to upgrade the project should be scrapped.´
The four employees" unions launched protest last Friday. ´We want to make it clear that talks are not necessary. The government can simply scrap the upgrade decision and we will immediately end protest and resume work,´ Rimal said.
The NEA management had invited the unions for dialogue regarding the NEA board"s decision to upgrade the capacity. ´The management said that it wanted to provide us additional information regarding the upgrade decision but we are not interested,´ Rimal told Republica on Saturday.
´We have further intensified the protest programs as the government didn"t listen to our demand so far,´ Rimal said.
The four employees" unions include: NEA Employees Association, NEA Employees Unions, NEA Employees Council and Nepal National Employees Association.
Explaining the details of the protest programs, Rimal said they would cut power supply to the ministerial quarters in Pulchowk for two hours from 10:30 am on Sunday. ´We will also cut power supply to the NEA head office for four hours Sunday and stage pen down protest throughout the day,´ Rimal said. ´The employees" unions have decided to stage a pen down protest for four hours in all NEA offices across the country.´
The controversial decision to upgrade the capacity of the project has been criticized from various quarters including by former energy and finance ministers. Senior leaders including central committee member of the Nepali Congress (NC) Dr Ram Sharan Mahat, central committee member of NC Prakash Sharan Mahat, politburo members of CPN-UML Surendra Pandey and Gokarna Bista and senior leader of the Rastriya Prajantra Party Dr Prakash Chandra Lohani have jointly submitted a memorandum to the chairman of the interim election council Khil Raj Regmi to revoke the upgrade decision Thursday.
In their six-point memorandum, the leaders have argued why the project should not be upgraded. ´The project"s upgrade is not in the interest of the country,´ reads the memorandum. ´Upgrading the project"s capacity will further deepen the load-shedding problem in the country.´
Upper Trishuli 3A is a run of the river project being developed by the NEA with China Gezhouba Group Company Limited as contractor. The Exim Bank of China has provided soft loan of US$ 89 million for the project.

Former ministers ask govt to halt upgrade

Senior leaders representing major political parties except UCPN (Maoist) have urged the government to immediately withdraw the decision to upgrade the capacity of Upper Trishuli 3 ‘A’ Hydropower Project.
Leaders, including central committee member of Nepali Congress (NC) Dr Ram Sharan Mahat, former energy minister and central committee member of NC Prakash Sharan Mahat, politburo members of CPN-UML Gokarna Bista and Surendra Pandey and senior leader of Rastriya Prajatantra Party Dr Prakash Chandra Lohani met the chairman of the interim election government Khil Raj Regmi at Singha Durbar on Thursday afternoon to exert pressure on the government to withdraw upgrade decision.
The leaders in a memorandum to Regmi have requested him to do the needful to stop implementation of the upgrade decision. The leaders have also said kickbacks were involved in the upgrade decision.
Responding to the group of leaders, Regmi assured that the government would investigate if there had been financial irregularities in the run up to the upgrade decision. “I have already asked the concerned authorities to take necessary steps to investigate the issue and halt the upgrade if any irregularities are found,” Dr Mahat said quoting Regmi.
In the six-point memorandum, the leaders have argued why the project should not be upgraded. “The project’s upgrade is not in the interest of the country,” reads the memorandum. “Upgrading the project’s capacity will further deepen the load-shedding problem in the country.”
Upper Trishuli 3A is a run of the river project being developed by the Nepal Electricity Authority with China Gezhouba Group Company Limited as contractor. The Exim Bank of China has provided soft loan of US$ 89 million for the project.

File on Upper Trishuli 3A upgrade at CIAA

The Commission for the Investigation of Abuse of Authority (CIAA) has finally spoken on the government’s controversial decision to upgrade the capacity of the 60 MW Upper Trishuli 3 ‘A’ Hydropower Project to 90 megawatts.
According to a source close to the Ministry of Energy (MoE), the CIAA has written to the ministry on Wednesday seeking details of the January 3 cabinet decision that decided in principle to go for an upgrade.
“Please, send a copy of the cabinet decision of January related to Upper Trishuli 3 ‘A’ to the CIAA,” reads the CIAA letter sent to the ministry. Following the CIAA request, the ministry sent a copy of the cabinet decision to the CIAA.
“The ministry has replied to the CIAA on Thursday,” the source revealed.
The source further disclosed that Energy Minister Uma Kant Jha and Energy Secretary Hariram Koirala had held a meeting with CIAA chief Lok Man Singh Karki before the NEA board of directors last week endorsed the cabinet decision. Minister Jha is also the chairman of the NEA board.
Both Secretary Koirala and Minister Jha when contacted by Republica refused to comment on the meeting.
“Based on the information I have, the decision to upgrade the capacity of the project was made after receiving CIAA’s nod,” the source said. “Despite giving nod to the upgrade decision, the CIAA has sought details of the cabinet decision.”
Baburam Bhattarai was prime minister when the cabinet in January decided to upgrade the project.

