Electricity and gas, which comprise about two percent of the GDP, emerged as the highest growth sectors in fiscal 2000/01. The growth in this group was over 19 percent and the trend is expected to remain bullish as new hydro-projects begin to supply to the central grid. Of the projects under construction, the 144MW Kali Gandaki project is expected to come on line later this year.

Meantime the Khimti I Hydropower Project (KHP) completed its first year of operation on 11 July. The KHP (60MW), the first private investment in hydro, is a project of Himal Power Ltd (HPL), a Norwegian-Nepali undertaking, which has a 20-year Power Purchase Agreement with the NEA. Butwal Power Compnay is the Nepali investor in the project.

Khimti sells electricity to the NEA at a little over 6 US cents (about Rs 4.5 ca) per kW, among the best prices a private company gets in Nepal, for all electricity generated?including flood energy during the monsoons. HPL says the high cost is because of its cost of funds?almost 70 percent on loan. The NEA says Khimti got a good deal because it came at a time where there were no other means to meet the increasing demands after the World Bank cancelled the controversial Arun-3, the only project under development before Khimti came along.