“The builder of the Three Gorges Project has shown interest in developing the West Seti Project under a Private Public Partnership model,” said Joint Secretary at the Ministry of Energy (MOE) Arjun Karki.[break]
Joint Secretary Karki said the Chinese company has offered to make arrangements for all credit including soft loans for equity share participation by Nepal Electricity Authority or any government body.
The Three Gorges Project on the Yangtze River in China is the biggest hydropower project in world with a 600-km reservoir and an installed capacity of 20,300 MW which is expected to rise to 22,500 MW when the project is fully developed.
MOE on Wednesday formed a technical committee under Joint Secretary Karki to decide on the financial plan and implementation modality for West Seti. “The committee will work on the financial and technical details of the project,” said Energy Secretary Balananda Paudel, who put the approximate project cost at around US$ 1.6 billion.
Secretary Paudel said that while China Three Gorges Corporation has shown interest in the project, the ministry was open to other proposals as well. The government had issued a construction license to West Seti Hydropower Limited on June 27, 1997 but revoked the license on July 27, 2011 after the company promoted by Australia´s Snowy Mountain Engineering Corporation (SMEC) failed to manage the funding despite 10 amendments to the agreement over the last 14 years.
The company repeatedly sought extensions and had last asked for a grace period on December 24, 2010 to rope in investors, but the government did not oblige. SMEC had banked on the Asian Development Bank (ADB) and China National Machinery and Equipment Import and Export Corporation (CMEC) for financing but both these had pulled out citing lack of good governance and an investment-friendly environment in Nepal.
SMEC invested over US$ 31 million in the project over the last decade as a major promoter but stopped funding office operations since August, 2010 after CMEC and ADB refused to invest in the project.
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