The Parliamentary Committee on Natural Resources (PCNR) has asked the government to revise the memorandum signed with the China Three Gorges Corporation (CTGI) to develop the West Seti project. The committee has also asked the Energy Ministry to hand over the project to the Electricity Investment Board.

The Ministry had signed MoU sidelining the board on 29 February and later clarified that the board had not come into full operation when the deal was signed. The board was formed one year ago to provide one-window solution to potential investors in mega project and as per the Investment Board Act, hydro project of 500MW and above has to be executed thought the board.

Radhesh Pant, CEO of the board, told the parliament committee last week that the board was ready to take the project ahead. However, some are skeptical about the resources required to handle the project.

The committee report has listed a number of areas where it wants the government to make changes before finalising the project deal. “We want it to be a multipurpose project with priority to development of the project sites and the vicinity,” said committee member Abhishek Pratap Sah.

The report has recommended Nepal be given up to 49 percent equity share of the project instead of current 25 percent equity. The CTGC has agreed to give up to 5 percent equity to locals out of its 75 percent equity, meaning Nepal will have 30 percent equity under current provision.

“We have recommended 10 percent equity be given to locals and 14 percent equity to different organizations working in the energy sector,” said another member Dharma Raj BK. But it looks financially unfeasible for Nepal Electricity Authority (NEA) as well as locals to manage USD 1.6 billion for the project. However, CTGC has promised to help NEA find a soft loan for to fund its 25 percent stake.

The report has recommended the power purchase agreement (PPA) be done in Nepali currency as far as possible so that the fluctuating rate of exchange could be checked. It has also asked the government to come up with details on energy utility and transmission line.

According to the committee Chairperson Shanta Chaudhary, the report will be tabled in the full meeting of the PCNR on 1 April. “The next meeting will make necessary changes and endorse the final recommendation.” she said.

Dewan Rai