Nepal’s
centre-left cabinet has cleared the way for Indian firm GMR to build a
$1.4-billion hydroelectric plant in the northwest of the country, a cabinet
minister said, the Himalayan republic's biggest foreign investment scheme. The
Nepalese government agreed to allow GMR in 2008 to construct the 900-megawatt
Upper Karnali hydroelectric power plant in the northwest. But the project was
delayed as the nascent republic was mired in instability with six government
changes in as many years. Political parties also demanded greater benefits for
Nepal from the scheme that is mainly aimed at exporting electricity to
power-hungry India. Law minister Narahari Acharya said a cabinet meeting had
approved the draft of an agreement to be signed with the Indian company. "This
approval will open the way for different foreign investment projects that are
in the pipeline to move ahead," Acharya said after a cabinet meeting.
"Concerns shown by different parties about the benefits
from the project have been addressed as far as possible," he said.
Officials said
GMR and another Indian firm, Satluj Vidyut Nigam, plan to construct other
hydroelectric plants in Nepal with a potential to generate up to 42,000
megawatts of electricity. China’s Three Gorges International Corp, is also in
talks with Investment Board Nepal to build a $1.6 billion dam to generate 750
megawatts of electricity on the West Seti River in the same area, as Beijing
competes with New Delhi for influence in Nepal. The GMR plant, set for
completion in 2021, will provide 12% energy free to Nepal to ease a crippling
power shortage and help its economy emerge from a decade-long civil war that
scared away investors and slowed infrastructure projects. Officials said Investment
Board Nepal will now sign a project development agreement with GMR, which will
construct transmission lines across the border to transmit the remaining
electricity to India. The agreement was expected to be signed during PM
Narendra Modi’s visit in August but was delayed because some political parties
wanted to ensure that the supply of water to irrigation canals on the same
river would remain unaffected by the dam, as well as other benefits to Nepal.
The Indian firm
will give a 27% stake in the plant to Nepal. GMR will build a separate power
house to generate two megawatts of electricity to be supplied to villagers in
Achham, Surkhet and Dailekh districts where the project will be located,
officials said. A group of former Maoist rebels says benefits to Nepal were not
adequate and has vowed to protest against the scheme. Nepal's economy is
expected to grow 4.6% in 2014-15, against the government target of 5.2%, with
the country facing up to 16 hours of daily power cuts during the dry season
when its rivers flow slowly.
