China Three Gorges Corp said it might shelve its proposed $1.6 billion hydroelectric-power project in Nepal amid a parliamentary probe in the South Asian nation into whether the project was properly awarded, a Nepal government spokesman said.
If the project falls through, it would be a big setback for Nepal’s ambition to harness huge untapped hydroelectric power from its Himalayan rivers and streams. It would also add to the setbacks faced by Chinese power companies in the region.
China Three Gorges “sent a letter to the government on Friday saying if things are not moving and the dilemma continues, we can mutually agree to pull out of the project,” said Arjun Kumar Karki, joint secretary in the policy and foreign-coordination section of Nepal’s Ministry of Energy. “But we see it as our priority project and we are committed to it.”
He said the Nepali government is planning to communicate this in its written reply to the Chinese company in the next few days.
A China Three Gorges official said it is up to Nepal’s government to decide whether to proceed with the project.
The brouhaha stems from a probe by a committee on natural resources in Nepal’s Constituent Assembly, which is its parliament. For more than a week, the committee has been looking into whether “proper procedures were followed by the government while granting the license to the Chinese company for the power project,” said Shanta Chaudhary, the committee’s head.
Committee members had voiced concerns the government granted the project to the Chinese company hastily, without inviting international competitive bidding as has been the general practice, she said.
Ms. Chaudhary said her committee will submit its report to the parliament within a week. “If we find any irregularity, we will simply ask both sides to follow the proper procedures,” she said.
Mr. Karki at the energy ministry said the government had the power under the country’s water-resources law to grant hydropower projects to any company without a bidding process. “We are hopeful of a positive decision from the parliamentary committee,” he said.
Some 40 per cent of Nepalis don’t have access to electricity, the government said, so the nation has been trying to foster new power projects. Some cities are without power for 14 hours a day.
On February 29, China Three Gorges and the Nepali government signed a memorandum of understanding for the construction of a 750-megawatt hydroelectric dam and power project on the Seti River in northwestern Nepal.
They agreed on a public-private partnership called West Seti Hydropower Development in which Nepal’s state power utility will hold 25 per cent and the Chinese company the rest.
The Nepali government said the estimated $1.6 billion cost will come through the company and in the form of a loan from China’s Exim Bank. The government said the annual 3.33 billion units of energy the project is expected to supply after its completion in 2019 will be for internal energy consumption.
If the project is shelved, or significantly delayed, it will add to similar frustrations of Chinese power companies in South and Southeast Asia. Last year, the government of Myanmar halted a $3.6 billion hydroelectric-dam project run by China Power Investment, referring to environmental and human-rights concerns. Earlier this month, China Power said it hoped to resume the project after addressing those concerns.
The Nepali government has sought foreign investment in its hydropower industry, which many Nepalis believe can put their poor country on the path to prosperity through the sale of surplus energy to its neighbors, India and China.
But many power projects have stalled due to the country’s prolonged political instability. It has been governed under an interim constitution since 2007 and the Constituent Assembly that Nepalis elected in 2008 has failed repeatedly to meet deadlines to give the nation a new constitution and to complete the peace process with the former Maoist rebels who now lead the national coalition government.
Politicians now have a nonextendable deadline of May 28 to deliver a new constitution and conclude the peace process.
A number of hydropower projects in which Indian companies hold significant stakes also have failed to take off due to politically motivated protests by local residents who tend to view Indian investments as against national interest. Nepal’s Prime Minister Baburam Bhattarai, a Maoist ideologue, recently sought to reassure Indian investors that their investments in hydropower would be protected.
In the past fiscal year that ended July 15, Nepal’s economy grew by 3.5 per cent, the slowest rate of the past four years, according to Nepal’s central bank.
