Politics pip Indian firm's hydropower bid in Nepal
May 2, 2007 - 12:50:26 PM

Kathmandu, May 2 - India's GMR Group, a prominent private sector organisation with prime interests in infrastructure and agro business, has had its bid for a 300 MW hydropower project in Nepal blocked by a parliamentary committee.

The group, which already operates three power plants in Mangalore, Chennai and Andhra Pradesh, was among 14 foreign companies bidding for three hydel projects in Nepal.

After Nepal's government decided to woo foreign investment to develop its hydropower industry, bids were invited for the 600 MW Buri Gandaki, 402 MW Arun III and 300 MW Upper Karnali projects.

A committee formed to assess the bids is reported to have adjudged GMR's bids the best for Upper Karnali and Arun III.

However, even before the government took a decision, an old skeleton in Nepal's hydropower deals has resurfaced, resulting in the Upper Karnali project being returned to the shelf once again.

According to parliamentarian C.P. Mainali, who also heads the United Left Front - a junior partner in the eight-party ruling alliance - a French joint venture company has appealed to parliament saying it had prior rights to the 300 MW Upper Karnali project.

In its letter to parliament's Natural Resources and Means Committee, of which Mainali is a member, French company Elysee Frontier says it was given a 'sole and exclusive' survey licence that the then Sher Bahadur Deuba government terminated illegally in 2001.

The French company, which had formed a joint venture with Nepal's state-owned Nepal Electricity Authority, was given time till mid-February 2002 to submit its power purchase agreement documents as well as financial commitment records, before its licence was cancelled in September 2001, showing 'bias'.

Now, with a new government at the helm and the Upper Karnali project likely to be revived, Elysee has asked the house committee to weigh its rights. Else, it is likely to start a lawsuit that would effectively block the project for several more years.

'Last year, when a new seven-party government came to power under Prime Minister Girija Prasad Koirala, Elysee wrote to the government, asking for its licence to be renewed,' Mainali told IANS.

'The prime minister's office responded positively and asked the water resources ministry to take necessary steps. However, despite that, the ministry issued an advertisement, asking for new bids,' he added.

The parliamentary committee has now ordered the ministry to put the project on hold till the dispute is resolved.

'We have to give consideration to Elysee,' Mainali said. 'It has already done the survey and 50-60 percent of the environmental impact assessment. It says it can start construction in maximum two years, which can't be matched by a new entrant.'

There are indications that the other two projects could also be stalled.

'This is a critical time and the government is only an interim one,' Mainali said. 'It shouldn't try to rush through issues of national importance.'

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