Government yet to take 50 per cent ownership of Khimti hydro

The government is preparing for interim arrangements to take control of half ownership of the Khimti Hydropower Project as it has failed to draft necessary law in time.
The Ministry of Energy, Water Resources and Irrigation (MoEWRI) confirmed that the government is preparing to introduce interim arrangements to manage and operate the Khimti Hydropower Project. “The project will not be shut down,” the ministry said adding that the ministry will soon finalise all the details to take 50 per cent ownership of the project.
According to project development agreement (PDA) signed on January 15, 1996, Nepal Electricity Authority (NEA) has to take 50 per cent ownership of the project by July 11 (yesterday) but the government’s delay in drafting the necessary law has made the fate of the 60-megawatt (MW) project uncertain.
But NEA and the Energy Ministry both claimed that they have not been able to do enough homework to sign the agreement to take control of its stake, also due to the outbreak of the coronavirus pandemic.
According to the PDA, from today all procedures related to acquire 50 per cent ownership should have been completed by NEA. “And the project should have been operating through a joint venture,” it reads, adding that the JV will also determine and certify the valuation of the project site, undertake share distribution, and determine new power purchase rate.
Earlier, the ministry had formed a team led by a joint secretary with officials of NEA to facilitate the process but it has not made any progress in forming the joint venture company.
The ministry has however already sent a letter to the promoter, Himal Power Ltd, for an interim management. “Though the agreement has expired the ministry has forwarded a draft memorandum of understanding (MoU) to the promoter to make interim arrangements for the operation of the Khimti hydel plant,” the ministry sources said, adding that they have also asked Himal Power to bear the expenses of the operational cost for the time being, which the government will adjust later. “The ministry is though prepared for the final negotiations with Khimti’s promoters in the process of taking over Khimti, failure of arrival of the concerned officials of the promoter company due to spread of coronavirus worldwide has delayed it.”
Himal Power Ltd – which currently has 100 per cent ownership of the project – has been tasked with developing the project under a 50-year lease contract with the government. According to the Himal Power, Khimti hydel project is generating 350GWh of energy annually, for which NEA is paying around Rs 5 billion. The NEA has been incurring an annual loss of Rs 2 billion while buying power generated by Khimti because of US dollar power purchase agreement (PPA).
NEA had initially signed the PPA with Khimti at 5.2 cents per unit, which was later revised upwards to 5.9 cents. The state power utility is buying electricity at up to Rs 21 per unit from the project as the price of the US dollar has surged massively in the last one decade.

Himal Power celebrates a decade of operations

Himal Power Ltd (HPL) celebrated its tenth year of successful operation of the Khimti I Hydropower Project.

"Khimti 1 is the first private sector project under a Build, Own, Operate and Transfer (BOOT) scheme after Nepal adopted a market economy in 1990 and opened the electricity sector for private investments.

"Khimti 1 plant started commercial operation on July 11, 2000 and has so far generated around four billion units of electricity," HPL said, adding that it has been operated with close to 100 per cent availability and reliability for 10 years now.

In accordance with the Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA), by July 2020 half of the Khimti I project will be handed over to NEA for a symbolic 1 Rupee.

Although production of electricity is the core business, HPL has also focused strongly on addressing community development needs through its Corporate Social Responsibility (CSR) programmes, it added.

Electricity has been provided to over 4,600 rural households through a 635 kW mini-hydropower plant. Presently 3,800 more households are being added and another 400 kW power plant is planned. Infrastructure created during the implementation of these Rural Electrification programmes has been handed over to the Khimti Rural Electric Cooperative (KREC), a member-owned and democratically managed cooperative.

The cooperative, the first of its kind and a model cooperative in Nepal, was based on highly successful cooperative models from USA and Bangladesh.

HPL has supported several schools in the districts of Dolakha and Ramechhap; with the Khimti Project School showing excellent results in the SLC exams, said the hydropower company that has aided numerous drinking water systems, toilets including bio-gas, agricultural and forestry projects, income generation training, women’s empowerment and irrigation systems have been implemented through the CSR efforts in the local communities.

A good example is the Halua Khola Irrigation System which has been in operation for eight years. The system supplies the village of Gogantar, consisting of approximately 100 households, with water for agriculture and has enabled the annual crops to be increased many fold.

"HPL supports local industry and the strengthening of competence within the Hydro Power field through the utilisation of expertise from such institutions as Hydro Lab and by supporting the establishment of a Turbine Lab in Kathmandu University," according to the hydropower company.

Khimti hands over micro hydel project to village

The Norwegian ambassador to Nepal, Thor Gislesen, handed over a 635-kw mini hydropower plant, transmission and distribution system and other assets to the Khimti Rural Electric Cooperative (KREC) for Kirnetar people in Dolakha district today.

The cooperative was established in 2004 by Himal Power Ltd (HPL) during the implementation of its rural electrification and development projects 'Jhankre Rural Electrification and Development Project' (JREDP and JREDP II).

Tom E Solberg, general manager of Himal Power Ltd, congratulated the KREC board and management on the occasion and said that the management of Khimti Rural Electric Cooperative has the motivation, capacity and feeling of ownership to manage the electricity generation and maintain its assets in an efficient and sustainable manner.

The cooperative currently provides electricity to 4,600 households and a further 3,800 households will be connected after the ongoing KiND project is complete. One more mini hydro power plant is being constructed, taking the total capacity of the cooperative to just above 1 MW.

HPL is the owner of the Khimti I Hydropower Project -- so far the largest private sector power project and the first "Build, Own, Operate, Transfer" (BOOT) model in Nepal.

Khimti Rural Electric Cooperative is the first fully independent, democratically operated and locally managed rural electric cooperative in the country. It serves as an example for other power projects in Nepal. KREC is providing better lighting for children's study, better health care, improved living conditions, establishing of small industry and enterprises and access to modern communications. These benefits will reach over 40,000 people in the vicinity of the Khimti 1 project area.

HPL said it would like to thank the government of Norway for its continuous support in bringing electricity and development to the rural population in Nepal.