Kathmandu, August 7:

The Asian Development Bank (ADB) is investing $50 million in 750 MW West Seti — Nepal’s single biggest power project, now expected to cost $1.6 billion. The project was originally estimated to cost $1.2 billion.

Construction work is expected to begin after monsoon, managing director of the West Seti project Bill Bultitude said. “The project cost is going to rise due to political instability and lack of clear political decision,” Bultitude said.

Over the 25-year operation period, Nepal will receive over $2 billion in royalties, free energy, taxes and dividends. Once the operation period expires, the project will be handed over to the government.

“We have to accept the new cost. Work on the $1.6-billion project could not start last year because of continued political uncertainly in Nepal,” he said, addressing a media briefing today.

“Tarrif for the sale of electricity to India has been re-negotiated. The new tariff is significantly higher than the previously announced,” he said.

Initial project work include building of access roads and bridges to the dam and power sites, geotechnical investigations to complete the detailed construction design, community consultations, land acquisition and construction of construction camps.

The project will create more than 3,400 jobs and the sponsors committed to require the construction contractors to provide preferential employment opportunities to Nepali citizens. At least 200 permanent jobs will be created for the operation and maintenance of the power station.

Sponsors and the ADB believe the compensation payments and infrastructure reimbursements for approximately 1,580 families requiring resettlement are generous in comparison to comparable projects internationally.