W Seti hydro plan: Govt to seek $1.6bn Chinese loan
The request will be made during a Chinese team’s visit next week Proposed move follows Beijing’s assurances to help build the project
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KATHMANDU, AUG 11 -
The government will formally request China for US $1.6 billion in loan to construct the much-hyped 750 MW West Seti Hydro Project Limited (WSHPL). The development follows Chinese assurances to provide assistance should the government formally request so, government sources said.
“After estimating the financial capabilities of interested countries and firms, we have concluded that only China can build this project. In this regard, we will make a formal request to China,” a senior Finance Ministry official told the Post. The request will be made during the visit here of a Chinese delegation led by a Communist Party official next week. Zhou Yongkan, who ranks ninth in the powerful Politburo Standing Committee, is arriving with a 60-member delegation on August 16 with an economic package, according to officials.
A Chinese team led by Director General of the Chinese Ministry of Water Resources and Irrigation, Gao Bo, is already in the Capital. The team held talks with Energy Secretary Bala Nanda Poudel, Irrigation Secretary Tana Gautam and Director General of Irrigation Department Anil Pokhrel on Wednesday. The Nepali side apprised the Chinese officials of their preparations. On July 27, the Cabinet revoked the licence of West Seti Hydropower Limited held by Australia’s Snowy Mountain Engineering Corps (SMEC) and decided that the Energy Ministry should develop the project itself. The company had acquired the licence in 1996.
The Ministry of Finance carried out a study of potential institutional lenders and zeroed in on China, according to sources. The Ministry of Energy revised the estimated current cost of the project to US $ 1.6 billion.
“It would be a government-to-government deal,” a senior Energy Ministry official said. “We are in the last stages of readying the technical proposal that will be forwarded later to the Ministry of Finance.”
In 2009 the cash-strapped project got a boost when the China National Machinery and Equipment Import and Export Corporation (CMEC) decided to invest in it. CMEC even signed an agreement with WSHPL during the visit of then Prime Minister Madhav Kumar Nepal to China in 2009. CMEC President Jia Zhiqiang and WSHPL Director Himalaya Pandey had signed a memorandum of understanding (MoU) in Beijing. The Chinese firm had decided to invest Rs 15 billion in the project.
However, CMEC later opted out of the project saying Nepal lacks an investment-friendly environment. Another important shareholder of the company, Asian Development Bank, also declined citing lack of public acceptance of the project and issues of good governance.
In May this year, China Three Gorges Corporation (CTGC), a corporation running one of the world’s biggest hydro power projects, sent a letter to Prime Minister Jhala Nath Khanal expressing its interest in the West Seti while offering ‘flexible conditions’ to develop the project.
Posted on: 2011-08-11 08:57
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