China and Australia will invest in the $1.2 billion and 750 megawatt West Seti project in western Nepal, a Chinese embassy official in Kathmandu was quoted by Xinhua as saying last week. "The construction of the project, is likely to begin in the coming dry season," Ma Dongsheng, second secretary of the embassy's economic and commercial counsellor's office, told Xinhua. The government awarded the contract to the Snowy Mountain Engineering Corporation (SMEC) of Australia in 1994 but was stuck because of delays in negotiations with sale of power to India. The project is expected to be completed by 2010 if it starts this year.

Now, Ma said, the China National Machinery and Equipment Import Export Corporation and the SMEC will invest 70 percent and 30 percent respectively for the project. The Chinese and Australian investors have already signed an agreement, and they have to get a production license from the Nepali government to start the project. West Seti is Nepal's first export-only project and the Power Trade Corporation of India will buy the electricity at 4.95 cents per unit.