With Chinese firm all set to return, govt must pull out all the stops to develop West Seti Hydropower Project

When Finance Minister Yuba Raj Khatiwada said in May, while presenting the federal budget for 2018-19, that Nepal would build the West Seti Hydropower Project “on its own”, indications were already there that the fate of the $1.8 billion China-funded project was up in the air. The project was awarded to the China Three Gorges International Corporation (CTGI) in 2012. The Investment Board Nepal (IBN) on Tuesday and Wednesday sat with CTGI representatives in Kathmandu in “a make or break talk” only to fail to find a middle ground in implementing the project. As things stand now, the CTGI looks all set to pull out of the project. Despite flexibility offered by the Nepali side during the two-day negotiations, the Chinese firm put forth additional conditions, for which Nepal had already exhausted all options.

Located in Doti, Dadeldhura, Bajhang and Baitadi districts of the far-west, West Seti is a storage-type 750MW project. The project’s history dates back to 1997. The licence of Australian Snowy Mountain Company, however, was scraped by the government in 2011 after it failed to attract sufficient investment for the dam for 16 long years. Earlier estimates suggested that 1,500 households were likely to be affected by the reservoir. An update in 2006-07 put the number of households to be affected at around 2,500. The CTGI was awarded the project through direct negotiation by the government of Nepal on February 19, 2012, but it took a little over five years for the CTGI and the Nepal Electricity Authority to sign a joint venture agreement. Now the number of people to be affected has reached nearly 10,000. And this has been one of the major sticking points for the Chinese firm, which says this could exponentially raise the cost. The IBN’s offer to reduce the generation capacity to 600MW from the proposed 750MW and extend the power purchase agreement in USD  to 12 years from 10 years earlier agreed upon also cut no ice with the Chinese firm. Yet another reason the Chinese firm did not seem keen to take the project forward is what it calls “low rate or return”.

Nepal’s hydropower potential has been a constant refrain from political leaders and various governments for the past many years. Though it is seen as key to leading Nepal towards prosperity and lifting the country out of poverty, the hydropower potential still remains largely unexploited, thanks to over-politicisation, corruption and disputes among others. For any big hydel project, resettlement is always a big challenge. Until there is a strong commitment from the state and impeccable policies in place, no project can take off. With CTGI’s entry six years ago, China has made a foray into Nepal’s hydropower market. But with the Chinese firm all set to return, the government must start exploring new options to take the project forward. It’s a shame that a much-talked about project has failed to materialise even 20 years after it was first conceptualised. The government must, with no further ado, start working on ways to develop the project. Nepal also needs to learn a lesson from this fiasco and should be cautious while developing new projects in the future.

Address concerns

Local levels have not been able to function effectively due to crunch of government staffers at designated municipalities and their wards. It has already been 15 months since the first round of local level elections were held. But even the easily reachable rural municipalities in Nawalparasi district are still facing shortage of government staffers, affecting service delivery in most Wards.

In his address to Parliament, PM KP Oli the other day claimed to have transferred 52,752 civil servants to the local levels. The provincial governments have already received 21,399 civil servants and the number of government staffers at the Centre has been cut down to 36,444, according to the PM. As per federal setup, most essential services should be made available to the people from Ward offices of the respective rural or urban municipalities. How can the people feel comfortable with their local governments when there is an acute shortage of human resources? This problem needs to be resolved soon to make the local levels fully functional in line with federalism whose true spirit is to serve the people from their doorsteps. The federal government must address the concerns raised by the lawmakers.