Nepal | September 28, 2020

IBN decides to provide forest land on lease


Pushpa Raj Acharya
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Mules are seen walking along the Karnali corridor on Monday, January 23, 2017. Photo: RSS

Kathmandu, August 2

The board meeting of the Prime Minister-led Investment Board Nepal (IBN) has decided to provide forest land to the Upper Karnali Hydropower Project that is going to be developed by GMR Upper Karnali Hydropower Ltd, a subsidiary of GMR Energy, on minimal lease fees.

The board meeting held today has paved the way for the development of the 900-megawatt project as it will be able to utilise around 5,000 ropanis of forest land on lease.

The developer of the Upper Karnali had been facing hassles in obtaining forest land as the Ministry of Forest and Soil Conservation had introduced stringent rules a few months back. As per the rules, the developer had to provide compensation to the government as per the prevalent rate of project located area, which would have significantly inflated the project cost. The project is located in Surkhet, Achham and Dailekh districts.

As Prime Minister Sher Bahadur Deuba himself has taken charge as the forest minister, the forest land for the project is expected to be handed over soon. The board has decided to hand over the land as per the spirit of project development agreement (PDA) signed in September of 2014.

As per the initial understanding with the Ministry of Finance after signing the PDA, the developer had been assured of being provided forest land at minimal lease fees. However, it has been asked to compensate for the land area where permanent structures of the project, like powerhouse and dam will be built. The
developer is also going to acquire 1,000 ropanis of private land in Dailekh and Achham districts for permanent structures and other facilities.

Due to uncertainty in obtaining forest land, the developer was not able to achieve financial closure of the project and it has sought extension of a year from September 18 this year to achieve the financial closure. However, the board meeting has not taken any
decision regarding deadline extension for financial closure of the $1.03-billion project.

It may take another six to nine months for the developer to conclude the leasing process of forest land, because it has to sign separate agreements at the district-level and community-level following the decision from the Ministry of Forest and Soil Conservation.

The prime minister-led board also decided today to sign final agreement with Hongshi Shivam Cement to bring foreign investment worth Rs 36 billion into the country and has formed a panel led by a member of National Planning Commission to recommend the government’s aid modality for a chemical fertiliser plant, as per IBN officials.

A version of this article appears in print on August 03, 2017 of The Himalayan Times.

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