The government on Tuesday took more than half a dozen decisions related to hydropower, including allowing GMR Upper Karnali Hydropower Company Limited and Himtal Hydropower Comapny -- subsidiaries of Indian power developer GMR-- to increase their capital and set up offices in New Delhi, India.
Nepal Investment Board (NIB), a high-level government entity chaired by Prime Minister Dr Baburam Bhattarai, met Tuesday morning and decided to renew the survey license for GMR for its Upper Karnali project (900 MW) for another six months.
The government had first granted a survey license to GMR for the Upper Karnali in May 2008. "GMR had sought a one-year extension of the survey license," a high-level government official said. "But the existing law bars that."
Likewise, the meeting has allowed GMR Upper Karnali Hydropower Limited and Himtal Hydropower Limited to established in Nepal to develop the Upper Karnali and Upper Marsyangdi (600 MW) respectively and increase their authorized and issue capital from Rs 450 million to Rs 1.9 billion for each company.
The companies had sought government approval to increase their capital investment after they increased their project capacity.
According to information compiled at the Department of Energy Development (DoED), the capacity of Upper Karnali has increased from 300 to 900 MW and that of Upper Marsyangdi from 250 MW to 600 MW.
"The meeting decided to allow them to increase their capital to cover the increased capacity of the projects," the official told Republica.
IBN, at its meeting scheduled after a long time, has decided to allow Sutlej Jal Vidyut, a state owned Indian power producer, to bring in new equity shareholders and extend the time for doing so. Sutlej, which is developing the Arun III (900 MW) hydropower project, has been seeking new equity shareholders to develop the project.
According to the government official, Sutlej and GMR had both sought approval to establish offices in Delhi to work on marketing their hydropower once they come on stream. Both companies, which are engaged in the generation of a total of 2400 MW in Nepal, have targeted the Indian market for their future power output.
Additionally, the government has granted Himtal Hydropower Limited permission to start land acquisition verification (LAV) at the project site for Upper Marsyangdi in Lamjung and Manang districts.
"The company had requested permission to conduct LAV at the project site and this was granted," the official said.
Meanwhile, the government recently approved the environment impact assessment (EIA) report for the Upper Marsyangdi project prepared by GMR.
The government has awarded three mega hydropower projects -- Upper Karnali and Upper Marsyangdi to GMR and Arun III to Sutlej -- under the build-own-operate-transfer (BOOT) scheme.
Sunday, December 30, 2012
Govt okays capital increase for GMR subsidiaries
GMR seeks to inject Rs 1.45b more in Upper Marsyangdi
GMR, the Indian power developer, has sought approval for injecting additional Rs 1.45 billion investment into the 600-MW Upper Marsyangdi Project after the government okayed the environmental impact assessment (EIA) report of the project prepared by the company.
"The Ministry of Environment, Science and Technology (MoEST) has approved the EIA report of the project on Monday and has forwarded it to the Investment Board of Nepal (IBN)," said a source close to the Office of the Prime Minister and Council of Ministers (OPMCM).
According to the source, GMR has sought approval from the government to bring in new investment worth Rs 1.45 billion for Upper Marsyangdi. GMR has earlier injected Rs 450 million into the project.
The company will get generation license of the project from the government only after it discloses financial closure of the project cost. The additional investment that the company is preparing to inject has no connection with the project´s financial closure.
Confirming the development, Keshav Bhattarai, secretary at MoEST, said the EIA report of Upper Marsyangdi has been approved. "We have forwarded it to the concerned agency for further execution," Bhattarai told Republica.
IBN, a high-level body of the government entrusted to carry out mega projects including hydropower projects of above 500 MW, will soon inform GMR about the development.
A source privy to the issue informed Republica that the IBN secretariat will take a decision on GMR´s application. "The board meeting has been scheduled for next week. The meeting will take a decision on approving the additional investment and other related issues," the source said.
Moreover, GMR, which is also developing the 900-MW Upper Karnali -- another of Nepal´s largest hydropower projects -- has applied for approval from the government to establish a new office in Delhi, India to manage its market for future power supply. GMR has targeted the Indian market to sell its power generated from the two projects -- Upper Marsyangdi and Upper Karnali.
"The scheduled board meeting of IBN will take a decision on it as well," the source further revealed.
The government has given the Upper Marsyangdi Project to GMR under build-own-operate-transfer (BOOT) act. GMR has been commissioned to complete the project by 2016.
Construction of the run-of-the-river project located in Lamjung and Manang districts will begin after the company discloses its financial closure successfully.
GMR, which has been frequently threatened by the CPN-Maoist, has asked for adequate security at the project sites from the government.
