Experts highlight the need for more FDI in hydropower

Published On: September 8, 2016 01:50 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 8: Hydropower experts have stressed the need to attract foreign direct investment (FDI) for the development of hydropower sector.

Speaking at a forum titled 'Foreign Direct Investment in Hydropower' organized jointly by International Finance Corporation (IFC), Independent Power Producers' Association of Nepal (IPPAN) and Nepal Water and Energy Development Company (NWEDC), in Kathmandu on Tuesday, they said Nepal was already late in terms of attracting FDI in hydropower.

Addressing the program, Minister for Energy Janardan Sharma said that it was high time Nepal attracted FDI to exploit its rich water resources. “We have both natural and human resources. What we do not have is enough investment.

Therefore, the importance for FDI is very high for Nepal,” Sharma said, stating that Nepal has already signed Power Trade Agreement (PTA) with India -- a huge market for hydroelectricity.

He also said lengthy licensing process and procedural hassles in signing Power Purchase Agreement (PPA) and Power Development Agreement (PDA) was discouraging foreign investors.

Similarly, Maheshwor Neupane, director general of the Department of Industry, said that the government has adopted a policy of prioritizing hydropower sector for FDI. He also said that FDI in hydropower sector has been increasing in recent years, albeit at a slow rate.

Stating that the Korean government built fundamental industries and developed its economy through foreign loans and foreign direct investment, Choe Yong Jin, Korean Ambassador to Nepal, said: “Nepal has one of the largest potentials in generating hydropower. But such great potential can only be materialized into reality through investment. And this investment will be made possible through discussions involving all the stakeholders, and decisiveness and strong will of the leaders.”

He expressed hope that the Upper Trishuli I Hydropower Project, which is being developed by the international consortium NWEDC composed of Korea South-East Power (KOSEP) and IFC, will make significant contribution to increasing total hydropower generation of Nepal.

Similarly, Heo Yup, CEO of KOSEP, shared Korea's FDI-funded development story. “Realizing that borrowing foreign funds and inviting FDI were essential for infrastructure development, Korean government took various measures to protect foreign capital. As a result, it attracted large amount of foreign capital.” He also said Korea was able to build a base for a sharp economic growth that surprised the whole world. “At last, after 30 years of receiving FDI, Korea became one of the top 10 exporting countries in the world, with its export volume of US$ 2,000 billion. Now, it is Koreans who makes FDI in other countries”, he further explained.

Comparing Nepal and Korea, he said both the countries have similar geography, and that Nepal can learn from Korea's experience.

Similarly, speaking at the program, Khadga Bahadur Bisht, president of Independent Power Producers' Association Nepal (IPPAN), said that Nepali policymakers should seriously pursue FDI in hydropower sector. “We have been seeking FDI since 1981. But only a few hydro projects have been funded through FDI so far,” Bisht said. “Nepal hasn't done well in terms of attracting FDI.”

A panel discussion was organized in the second session of the program. The panelists were Suman Prasad Sharma, secretary of Ministry of Energy; Khadga Bahadur Bisht, president of IPPAN; Iqbal Munawar, Project Manager PPIB, Pakistan; Kamal Dorabawila, principal investment officer of IFC; and Michael Boyd, Energy Policy & Strategy Advisor to the USAID.

The panel discussion was led by Session Chairperson Dr Swarnim Wagle, former National Planning Commission member.

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