Nepal clears GMR’s $1.4 billion hydel project

Kathmandu: Nepal’s centre-left cabinet on Thursday cleared the way for Indian firm GMR to build a $1.4 billion hydroelectric plant in the northwest of the country, a cabinet minister said, the Himalayan republic’s biggest foreign investment scheme. The Nepalese government agreed to allow the GMR Group in 2008 to construct the 900-megawatt Upper Karnali hydroelectric power plant in the northwest.

But the project was delayed as the nascent republic was mired in instability with six government changes in as many years. Political parties also demanded greater benefits for Nepal from the scheme that is mainly aimed at exporting electricity to power-hungry India. Nepal’s law minister Narahari Acharya said the Cabinet meeting had approved the draft of an agreement to be signed with the Indian company.

“This approval will open the way for different foreign investment projects that are in the pipeline to move ahead,” Mr Acharya said after the Cabinet meeting.“Concerns shown by different parties about the benefits from the project have been addressed as far as possible,” he said. Officials said that GMR and another Indian firm, Satluj Vidyut Nigam, plan to construct other hydroelectric plants in Nepal with a potential to generate up to 42,000 megawatts of electricity.

China’s Three Gorges International Corp, is also in talks with Investment Board Nepal to build a $1.6 billion dam to generate 750 megawatts of electricity on the West Seti River in the same area, as Beijing competes with New Delhi for influence in Nepal.The GMR plant, set for completion in 2021, will provide 12 per cent energy free to Nepal to ease a crippling power shortage and help its economy emerge from a decade-long civil war that scared away investors and slowed infrastructure projects.

Officials said Invest-ment Board Nepal will now sign a Project Development Agreement (PDA) with GMR, which will construct transmission lines across the border to transmit the remaining electricity to India.