CPN-Maoist threat worries GMR
Indian power developer GMR, which is also the promoter of the 900MW Upper Karnali Hydropower Project, has expressed grave concern over the recent decision of the CPN-Maoist to launch “ "strugg”e" against projects being developed by Indian companies.“
"GMR has expressed its concern in writing," a source at the prime minister´s office told Republica, adding the Indian company has asked the government to pay serious attention to the CPN-Maoist decision and provide adequate security at the project site. As per the agreement with the government, the Indian company has to complete the Upper Karnali Hydropower Project by 2016.
The Bheri-Karnali state committee of the CPN-Maoist has decided to form a security squad to chase away GMR officials. According to Kalendra Sejuwal, Surkhet based reporter of Republica, the state committee took such a decision to safeguard the sovereignty of the countr“. "The party has been keeping a close eye on projects that have been awarded to Indian companies," Sejuwal said quoting Bharat Bam, secretary of the Bheri-Karnali state committee of the CPN-Maoist.
Meanwhile, Pampha Bhusal, spokesperson for the CPN-Maoist said the party was totally again“t "projects that do not serve national intere”ts". She further added that the people of Karnali are against the project and that the party supports the“. "The project was awarded to GMR without competitive bidding.
Also, the company does not aim to run the project in full capacity. Upper Karnali can generate more than 4,000 MW of hydroelectricity project," she told over phone to Republica.
The GMR also has forwarded its letter to the Investment Board of Nepal (IBN). The IBN, however, has so far not responded to GMR´s concern.“
"The IBN has not yet responded as how it would protect the project from the so-called nationalists," said an official at the prime minister´s office.
Radesh Pant, CEO of IBN could not be contacted for comments despite several attempts. The government has awarded Upper Karnali Hydropower Project to GMR under the build-own-operate-transfer (BOOT) model.
Additionally, other foreign power developers also have expressed concern over the situation in the country. "Other developers have not come up with formal letters but they also share similar concerns," said the official.
Monday, November 5, 2012
Sutlej, GMR, SN Power oppose new PDA template
GMR, Sutlej Jal Vidyut Nigam Ltd (SJVN) and SN Power, three international power producers which are working on three hydropower projects with collective generation capacity of 2400 MW, have opposed the government´s new Project Development Agreement (PDA) template, saying that it does not guarantee policy consistency.
They have also raised concerns over the force majeure clause, arguing that it should be applicable not just in case of natural calamities, as provisioned in the template, but also in case of political instability and bureaucratic hassles.
The Investment Board (IB) had unveiled the template of the PDA in June as its basis for negotiations with international power developers.
However, the three developers said they have strong ´reservations´ about the PDA template. "Its provisions are weak and unacceptable," an informed source quoted the senior officials of the three firms as saying during their meetings with IB officials.
During the meetings, they even asked the IB not to apply the template during their PDA negotiations. "Their argument is: their engagement in the country had begun long before the template was developed, and hence, the template´s provisions should not be imposed on them," stated the source.
Radhesh Pant, IB CEO confirmed the dissatisfaction of GMR, Sutlej and SN Power. "Yes, they have expressed concerns over the PDA template. But we have asked them to submit their concerns in detail and in writing so that we could discuss them officially," Pant told Republica.
However, he denied divulging any further details.
The source, however, said the developers have asked IB to categorically cite a provision warranting consistency of policies.
"The PDA template must assure that income tax and bonus provisions, among other things, would remain the same for us throughout the project period. It must guarantee that in case of any change in the rules, it would not apply to us," the source quoted developers´ representatives as saying during the meeting.
The developers have even asked IB to extend the concession period, which is their span of ownership of the projects to be developed under build-own-operate-and transfer (BOOT), to 35 years from 30 years.
"Thirty years would be inadequate to recover the project cost," the developers have told the IB, according to the source.
So much so, SN Power has even warned that it could withdraw from Nepal if IB did not agree to its ´request´. Sandeep Shah, country director of SN Power, could not be contacted for comments.
SN Power, Norwegian power producer that developed Khimti I (60 MW), is working on the project concept of Tamakoshi III (estimated 600 MW) in cooperation with Indian developer TATA Power.
Sutlej, India´s state-owned power producer, which has got approval from the government to invest Rs 82.5 billion for the development of Arun III (900 MW), too has said that it wouldn´t be able to work under the provisions of the PDA template.
"We have already invested so much in the project. The government can´t impose new provisions on us now," the source quoted Sutlej officials as saying.
GMR, another Indian power developer, is working to develop Upper Karnali (900 MW).
IB entrusted to implement hydropower projects of 500 MW and above, had even invited a three-member team of Herbert Smith, British consultant that drafted the PDA template, to Nepal from London last week to convince the developers that the template is in line with the country´s law and international practices, and hence, is ´bankable´.
However, the source said IB´s effort did not pay off. Officials from GMR and Sutlej could not be reached for comment.