International News

A new beginning with Nepal
An early visit by Prime Minister Narendra Modi to Kathmandu will offer an opportunity to remove the accumulated cobwebs of mistrust between the two neighbours and focus on future potential

Two Indian companies preparing to construct three big projects in Nepal have been given assurance by the Indian government that electricity generated by them will be imported at a time when there have been different comments about power trade agreement (PTA) between Nepal and India.

Indian Energy Ministry has given permission to GMR Energy Limited and Sutlej Hydropower Corporation that electricity generated by Upper Karnali (900 MW), Upper Marsyangdi II (600 MW) and Arun III (900 MW) projects—with combined installed capacity of 2400 MW—can be imported from Nepal during the license period. GMR and Sutlej now can export electricity from Nepal even without PTA between the two countries. Lanco Energy, Patel Engineering, Bhilwara  Energy and all other Indian companies will also now be able to export electricity from Nepal without any difficulty. But promoters from Nepal, China, Norway, Brazil, South Korea and other countries must wait for PTA to sell electricity to India. The projects to be developed for export will not get market in lack of PTA with India. These projects may not even be constructed if the market is not certain. “India has already given approval for import of electricity generated by Indian companies without any agreement,” an official at the Energy Ministry in Nepal said. “PTA between the two countries should be signed soon as India will provide permission for import of electricity generated by Nepali and foreign companies only after PTA,” the official reasoned.  All the three projects being developed by GMR and Sutlej for export to India are scheduled to be completed by 2021.

Energy Secretary Rajendra Kishore Chhetri stated that preparations are on to conclude PTA within a month. “The draft for PTA on behalf of Nepal has already been prepared,” he added. Export of electricity will be easy after signing of PTA as electricity import fee and import license will not be charged, and customs duty and additional tariffs will be removed. There will be investment environment owing to certainty about market after signing of PTA. Promoters have been demanding for a PTA stating that banks will not invest on big projects unless the market is certain.

Meanwhile, India has removed the tariff of IRs 2 per unit levied on electricity exported from Nepal for sometime by bringing an Open General License (OGEL). Nepal is currently importing up to 200 MW from India. The two countries have signed for exchange of up to 250 MW now. The Nepal Electricity Authority (NEA) has been currently procuring electricity from the Power Trading Corporation (PTC) of India at a commercial rate. NEA and PTC have similarly signed agreement for trade of 150 MW.

GMR and Sutlej have received generation license for Upper Karnali and Arun III respectively through free competition. Project development agreement (PDA) among the companies concerned and the Investment Board (IB) for development of the three projects has reached the final stage. Chief Executive Officer (CEO) of IB Radhesh Pant claimed that PDA with GMR and Sutlej will be signed soon. “We have reached agreement on almost all issues with the promoters of Upper Karnali, Upper Marsyangdi II and Arun III. We have agreed on the majority of issues apart from force measure,” he revealed.

GMR is preparing to bring foreign partner for Upper Karnali and has been holding discussions with Electricite de France SA (EDF) for joint investment. The International Financial Corporation (IFC) under the World Bank has also agreed for equity investment on Upper Marsyangdi II.  GMR has agreed to provide 108 MW (440 million units a year) of free electricity to Nepal from the day the Upper Karnali project comes into operation and free equity of 27 percent. Similarly, Nepal will receive 198 MW of free energy from Arun III.

Draft of Nepal’s PTA

The draft of PTA prepared by Nepal has incorporated the majority of suggestions of private sector stressing on the interest of Nepal. The draft has provisions including permission for trade of electricity among two countries as per OGEL without any obstructions, allowing any company of any country to sell electricity from Nepal to India at a competitive price after acquiring license, and prohibiting appointment of a single procurer for power trade by both Nepal and India.

The draft also has provisions like allowing Nepali companies to participate in power exchange of India, and prohibition on levying any tax and tariff on bilateral power trade, any kind of limitation on power trade and ban on power trade by bringing a new act in the future. The draft also proposes that Nepal be allowed to export electricity to a third country via India, and Nepalis also be allowed to invest in India.

Source : Karobar Daily

comments powered by Disqus

Interview+ View All

Article+ View All