Nepal | May 27, 2020

Construction of hydels with total capacity of 3,000MW stalled

Himalayan News Service
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Kathmandu, May 21

The coronavirus pandemic has pushed back the completion date of nearly five dozen hydropower projects with total installed capacity of 3,000 megawatts that are under construction through private investment.

All construction activities of the under-construction projects have come to a standstill due to the lockdown imposed by the government to control the spread of the coronavirus contagion.

The Independent Power Producers’ Association, Nepal (IPPAN) has informed that all the projects under construction and those that have reached the construction stage with investment from the private sector have been postponed for at least a year.

According to IPPAN, since all construction works have been stopped the projects that were ready to start construction works by raising the required investment cannot move forward at the moment. Similarly, the detailed engineering work of the projects that were in the study phase has also come to a standstill.

Kumar Pandey, vice president of IPPAN, informed that nearly Rs 700 billion has been invested by domestic and foreign investors to build the aforementioned projects. This investment is about 25 per cent of the country’s gross domestic product (GDP). Due to the pandemic all construction activities have been halted and the projects under construction have to pay Rs 50 billion in interests to banks and financial institutions. He mentioned that this was adding on the financial burden of the developers.

According to IPPAN, the government’s plan to generate 15,000 MW of electricity in 10 years has come to a halt. Pandey said the loan and equity investment structure of the projects need to be changed now. The COVID-19 will also have a major impact in the electricity sector as domestic energy production had been rising and electricity import from India had been declining in recent times but the situation will soon change, as per private investors. Energy entrepreneurs have said that the power generation target has been hit hard.

The government’s plan to add 1,000 MW of electricity in the current fiscal has been affected due to coronavirus pandemic with only 123 MW being added this year.

The future of various hydropower projects is still uncertain as positive cases of the COVID19 continue to surges in Nepal.

The government has set a target to increase the installed capacity to 3,000 MW by adding 1,600 MW in the upcoming fiscal year. This target is also likely to be hit. The Nepal Electricity Authority has stated that the installed capacity is 1,386 MW so far.

A version of this article appears in e-paper on May 22, 2020, of The Himalayan Times.

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