Power-sharing pact

Published: Saturday 04 July 2015

-- Nepal is all set to embark on its first ever joint venture hydel project. The Upper Karnali power project, a Nepal-India collaborative effort, is a 300-mega watt (mw) venture with an estimated cost of US $500 million.

The Karnali river in west Nepal is the country's longest river. Nepal Electricity Authority (NEA) officials revealed that they were vetting a draft memorandum of understanding for the Upper Karnali project, which envisages five units of 60 mw each on the river in the Birendranagar district of Nepal.

India's state-owned National Hydroelectric Power Corporation (NHPC) will set up the project at Birendranagar, 600 km west of Kathmandu and 100 km north of the Bareilly-Lucknow border on the Indian side. NHPC chairperson Yogendra Prasad said the river's natural bend and a drop of about 150 metres in its course will be utilised to drive turbines.

The project will have a debt-equity ratio of 70:30. While Nepal will contribute 49 per cent equity, NHPC will put in the remaining 51 per cent. The corporation is optimistic that the project's capacity can be enhanced to 480 mw, in which case its cost will rise to US $562 million. The venture is expected to produce 2,353 million units of power annually, and the Nepal government will earn an energy royalty at the rate of 16 Indian paise (US $0.0036) for every unit exported to India. This will be over and above profit-sharing between the promoters. Power is to be transmitted through a link connecting the project with Bareilly.

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