Leaders to discuss Trishuli 3 'A' with Regmi

Top leaders of the major political parties, except UCPN (Maoist), are meeting Chairman of the Interim Election Council Khil Raj Regmi, on Thursday to draw his attention to the recent decision of Nepal Electricity Authority (NEA) to upgrade the capacity of Upper Trishuli 3 ´A´ hydropower project from 60 to 90 megawatts.
Leaders, including central committee member of Nepali Congress (NC) Dr Ram Sharan Mahat, former energy minister and central committee member of NC Prakash Sharan Mahat, politburo members of CPN-UML Gokarna Bista and Surendra Pandey and senior leader of Rastriya Prajatantra Party Dr Prakash Chandra Lohani have decided to meet Regmi to exert pressure on the government to withdraw the NEA board´s decision to upgrade the capacity of Trishuli 3 ´A´.
“This is a wrong decision and apparently involves huge kickbacks,” Mahat said. “We won´t let the government move ahead with the decision that would cause a loss of more than around Rs 8 billion.”
The controversial decision that was initially made by the Baburam Bhattarai-led government had received a final nod from the NEA board last week. “This indicates collusion of corrupt government officials, NEA officials and the Chinese contractor,” Mahat claimed. “The ministers involved in endorsing the decision are also involved in influencing the NEA decision.” Energy minister Uma Kant Jha, who is also the chairman of the NEA board refused to comment on the issue with Republica.
Mahat, who has remained firm against upgrading the project from 60 to 90 megawatts, categorically outlined the major reasons on why the project should not be upgraded. “First, this decision will further deepen the problem of load-shedding in the country. Second, the project would generate additional 30 megawatts electricity only during the wet season,” Mahat explained.
The run of the river project is being developed by China Gezhouba Group Co with soft loan worth US$ 89 million from the Exim Bank of China. “The contractor had agreed to upgrade the 60 megawatts project to 90 megawatts for an additional 25 percent cost. But it has now quoted an additional 50 percent cost,” said Mahat.
The Bhattarai-led government was in favor of upgrading the project after the Chinese contractor informed NEA that it would upgrade the project at the total cost of US$ 132 million.
The project was awarded to the Chinese contractor under the EPC (engineering, procurement and construction) model. EPC contractors should carry out detailed engineering design of the project, procure all equipment and materials necessary and then construct to deliver a functioning facility.
“The project variation that the NEA board has approved is against the EPC model,” Mahat said. “This is a blatant violation of the existing laws related to hydropower development.”
Earlier, the Ministry of Energy (MoE) had formed two committees to study whether it would be appropriate to upgrade the project capacity. Both the committees had suggested to the government not to upgrade the project capacity saying it would inflict huge losses to the country.
The Supreme Court, responding to a writ petition against the Bhattarai-led government´s decision to upgrade the project, had said that the NEA board would take a final decision regarding the issue. But the NEA board again sought suggestion from its management on whether or not to approve project upgradation. The NEA management had recommended upgrading the project capacity.

Cabinet puts proposal to declare four firms as sick on hold

The cabinet has put the industry ministry"s proposal to give "sick industry" status to four firms on hold, stating that the firms do not meet the criteria.
The Ministry of Industry (MoI) a few weeks ago recommended to the government to give "sick industry" status to Birat Leather, Birat Shoes, Shree Nepal Boarders and Basulingi Private Limited.
“The cabinet declined to give "sick industry" status to those firms stating that they do not meet the criteria set in Industrial Act 1992,´ an official at the MoI said. “The cabinet has put the proposal on hold.”
The Industrial Act 1992 states that only the industries which have incurred loss for five consecutive years and are still in operation shall be given "sick industry" status.
“None of the recommended four industries are in operation,” the official added.
Confirming the development, Krishna Gyawali, secretary at the MoI said the cabinet has neither endorsed the proposal not has asked the ministry for further information about the firms. “I have briefed Minister for Industry Shankar Koirala on the exact situation of the four firms,” added Gyawali.
The government"s attempt to revive sick industries had failed in the past as well due to confusion over criteria.
“This time also the cabinet couldn"t take any decision on sick industries because of the criteria,” the official at MoI said.
According to the industry ministry, a total of 37 firms had applied at the Industrial Promotion Division (IPD) to get "sick industry" status. The ministry had formed a technical committee under the leadership of chief of the IPD to conduct study on those firms.
After conducting field study and due diligence auditing of all the firms, the committee had recommended to the ministry to forward the name of four firms to the cabinet.
The government had announced programs to provide relief package to sick industries through its Immediate Relief Program 2011/12. The MoI was assigned to identify actual number of sick industries upon submission of a report in 2011 by the Sick-industries Rehabilitation High Level Task Force (SIRHLTF) that laid emphasis on revival of sick industries.