PM directs ministry to hand over PDA task to IB

With the Ministry of Energy (MoE) not being able to expedite power development agreements (PDAs) of large hydropower projects, Prime Minister Baburam Bhattarai has directed the ministry to hand over the job to the Investment Board.

Prime Minister Bhattarai last week directed the board to take over the job of resuming PDA negotiations and concluding the West Seti deal with China Three Gorges International (CTGI), according to sources at the Prime Minister’s Office (PMO). “As there has been delay over the PDA signing for over three years, Prime Minister directed the MoE to handover the task to the Investment Board,” said source at PMO.

The parliamentary Natural Resource and Means Committee (NRMC) had also directed the government to bring the West Seti Project under the Investment Board’s purview. However, as ministry is yet to follow the Prime Minister’s direction, the PMO will write a formal letter to the board, asking it to take over the project, according to PMO sources.

 After NRMC decision, the PMO had also asked the ministry to communicate with Three Gorges about the NRMC decision for amending the Memorandum of Understanding and holding further negotiations. “The ministry has not communicated with the Chinese company so far,” one of the sources said.

As per the Investment Board Act, hydropower plants with a capacity 500 MW and above come under the board’s purview. The board has been formed to provide a one-window solution to potential investors in mega projects.

The delay over PDA has been the major concern of hydropower developers. A total of seven projects are awaiting PDA since last three years. The delay has prevented them from entering into the construction phase.

According to the Energy Ministry, it has prepared the draft PDA and sent it to the Finance Ministry and Law Ministry for their inputs. The draft is yet to be forwarded to the Cabinet for final endorsement.

It has been four years since the government signed MoUs with two Indian companies—GMR Energy and Sutlaj Jalvidyut Nigam—to develop Upper Karnali (900 MW) and Arun 3 (900 MW), respectively. The Energy Ministry had committed to wrap up PDA within 18 months, while granting them survey licences. Same is the case with SN Power that is developing Tamakoshi 3 (880 MW).

The 38-month dillydallying over PDA has put developers on quandary. If PDA is initiated, these projects—with a combined capacity of around 4,000 MW—would enter construction phase. Also, a total of Rs 480 billion would come as foreign direct investment in the country.

GMR, while signing the MoU for the Upper Karnali, had agreed to provide 27 percent free equity and 12 percent free energy to the government. Likewise, Sutluj had agreed to give 21.9 percent of free energy from Arun 3.

Investors seek a government assurance through PDA that helps avert any possible social, economic or policy-level uncertainties during construction. Generally, issues related to taxes, licence period, free energy, royalty, repatriation right and parties’ obligations are included in PDA. After PDA is approved, the Department of Electricity Development (DoED) will issue generation licences to these projects.

The PDA signing process with these seven hydro projects were initially postponed in September 2010 after the UCPN (Maoist) asked the government to shelve projects being developed by Indian developers. The power tussle between the then energy minister Prakash Sharan Mahat and energy secretary Shankar Koirala further delayed the process.

Source: Kantipur

Security of Indian investment tops agenda

NEW DELHI, MAR 4, 2012

Indian parliamentarians and leaders today raised the issue of security for Indian investment in Nepal in the first Nepal-India Parliamentary Forum meeting organised by Federation of Indian Chambers of Commerce and Industry here in New Delhi.

UML leader Pradip Gyawali said the Indian participants were of the view that if Indian investors continued to face security problems in Nepal even after the signing of Business Promotion and Protection Agreement, then both countries could do projects jointly.

Indian participants cited the case of GMR Group, whose power project office in Dailekh district was vandalised in May last year. The group is developing 900 MW Upper Karnali Hydro Project.

Indian participants said India being the bigger neighbour should play a role in overall development of the Himalayan nation, giving emphasis to trade and economic cooperation.

Indian participant KC Tyagi who is also General Secretary of Janata Dal (U) told this daily that there was no reservation among Indian leaders about revision of the 1950 treaty.

“On all major bilateral issues, we spoke in one voice but on the issue of federalism, we were divided as we spoke along our parties’ lines,” Gyawali said. He said he told the meeting that if Pancheswor project could be expedited, it would be more beneficial for Nepal and could even serve as a model for hydro power cooperation between the two countries.

Talking to journalists on the sidelines of the meeting, Indian State Minister for Parliamentary Affairs Rajiv Shukla said a peaceful and stable Nepal was also in the interest of India and therefore his country was ready to help in all possible manner. He said India could greatly help in Nepal’s trade and education sectors.

Madhesi Janaadhikar Forum-Nepal Chair Upendra Yadav said an accommodative attitude taking care of India’s security interest while fully respecting Nepal’s

sovereignty, was the only way to put Nepal-India relations on a sound footing. “Actually Nepal should not allow its territory to be used against any of its neighbours. It is essential to examine future prospects of Nepal-India relations from strategic economic perspective,” reads a written statement he delivered at the closed door meeting.

Both sides also shared their experience of federalism. Tyagi said the inherent flaws of Indian federalism, which allows the centre to dismiss elected state governments ought to be avoided in Nepal. “Nepal’s constitution should not repeat the mistake of our constitution. Some states have been locked in bitter water disputes since independence, Nepal should avoid such scenario,” Tyagi said adding, “it is imperative for a statute to take into account the interests of all stakeholders, particularly the minorities.

Talking to journalists on the sidelines, UCPN-M participant Krishna Bahadur Mahara said his party was committed to peace and democracy and trust deficit between his party and India had been narrowed down. “It is not only India but the entire International community that had doubts about our party in the past, but we have been able to remove them.”

Source: THT