NEA struggles to raise funds for Upper Tamakoshi

Says no to joint venture

Kathmandu, August 23:

Even after two years of completion of the feasibility study, the 309 MW Upper Tamakoshi Hydro Project is still at the ‘pre-construction phase.’ The Department of Electricity Development (DoED) had given the development licence for this project to the Nepal Electricity Authority (NEA) some six years ago.

NEA, on its part, claims that work is in progress. “We are busy in road construction and conducting a detailed survey of the site,” Dr Mrigendra Bahadur Shrestha, project manager of the NEA Upper Tamakoshi Hydo-Electricity Project, said, adding, “We hope to invite tender by June/July 2008.”

But NEA is still looking for internal funding and has approached Employees Provident Fund (EPF) and Army Welfare Fund for the purpose. It seems the delay has been caused precisely because NEA has not been able to generate funds for the project. As per an estimate, the cost of the project is $1,100 per unit of electricity.

Arjun Karki, managing director, NEA, however, refused to acknowledge that there is any problem in generating funds. “We are not lacking in any aspect; in fact we are currently discussing the draft Memorandum of Understanding with EPF,” he told this daily.

The private sector representatives, on the other hand, firmly believe that NEA continues to have problems in raising the funds. “The problem is NEA neither has financing capacity nor management capacity to run this mega project,” Sandeep Shah, president of Independent Power Producers’ Association of Nepal (IPPAN), told this daily. According to Shah, NEA should promote joint venture and participate in other projects rather than struggling to raise funds on its own.

“NEA may have technical capacity, but it is going to be extremely difficult for it to raise the funds as the government will not provide any Bank guarantee. The project itself should be creditworthy. That is why the private sector is required,” he said.

“Also, since NEA does not have experience in building mega hydro-projects, it will not be able to professionally manage the project,” Shah added.

Some international power developers, including Norwegian S N Power and CEC, USA, have shown interest in commissioning the Upper Tamakoshi project and proposed joint venture with NEA.