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Japan firm shows interest in building Tamakoshi III hydro

Kathmandu, December 18, 2016: A Japanese company has expressed interest in developing the Tamakoshi III Hydropower Project, which has been in limbo after Norway’s Statkraft pulled itself out of the project in January.

During their meeting with officials of Investment Board Nepal (IBN) a few weeks ago, a team from Kansai Electric Power Company, a Japan-based power utility, expressed interest in building the 650MW project.

Kansai is one of the largest power developers in Japan with a handful of hydropower projects in Asian countries like Taiwan, Laos, Philippines and Indonesia.

IBN, however, asked Kansai officials to wait until the government comes up with a modality to develop the project.

Unveiling the budget for this fiscal year in July, the government had announced plans to build the project under Engineering, Procurement, Construction and Financing (EPCF) model. However, it is yet to come up with the guidelines that govern the EPCF model.

The board will start an international bidding process once the guidelines are introduced, said an IBN official. “We want to appoint developers in a transparent manner,” said the official. “Therefore, we have asked the Japanese company to take part in the bidding.”

Before Kansai, a couple of Chinese companies had also expressed interest in developing the project as contractors.

“We have also asked those companies to wait till our government completes internal homework,” said IBN official.

The IBN official, however, said Kansai looked more promising compared to the two Chinese companies as the Japanese firm wanted to undertake the project as a developer. “We want someone who comes in as a developer rather than a contractor,” said the source.

The Norwegian company had pulled out of the project at the time when it was about launch negotiations with IBN on Project Development Agreement (PDA). It had also singed a Project Negotiation Agreement with IBN.

It had spent Rs1 billion for the survey, technical updates and Environment Impact Assessment of the project after receiving the survey license from the government in March 2007.

Multiple sources at different government agencies said the major concern for the company was finding a market for the electricity produced from the project.

It had planned to sell electricity to India as a Power Trade Agreement (PTA) had already been signed with the southern neighbour. But following the trade blockade imposed by India upon Nepal and the uneasy relation between the two neighbours, the Norway firm was doubtful about India a market for its electricity.

The run-of-the-river project is located in Dolakha and Ramechhap districts of the central region.

By Bibek Subedi