MoU signing with India raises high hopes for stalled West Seti project development
KATHMANDU: The 750 megawatt West Seti hydropower project based in Sudurpaschim province has entered a new phase of development with the signing of a Memorandum of Understanding between Nepal and India in this regard.
India’s state-owned NHPC Limited and Investment Board Nepal (IBN) on Thursday signed the MoU to develop the long-awaited project.
The development of the storage type project listed as a national pride project has remained a dream of Nepal for about 40 years.
Confusion over the implementation of the project threatened with international companies: SMEC from Australia and Three Gorges from China, leaving contracts to develop it in the middle.
Now the NHPC, which has a history of developing projects equivalent to around 7,300 megawatts in Himachal Pradesh, India, and other regions, has agreed to develop the West Seti Hydropower Project and 450 megawatt Seti River-6 as part of a clustering model.
As promised by NHPC Chairman and CEO Abhay Kumar Singh during the MoU signing ceremony, the project will find its tentative form within a year.
The Australian Snowy Mountain’s Engineering Corporation (SMEC) has prepared a detailed project report for the West Seti and the Chinese state-owned company China Three Gorges Corporation has also carried out a new DPR study prepared by the SMEC.
It wouldn’t be an exaggeration to say that Thursday’s developments obviously provided reason to believe that we have to wait a long time for our dream of bright days to come true.
Nepali is striving to explore and realize its untapped potential for hydropower development, which is one of its top priorities.
The decision to bring the West Seti forward is in itself a significant achievement.
Arun III hydropower projects report physical progress of over 50%.
Similarly, processes are underway to develop the Lower Arun and Arun IV projects in partnership with the Indian company Satluj Jal Vidyut Nigam, known as SJVN, the developer of the Arun III.
Prime Minister Sher Bahadur Deuba, who was present at the MoU signing ceremony, said the project was crucial not only for the development of Sudurpaschim but also for the overall economic and social development of the nation.
Investment Board Nepal Managing Director Sushil Bhatta and NHPC Chairman and Managing Director Abhay Kumar Singh signed the MoU on Thursday.
An agreement was reached between NHPC and HIDCL regarding collaboration in the energy sector during the investment summit organized by the Council in 2019. The proponent must file an application for authorization to investigate the hydroelectric project of West Seti within 45 days of signing the MoU.
There is a provision that the application must be filed within six months for the Seti-6 project.
An arrangement has been made that the company must submit its report to the Council after completing a detailed project report within two years of obtaining permission to investigate. It might not take that long because all the preparatory activities for the project have already been completed.
The MoU mentioned that different issues including estimated cost, assurance of market, assurance of financial sources should be incorporated in the report.
The two parties would hold Project Development Agreement (PDA) discussions and the board would facilitate them.
The Indian company-NHPC has already built hydroelectric projects generating more than 7,000 MW of electricity. The company is committed to completing the project on time.
NHPC is looking for a market in India
The Board meeting on August 8 this year tasked NHPC to take over the work of the project.
The Indian company had offered to seek a market in India for the electricity produced in Nepal in addition to arranging for the financial and technical management of the project.
Following the visit of Nepalese Prime Minister Sher Bahadur Deuba to India last April, the project, which was “on hold” from French, Australian and Chinese companies, is now set to follow a new path with a clear framework.
NHPC Limited has submitted an application to Council to implement the scheme through dialogues, the Council said.
The 47th meeting of the Council had formed a committee coordinated by the Deputy Chairman of the National Planning Commission, Bishwanath Poudel, to prepare a draft on the development and investment modalities of the joint West Seti and Seti River-6 hydropower project. The Board decided to implement the recommendations provided by the Project Committee.
Former Energy Secretary Anup Kumar Upadhyay felt that there was no other better option than this company which was owned by the Indian government and specialized in the hydroelectric project.
Upadhyay further said, “This project will now proceed as NHPC is technically and economically sound and can provide a market for the electricity produced here.” The inhabitants of the project sites have always been waiting to see the project, initiated since 2036 BS, come to fruition.
The lack of clarity on the construction modalities, the absence of decision on the construction of the transmission line, the settlement of the displaced persons and the absence of determination in the market for the electricity produced, among others, have pushed the project in limbo for a long time.
Now the people of Sudurpaschim are confident that the work on the project will go ahead.
The Chinese company – Three Gorges – had also given the same reason when it withdrew from the project. According to officials involved in the project, the Australian company Snowy Mountain Engineering Corporation (SMEC), which had been engaged in the preparation of the detailed project report (DPR) for the project since August 1989, submitted its report in 1992.
The agreement signed with SMEC on the build-own-operate-transfer (BOOT) model was never implemented. SMEC kept the project “on hold” for 18 years, although it continued to say it was building the project. Deciding that “enough is enough”, the government itself took ownership of the project in 2011.
The SMRC had said that it would sell the power generated from the project to India and hand over the project in its present state to the government 30 years from the date of the start of power generation.
From the pan to the fire
The project was awarded to the CWE Investment Corporation, a subsidiary of the Three Gorges Company of China, in 2011. The Nepalese people were confident that the Chinese construction company would take on the project because the same company had built the capacity to 22,500 megawatts of the Three Gorges. Hydroelectric project in China.
An agreement has been reached to create a joint venture with 75% of the shares of the Chinese company and 25% of the shares of the Nepal Electricity Authority (NEA). The total estimated cost of the project was Rs 180 billion and it was also agreed to bring in a foreign loan of Rs 150 billion for the project.
If the works had been carried out according to the agreement, the project would have already started producing electricity only last year. The Chinese company also kept the project “on hold” for a total of seven years, the period of the project’s completion.
In the end, the Chinese company also abandoned the project citing lack of a market for electricity, disagreement over resettlement and rehabilitation issues, and uncertainty over who will build the transmission line.
The government had even allocated a budget each year for this project until 2018.
Although it was said that the construction of the project would be started by fixing a suitable modality for it afterwards, it was not conclusive.
It is stated in the government policies and programs for the current fiscal year unveiled by President Bidya Devi Bhandari on May 24, 2022 during the joint session of the two houses of the Federal Parliament that the construction of the West Seti and Seti River-6 projects would be launched.
Similarly, the current fiscal year budget that the government announced on May 29 also clearly mentions the project.
It also gave a basis to believe that the project will progress one way or another.
The Seti River originates from Saipal Mountain in Bajhang district and joins the Karnali River when it reaches Achham after passing through Baitadi, Dadeldhura and Doti.
Both projects are based on the Seti River.
Hydropower experts and planners are of the opinion that Nepal should now focus on maximum power generation and both benefit from the projects and facilitate their construction.