Nepal hydel project gets fresh start with ADB loan
Apr 26, 2007 - 2:06:08 PM

Kathmandu, April 26 - A floundering mega hydropower project in Nepal, in which the Indian government had shown interest nearly two decades ago, has been given a fresh lease of life with the Asian Development Bank agreeing to lend $45 million.

The 750 MW West Seti hydropower project in inaccessible Doti district will see work resume after Nepal's new cabinet approved of the deal Wednesday, Minister of State for Water Resources Gyanendra Bahadur Karki told IANS.

With the project floundering for lack of funds, the ADB is loaning $45 million to the government of Nepal with debt contributions sought from Chinese investors, including the Bank of China and Export Import Bank of China.

China National Machinery and Exquipment Import and Export Corporation will build the project, the Kathmandu Post daily said.

It also said some Indian agencies would have equity participation.

However, Nepal Electricity Authority said the full details had yet not been worked out.

Surveys and studies on the project, which is dedicated to exporting electricity, began in 1991 when the Indian government expressed interest in putting up 60 percent of the required funding.

However, like most hydel projects negotiated between India and Nepal, the cooperation did not materialise and an Australian company, Snowy Mountain Engineering Corp -, was given the rights to promote the project on the build-own-transfer line.

Five years ago, SMEC signed a purchase agreement with India's Power Trading Corporation.

While nearly 10 Indian organisations are vying for at least three major hydropower projects in Nepal, none has been given the go ahead as the bid evaluation committee is yet to table its recommendations.

Though Indian organisations have been heading nowhere, China is set to enter Nepal's hydropower sector in a big way with Sinohydro Corporation Sanmenxia Overseas Ltd the new entrant.

A three-member delegation from the agency is arriving in Kathmandu on Thursday to negotiate at least one major power deal.

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