Changed landscape of hydro sector

The government increased the application fee for survey license of hydroelectric project in October 2012 aiming to curb the growing proclivity of holding licenses of projects by developers. The news that highlights the issuance of 13 new survey licenses: 

• The Department of Electricity Development (DoED) issued 13 new survey licenses for different hydropower projects with installed capacity of 715.15 MW in the last six months.
  The licenses were extended after the department revised the survey license fee structure from a range of Rs 50,000 to Rs 200,000 in the past to Rs 1 million to Rs 6 million in October 2012.

The immediate effect of that policy change has been reflected in the number of application that come in the Department of Electricity Development (DoED).

Energy ministry opposes govt attempt to empower NIB

Protesting the government preparation to delegate more authority to the Nepal Investment Board (NIB) to enable it to handle mega projects independently, the Ministry of Energy (MoE) has written to the Office of the Prime Minister and Council of Ministers (OPMCM) to rethink the move.
The OPMCP in preparation to forward a proposal to the cabinet to empower the NIB has been collecting comments from different line ministries.
The OPMCM has received a letter from the MoE, which has clearly urged the government to rethink its move stating that NIB lacks necessary human resources and expertise to independently handle hydropower projects of above 500 megawatts.
"The letter from MoE explicitly asks us to do a rethink before submitting a proposal -- that will delegate more authority to the NIB to handle mega projects -- to the cabinet for approval," a high level official at the OPMCM said in condition of anonymity.
The OMPCM had sought comments from all the concerned ministries before submitting a proposal to delegate authority to the NIB to facilitate implementation of 14 select projects including five mega hydropower projects, namely, Tamakoshi III (600 MW), Upper karnali (900 MW), Upper Marshyangdi (600 MW), Arun III (900 MW) and West Seti (750 MW).
The source, however said, other ministries have not shown any strong reactions regarding the proposal to strengthen NIB. "However, the MoE has asked the OMPCM to rethink before taking any decision stating that it would weaken the government´s implementation capacity regarding mega projects if more authority is delegated to NIB, which is lacking in institutional capacity," the source further revealed.
Meanwhile, officials at the MoE said that handing over projects to the NIB would not be practical without boosting its its capacity and human resources. "NIB doesn´t have technical know-how, lacks in institutional capacity and required human resources, whereas the ministry has experience of 30 years in implementing hydropower projects besides a department, Nepal Electricity Authority (NEA) and qaualified human resources under it," a high level official at the MoE told Republica.
"There should be tremendous improvement in NIB´s institutional set up and human resources capacity if it wants to capacitate itself to implement mega projects. It will be a mistake if the government decides to ignore the institutioanl capacity of the MoE and delegate more authority to a new-born institution," the official said.
NIB, set up under the Investment Board Act- 2011, has long been seeking more teeth to handle mega projects independently.
The government in May last year had handed over 14 mega projects such as Second International Airport in Nijghad, Kathmandu-Tarai Fast Track, Project to upgrade and manage Tribhuvan International Airport (TIA), Waste Management Project, Fertilizer Company and the aforementioned five hydropower projects among others.
However, Tulsi Prasad Sitaula, secretary at the Ministry of Physical Planning, Works and Transport Management (MoPPWTM) said that the ministry has no objection if NIB finds investors for project development. "But NIB is not the implementing agency for the selected projects," Sitaula said.

NEA to hold talks with Rahughat project developer

The Nepal Electricity Authority (NEA) has formed a high-level committee to hold dialogues with IVRCL Infrastructures & Projects Ltd, an Indian company that bagged the contract for developing Rahughat Hydroelectricity Project (32 MW), but has stalled works demanding upward revision of costs.
"We study the situation and hold dialogues with IVRCL," said Managing Director of NEA Rameshwore Yadav, who is heads the committee formed to hold talks with the Indian company. "We will also study whether such projects benefit NEA."
The four-member committee that will hold dialogues with IVRCL also has the mandate to decide whether or not to revise the cost of the project, according to NEA officials. “I can´t say anything now but we may have to make an upward revision of costs if we want project to complete," an official from NEA said on condition of anonymity.
NEA, which is developing Rahughat with soft loans from Exim Bank of India, is also mulling to stop developing small scale projects. "We are thinking not to handle projects with the capacity of less than 100 MW," Yadav said. "These kind of small projects only kill the time and resources of NEA."
IVRCL has halted the project works for a month demanding cost adjustment with increased prices. The project was awarded to IVRCL in November 2010 and was expected to complete in 42 months. “We think it too late now to make a cost adjustment," Yadav said.
According to NEA officials, the government had signed a contract agreement worth Rs 2.5 billion with IVRCL. "IVRCL is pressing us for cost readjustment two years after signing the contract agreement. This is not ideally acceptable," an official of the project said.
The locals have pushed for early completion of the run-of-the-river project is based in Myagdi -- a hilly district in mid-western part of the country. "This is completely an issue between NEA and contractor IVRCL," Dilip Poudel, Republica´s Baglung based reporter said over phone. "Locals want this project to be completed on time."

Locals for speedy development of Budi Gandaki project

Locals from Gorkha and Dhading have urged the government to speed up the implementation of the 600MW Budi Gandaki project and promptly commence processes for carrying out the feasibility study of the reservoir-based hydroelectricity project. 

The locals pushed for the early implementation of the project during their meeting with Prime Minister Baburam Bhattarai on Saturday. On the occasion, they expressed concerns over government´s reluctance in calling bid for the feasibility study. 

“We expressed our concerns with the prime minister and urged him to take immediate action to speed up the work of the project,” said Ram Chandra Poudel, a local who was also present at the meeting with PM. 

Responding to the locals, PM Bhattarai said the project was very important for the socio-economic development of the country and the government was committed to executing the project. 

“We have already included it among the national-pride projects. We will soon take necessary steps to develop it,” Poudel quoted PM as saying at the meeting. 

Budi Gandaki is one of the mega hydropower projects of the country which was identified almost 30 years ago in 1983. But the government had not taken any initiatives for developing the project as construction as well as resettlement and rehabilitation of people living in 23 VDCs in Gorkha and Dhading required a huge fund. 

Nonetheless, Budi Gandaki had received applications from 24 firms for conducting feasibility study of the project.

"Of them, we have shortlisted six companies, inlcuding firms from the US, Germany, Italy, France and Australia for carrying out the task," said Lila Nath Bhattarai, director of the project. 

The project office has already forwarded the list of short-listed firms to the government, requesting it to select one of them for the task.“"We hope the government will soon take a decision,” he added.