Lack of farsightedness, planning, ambiguous policies and weak implementation over the years has left projects in a bad state
Kathmandu, October 23, 2016: The performance of national pride hydropower projects are far behind schedule due to lack of legal incentives, special rules and regulations to smoothly run these projects. According to the report of the Office of the Auditor General (OAG), the budget allocated for national pride projects are not spent and the development of projects are not as expected.
The government has announced three hydropower projects — Upper Tamakoshi, Buddhigandaki and West Seti as national pride projects with huge importance and impact on the nation. Except for Upper Tamakoshi 456 MW run-of-the-river project, both storage projects Buddhigandaki 1,200 MW and West Seti 715 MW are performing badly. Lack of proper attention, special provisions and policies, minimising of hurdles, prioritisation and strong political will to develop these projects are the main reasons for slow development. Moreover, lack of farsightedness, planning, ambiguous policies and weak implementation in yester years resulted in the present poor state of these national pride projects.
The government identified 21 projects as ‘national pride’ projects considering the important role they could play on the socio-economic development of the country. To ensure early completion of these projects, the government has also pledged to remove all hurdles in the way of their implementation. However, the government and concerned authorities have proved once again that they are big on talk and low on delivery.
Still on paper
The government announced Budhigandaki as a national pride project in the fiscal year 2013-14. The project was to be completed by 2019-20, however, there has been no work done physically. According to the OAG report, physical development is nil and of the total estimated cost of Rs 255 billion, only Rs 1.22 billion was spent till the end of fiscal year 2015-16.
“Development of any hydropower project needs intense paper work before going to construction phase. And it will be wrong to say that there is no development on the project,†said Gopal Basnet, Executive Director at Buddhigandaki Hydropower Development Committee (BHDC). Informing about the progress, he said, “We have already completed the detailed engineering report and environment impact assessment (EIA) report is ready for submission to the Ministry of Environment.†He further said, “Once we get EIA approval from the ministries, we will process for bidding tender and determine the modality of funding.†According to him, they plan to complete the modality of funding by the end of December.
Land acquisition, compensation, rehabilitation and resettlement are major challenges that come along with storage projects. On these issues, Basnet said, “We have already acquired 60,000 ropanis of land in a short period. Now we are working on the classification of land to compensate.†He further said that they have estimated Rs five billion to be needed for acquiring private land that will be submerged by the reservoir.
According to him, the government should develop a finance management committee, development model for the project, finance modality and a committee to transfer it into a company to provide authority for smooth work on the project development. He also said that due to the earthquake, they are slightly set back but work was still on schedule. He is of the opinion that if everything goes smoothly after awarding project to contractors, it will take seven to eight years to complete the mega project. As per the census report of 2013-14, the project will affect 8,117 households out of which 3,560 households will be displaced fully affecting a population of 46,000.
Waiting for the green signal
Likewise, West Seti Hydropower Project is at a standstill with no visible development. The project is waiting for joint venture agreement (JVA) with its Chinese counterpart the China Three Gorges Corporation. Due to delay in negotiation and establishing joint venture company, no physical homework was done on the project. The project was awarded to the Chinese contractor Three Gorges with a 75 per cent stake in the company and 25 per cent to Nepal Electricity Authority in built-operation-transfer modality.
Investment Board of Nepal (IBN) is playing a mediating role for negotiation with the Chinese counterparts to conclude the JVA. “The negotiation is in the last stage and we will conclude it within this month,†said Sanjay Dhungel, Senior Divisional Engineer at IBN. Agreeing that the project is delayed, he said, “Once a joint venture company is established, the project gets legalised and the project will speed up,†adding that the project has completed preliminary study reports which just needs updates. According to him, it is natural for it to take time to work on such a large scale project.
Dhungel said that the concept paper on National Energy Crisis Mitigation and Electricity Development Decade 2072, has created positive ground for the development of national pride projects. He said, “The concept paper is the best document to solve the problems of the hydro sector of Nepal. However, without legalising the concept paper as law, it cannot be implemented. So the government should speed this up.â€
According to him, the government has to deal with barriers and policy clashes with many different ministries while developing projects. “Forest clearance is major hurdle in West Seti project and the government should make it easy to get clearance and look into other policy barriers to smoothly initiate the national pride project,†he said. As per the SMEC’s report, the project will relocate approximately 2,000 households. “As local people are positive towards the development of the project, land acquisition won’t be a problem,†he said confidently.
Among the three projects, Upper Tamakoshi is performing well and near completion. According to the Ministry of Energy (MoE), the project has met 80 per cent of physical target. The project is one of the huge projects developed with local investment. The project, funded by domestic financial institutions and companies, received the label of national pride in the fiscal year 2010-11 and was supposed to come into operation in February 2017. However, the devastating earthquakes of 2015 have pushed back its commercial operation date to September 2018.
Paving the way
As most hydropower projects are run-of-the-river type, the variation in demand and supply of electricity in the dry season became too high that the country suffers loadshedding of up to 14 hours a day. To minimise the power cuts, it is vital to complete all of three national pride projects as soon as possible.
“Our system is focused on run-of-the-river hydropower projects.To minimise this variation development of West Seti and Buddhigandaki storage projects play a vital role,†said Dinesh Kumar Ghimire, Spokesperson and Joint Secretary at MoE. Citing that political parties are positive, he said, “As it will take time to introduce the law, the ministry is working on a bill to foster the hydro sector.â€
Minister for Energy Janardhan Sharma informed, “As a part of law reforms, we have already sent the draft of Electricity Regulation Commission Law and Energy Crisis Bill for approval to the Ministry of Finance and Ministry of Law, Justice and Parliamentary Affairs to ensure smooth development of hydropower projects.†He further said that the government is positive and it will support the development of hydropower to end power cuts.
Ghimire further said, “We have developed an Energy Crisis Bill and Electricity Regulation Commission Law with intensive research and after identifying various challenges in on-going projects. We believe that the bill and law will certainly help mitigate problems.†Agreeing that there have been delays to develop projects, he said, “Rather than scruntinise what caused the delay in projects earlier, we need to focus on how to speed up the development of projects in days to come. And the ministry is working on developing national pride projects as well as other hydropower projects without delay.â€
According to him, they are working to ease major problems such as land acquisition, right of way issues, land evaluation, incentives, rehabilitation and resettlement issues.
“As a part of law reforms, we have already sent the draft of Electricity Regulation Commission Law and Energy Crisis Bill for approval to the Ministry of Finance and Ministry of Law, Justice and Parliamentary Affairs to ensure smooth development of hydropower projectsâ€
Janardhan Sharma, Minister for Energy
“Development of any hydropower project needs intense paper work before going to construction phase. And it will be wrong to say that there is no development on the projectâ€
Gopal Basnet, Executive Director, BHDC
Our system is focused on run-of-the-river hydropower projects. To minimise this variation development of West Seti and Buddhigandaki storage projects play a vital roleâ€
Dinesh Kumar Ghimire, Spokesperson and Joint Secretary, MoE
By Sujata Awale
