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dam-l LS: Nepal picks U.S. firm to build Arun Dam
Nepal picks U.S. firm to build hydropower plant
NEPAL : July 7, 2000
KATHMANDU - A senior Nepali official said yesterday
that an American company would be allowed to construct a
hydroelectric power plant, a controversial smaller version
of which was dumped by the World Bank five years ago.
Bishwanath Sapkota, the top government official at the Water Resources
Ministry, said the U.S.-based Eurorient Investment Group would
construct the 402 megawatt (MW) Arun III hydroelectric project in the
eastern Arun Valley.
"It (the U.S. firm) was selected from among three bidders to develop the
project," he told Reuters.
Other competitors were Canadian firm, ASTQ Holdings Corporation,
and Nepal's Susasun Power Company (P) Limited.
Nepali officials said the U.S. firm would get a construction licence only
after it had provided financing details for the multi-billion dollar
facility and an agreement with the buyer for the electricity generated from the
plant.
The power house is to be set up on the Arun river at a remote valley in
the Sankhuwasabha district of the Himalayan kingdom.
In August 1995, the World Bank withdrew from a consortium of
Western donors to fund a smaller version of the Arun project to generate
201 MW of hydropower, asking Nepal to develop smaller plants.
The bank's concessionary lending arm, the International Development
Association (IDA), had earlier proposed lending $175 million for the
plant which was planned as a government project at a cost of about $1.0
billion.
Environmental groups had criticised the scheme saying it would damage
some of the region's pristine forests and would have required relocation
of 155 families.
Last year, Nepal invited private investors to develop a bigger version of
the facility.
Numerous rivers cascading from the lofty Himalayas have a combined
potential to generate up to 83,000 MW of hydroelectric power in Nepal.
The country uses less than 0.5 percent of this potential for want of funds
and technical knowhow.
In 1998, U.S. energy giant, Enron Corp , withdrew a multi-billion dollar
dam plan on the Karnali river in west Nepal, citing uncertain energy
markets.
Australia's Snowy Mountain Energy Corporation (SMEC) which is to
generate 750 MW power on the Seti river, also in west Nepal, is looking
for potential buyers in neighbouring power hungry India.
Nepali officials say export of hydroelectric power to India is the only
hope to bridgea galloping trade deficit with New Delhi which was
$284.7 million in 1998/99 (mid-July-mid-July).
Story by Gopal Sharma
REUTERS NEWS SERVICE
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