Nepal Electricity Authority (NEA) and China Three Gorges Corporation (CTGC) have yet to seal their joint venture deal for the construction of the 750 MW West Seti Hydropower Project. For this purpose, NEA has invited CTGC to visit Kathmandu by October-end, reports The Kathmandu Post.
CTGC had sent a letter to the Investment Board Nepal (IBN) last September. In response, the NEA is sending a letter saying that it will try to resolve the causes of dissatisfaction during the visit.
CTGC has asked for clarification of a different issues; some of which are capitalization of pre-incorporation expenses, modality of issuing shares to locals and the power purchase rate for the electricity generated by the project.
Also, Nepal Rastra Bank (NRB) has issued a directive allowing foreign companies developing infrastructure projects in Nepal to factor in the cost incurred prior to their establishment as paid-up capital. Foreign companies constructing national pride projects and those that have received investment approval from IBN are eligible to receive this facility.
Though CTGC is eligible to receive this facility, it is concerned that the proposed joint venture company will automatically become a public limited company requiring greater disclosure and compliance if shares are issued to the general public.
IBN has said that they will convince visiting CTGC officials that a proper mechanism will be developed before the company is formed so that it will not have to go public.
Furthermore, new guidelines have been set for the power purchase rate were set in January by the Energy Ministry. NEA will set the rates according to these guidelines.
The West Seti Hydropower Project is a reservoir type project. The rates have been guided as Rs. 12.40 per unit during the dry season (December to May) and Rs. 7.10 during the wet season (June to November).
The total project cost is estimated at $1.6 billion.
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