Nepal has extended a warm welcome to more Chinese hydropower companies to invest in projects worth $400 billion, following the approval of a $1.8 billion contract to China Three Gorges Corp for West Seti Hydropower.
"In terms of capital, nobody can compete with China," constituent assembly member and enterpreneur Binod Chaudhary said here on the sidelines of the Boao Forum for Asia in Hainan province today. "The biggest opportunity for Chinese companies in Nepal is to build projects in the same manner as the West Seti project."
The government has just approved Three Gorges Corp to undertake the $1.8 billion West Seti River hydropower project. The 750-megawatt (MW) plant has opened a 'complete new chapter' for Chinese investment in its neighbouring country, Chaudhary said. "China Datang Corporation, a State-owned power company, has also shown an interest in Nepal's hydropower sector," according to convener of the energy development council under the Confederation of Nepalese Industries (CNI) Sujit Acharya.
Nepal, which borders China and India, is reeling under acutely power shortage leading to higher cost of production of the domestic manufacturing companies.Compared with the 20,000-MW-capacity of untapped water resources, the country only has a generating capacity of 650 MW, according to Chaudhary. With no public bidding for the West Seti project, there was great debate over whether the Nepal government should have called for a competitive tender, Chaudhary said, adding that other procurement models for future hydropower projects will be introduced.
The Export-Import Bank of China will provide loans of $1.8 billion for a period of 10 years for the project, in which Three Gorges Corp will hold 75 per cent equity, and the Nepal Electricity Authority (NEA) the remainder.
The hydroelectric dam is expected to start construction in 2015 and could be in operation as soon as 2020, he said, adding that some of the electricity generated by the West Seti plant could be supplied to China, as Nepal was unlikely to absorb all the power, given the small size of the country.
Three Gorges Corp's rivals, including Sinohydro Corp, are also building hydropower plants in Nepal, but private companies from Europe and India are the major investors in the sector.
Chaudhary allayed concern that local residents may oppose the West Seti project because of environmental damage. Local people showed a very positive attitude, believing it would improve the area's infrastructure and living standards, he said.