Nepal | July 04, 2020

IBN, MoE lock horns on dealing with hydel projects

Himalayan News Service
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Hydropower projects

Hydropower projects. Photo: THT

Kathmandu, December 2

The widening rift between the Ministry of Energy (MoE) and Investment Board Nepal (IBN) caused by the overlaps in jurisdiction to take forward hydropower projects of over 500 megawatts is likely to affect the fate of the 680-megawatt Betan Karnali Hydroelectric Project, which is being initiated by the Employees Provident Fund (EPF).

The MoE had issued the survey licence of the Betan Karnali Hydropower Project to EPF, to take forward the project by making equity investment from its contributors in the third week of May this year. The ministry had handed over the licence to EPF on the grounds of Section (35) of the Electricity Act, which allows the ministry to hand over the contract of hydropower projects and transmission line projects based on a bilateral negotiation with a reliable party.

The EPF has proposed to make 40 per cent of the investment from contributors, and around 600,000 contributors of the EPF will get shares of the hydropower project.

Betan Karnali is the largest capacity project in the country that is going to be developed through domestic resources as proposed by the EPF. After obtaining licence from the ministry, the EPF has started generating funds to invest in the project from the certain interest income of the depositors against the promise to provide them shares of the hydroelectric project. It has also proceeded to hiring a consultant to prepare the detailed project report (DPR) of the project, according to Deepak Rauniyar, acting administrator of EPF.

However, the IBN has shown dissatisfaction on the ministry’s move by issuing licence of an above-500-megawatt project, which IBN officials claim falls under the jurisdiction of the board.

“The Investment Board Act, 2010 clearly defines the role of IBN in dealing with projects with capacity of 500 megawatts and above. Thus, the provision of the Electricity Act, 1992 has no relevance after the government set up a separate institution to deal with mega hydropower projects,” one of the high-ranking officials at IBN claimed.

The IBN had even sought a legal recourse and filed a case in court against the decision of the MoE to award the survey licence of a separate hydropower project, Tamakoshi III, to TBI Holdings through bilateral negotiation. The apex court recently issued a stay order in favour of the IBN.

If the IBN wins the case during final hearing, the same precedence will work for other 500-megawatt and above projects that have obtained licence from the ministry through bilateral negotiations.

Officials of the MoE declined to comment on the sub-judice case related to Tamakoshi III, but said the MoE had issued licenses utilising the rights provided by the prevailing act.

“The Investment Board Act has not superseded (replaced) the Electricity Act and the MoE has the right to issue licence for all strategic projects, including transmission lines,” said Dinesh Kumar Ghimire, spokesperson for MoE. “Bilateral negotiation with a reliable party based on the standard terms and conditions ensures early execution of the projects.”

He also said that the MoE has not dealt with the projects that IBN is overseeing, and both are government institutions.

IBN selects the developer through competitive bidding as per the established rules. However, the Electricity Act has provided authority to the MoE to issue licence based on bilateral negotiations.

Surveyed by Japan International Cooperation Agency (JICA) in 1982, the 680-megawatt Betan Karnali Hydroelectric Project is a low-cost, high-capacity project. The cost of the project is expected to hover around Rs 70 billion. The nature of the project is peaking run-of-the-river and the project can commission power as per the installed (rated) capacity for six hours a day. The project is also expected to help in bringing socio-economic transformation of the mid-west and far-west region, as per Rauniyar.

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

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