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Stalled again

Friday, March 9th, 2012

The parliamentary committee on Natural Resource has directed the government not to proceed with the works of West Seti hydropower project on Friday.

The committee chairperson Shanta Chaudhari said the project deal was suspicious as it was signed overnight without fulfilling legal procedure. “Energy minister could not clarify the reason behind signing the deal with Chinese company without calling for a competitive bidding satisfactorily to the committee,” she said.

The committee members criticised the government hasty decision to award the contract to China’s Three Gorges Corporation (CTGC). Saying the deal is anti-national, they demanded the agreement be scrapped and the contract be awarded through competitive bidding.

The committee has formed an 11-member probe committee for detailed study of the agreement, which is given 10 days to submit its report.

The government had signed a memorandum of understanding with CTGC last week. The construction work is set to begin from July 2014 once the company updates all technical studies carried out so far on its own.

Under the terms agreed, the reservoir project will be built for domestic consumption under a build, operate, own and transfer (BOOT) mode for a period of 35 years. The total cost of the project that generates 750MW is between $1.2 to 1.7 billion. The company has agreed to complete the project by 2019.

The project will be developed in a Private Public Partnership model with 25 per cent share of Nepal Electricity Authority and 75 per cent of CTGC. Local people will be entitled to two to five per cent share out of CTGC’s 25 per cent.

The government scrapped the licence of West Seti last year as the promoter Australian’s Snowy Mountains Energy Corporation (SMEC) pulled out from the project because of lack of fund. The SMEC had conducted a study of the project receiving fund from China National Machinery and Equipment Import and Export Corporation (CMEC) and Asian Development Bank (ADB).

Initially, the West Seti project was designed as an export-oriented project with 90 per cent of the power to be exported to India, which was opposed by locals.

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