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dam-l LS: India to buy power from West Seti hydro, Nepal?
Source: NepalNews Feb. 4, 2000.
India to buy West Seti power
-By Kavita Sherchan
KATHMANDU, Feb 3 - The much delayed Power Purchase Agreement (PPA) of
West Seti, the first Nepalese hydel project developed entirely for
export purposes, may
finally conclude with India in mid-2000.
Additionally, the Australian company that is promoting the project may
thereafter apply for the generating licence with HMG, kicking off the
production phase of the
project.
According to sources, Snowy Mountain Engineering Corp (SMEC), the
Australian company which is developing the 750 Megawatt capacity
storage type hydel project, has
convinced India’s Power Trading Corporation (PTC) to buy the
electricity generated by West
Seti. The US$ 1.2 billion project is being developed entirely for
export purposes, especially to the
power-starved northern Indian regions. Even New Delhi and its
neighbouring industrial areas like Noida, where peaking power
shortfall is roughly 2000 MW, could benefit from the project.
The Power Purchase Agreement, which is the centrepiece of the
negotiations with India and on which hinges the fate of the project,
was originally targeted to be completed by September last year. But
it was delayed due to the disagreement over pricing and the buyer.
Negotiation with India was not moving ahead as India wanted SMEC to
sign the deal with UP State Electricity Board, the targeted buyer,
while SMEC wanted the Central
board to sign the deal.
It was only when India set up PTC, empowered to sign PPAs with
independent power producers, did things start looking up. According
to sources, PTC, comprising Power
Trade Corporation, Power Finance Corporation and National Thermal
Power Corporation has finally
agreed to buy the electricity from SMEC.
"According to the agreement, PTC will buy electricity from SMEC and
then sell it to UP State Electricity Board," said the source. SMEC
was keen on signing the deal
with cash rich and well-managed PTC since the State Electricity
Boards of India don’t have
a reputation for efficiency.
The current negotiation which started in early January is being
conducted by the SMEC Headquarters
in Australia and not its Nepal office. Sources say the company is
hoping to conclude the PPA in a
couple of months and then apply for power generation licence.
"Hopefully this can be done by the
middle of this year," said the source. "If everything goes smoothly,
SMEC will start construction by
the end of this year."
The two sides have also reached an agreement over the pricing. SMEC was
demanding 6 to 9 cents per unit of electricity. The negotiation with
India was also delayed
because SMEC demanded payment in dollars while India was not ready
for it. Sources now say the two
parties have also reached some sort of agreement over this. No
details were available, though.
According to the agreement, once the West Seti comes into operation
SMEC will pay US$ 29 million in the first year as royalty and taxes
to the Nepali government. This
will lead up to US$ 157 million by the 15th year. As per the
agreement SMEC will pay 2.4 percent as
royalty to the government for exporting electricity.
The Lokendra Bahadur Chand government gave SMEC the licence to conduct
Survey and Detailed Engineering Study for West Seti in June 1994.
According to the
agreement, the project will sell electricity to India only for 30
years. The project with a dam height
of 195 metres touches Baitadi, Bajhang, Doti and Dadeldhura of the
far western region.