Kathmandu February 18

Minister of Energy, Water Resources and Irrigation Barsha Man Pun today said the government expected a trilateral Power Purchase Agreement between Nepal, India and Bangladesh on the Upper Karnali Hydropower Project during the upcoming investment summit slated for March 29 and 30.

Addressing a question-answer session in the House of Representatives, Pun said the agreement would facilitate export of 500MW energy generated from the 900MW Upper Karnali project to Bangladesh.

During his visit to India last week, Pun had held meetings with his Indian counterpart, and officials from India’s Power Trade Company and GMR, the Indian company developing the project. “Indian authorities have expressed commitment to sign the PPA during the investment summit,” he said.

Pun said he also floated an alternative proposal in Delhi that if GMR was not able to develop the project, Nepal government would build it by allocating shares in the project to GMR equivalent to its investment so far. “Locals are expressing frustration over delay in the project construction, and we are also feeling the same. We do not want to delay the project any more,” he said.

Following Nepal Investment Board’s inquiry, GMR had, on January 23, submitted its progress report, seeking a one-year extension for the project’s financial closure. It said in the progress report that PPAs with Bangladesh and India’s Haryana state government (300MW) would be done in the next two months.

Pun said he told Indian authorities the PPAs should be signed during the summit. “The Indian side told me the draft PPA to be signed between GMR and Bangladesh government was in the final stage and that they were ready to sign a trilateral agreement, including Nepal,” he said.

Nepal-Bangladesh Joint Steering Committee meeting held in Kathmandu on December 4 had decided that Bangladesh would buy electricity from the project. “Haryana government has agreed in principle to buy 300MW electricity from GMR,” Pun said.

GMR has been holding the project since 2006 when it won the contract through global biding. As per the contract agreement, Nepal Electricity Authority will get 108MW energy for free and 27 per cent equity share.

Detailed Project Report, Environment Impact Assessment, and EIA for transmission line have already been endorsed by Nepal government. The government has also paved the way for the project to acquire the required land, and a rehabilitation and resettlement programme for those to be affected by the project has already been made public. Of the total 49 hectare of private land required, the project has already acquired 7.4 hectare.

Pun said Nepal had already started exporting surplus energy to India under the energy banking system. He said the exports amounted to Rs 160 million so far this fiscal, while last year’s exports stood at Rs 70 million. “We will export energy worth billions of rupees from next year after Upper Tamakoshi project starts generating 456MW electricity. We are not very far from becoming self-reliant in energy. We will export our surplus energy to whoever gives better price among India and Bangladesh,” said Pun.

Nepal will have energy surplus in the rainy season and face shortage in the dry season, while it is the opposite in India and Bangladesh. “We can buy energy at cheaper rates in winter, and sell at higher rates in rainy season. No energy will be wasted,” he said.

He said the government was working to ensure generation of 3,000MW energy in the next three years, and complete projects generating 5,000MW in five years. The government plans to generate 15,000MW in 10 years. “We are planning to invest Rs 3 trillion to complete the projects. We will raise the funds from the general public, foreign investors and loans and grants,” he said.