Nepal and India have agreed to jointly develop the 300MW Upper Karnali hydropower project. A team from India's state-owned National Hydroelectric Power Corporation is returning next month for a site study in western Nepal. "By December, we must start work at the site," NHPC's Yogendra Prasad told us. "We intend to complete the project in five years." Already, there are hints of disagreement. Nepal's Department of Electricity Development say NHPC will be required to prepare a detailed project report of the 600MW Budhi Gandaki storage type project as a pre-condition for developing Upper Karnali. NHPC's Prasad denies this: "There is no such condition, very soon we will be signing an Memorandum of Understanding on Upper Karnali."

NHPC also constructed the 14.3MW Devighat power plant in 1993 and the 60MW Kuchu project in Bhutan. The Indian company says it can generate electricity at five cents per unit for the Upper Karnali.

If the project goes ahead, NHPC will sell electricity to India's National Power Trading Corporation, or to states bordering Nepal. "Selling the power will not be a problem at all," says Prasad. But that is precisely what stalled a 750MW Nepal-Australian joint venture reservoir project on the West Seti for the past six years. Eurorient, an American company, gave up the 402MW Arun III project just because it could not strike a deal with India. The now bankrupt Enron Corp, another American company, too was unable to sign the PPA with India for the development of the 10,800MW Karnali Chisapani hydropower project.