Government urges JICA to further invest in energy sector

The government has urged the Japan International Cooperation Agency (JICA) to increase investment in Nepal’s energy sector.
During the meeting with director general of the South Asia Department JICA Hara Shohei today minister for Energy, Water Resources and irrigation Barshaman Pun urged JICA for yet another investment as the Tanahun Seti hydropower project has reached to its construction phase. JICA has invested in 140-MW Tanahun Seti hydel project.
Saying that the government has set a target to generate 15,000 MW power in next 10 years Pun, on the occasion, also urged JICA to increase investment. “JICA could encourage private sectors of Japan for the investment in energy sector of Nepal,” he added.
Similarly under secretary at the Energy Ministry Sagar Gautam on the occasion appreciated JICA’s support in other different projects. Nepal has already established bilateral mechanism with China, India, Bangladesh and Austria for energy cooperation, he said, adding that the ministry is planning to establish such mechanism with Japan.

Tanahu Hydropower terminates CMC contract

Tanahu Hydropower – the developer of 140-MW Tanahu Hydropower Project located in central Nepal – has terminated the contract signed with Cooperativa Muratori e Cementisti di Ravenna (CMC) that was appointed to execute one of the important components of the power plant.
The storage type project – the wholly owned subsidiary of Nepal Electricity Authority (NEA) – today dispatched the termination letter to the Italian contractor – though it will delay the project – after it failed to mobilise the work force despite repeated directions from the employer.
The NEA in October had selected two contractors – one CMC and another Chinese – for the $550 million hydropower plant. The project appointed CMC and asked it to start work by February 11. But CMC asked for advance payment before it starts the work. According to the managing director of the project Pradeep Kumar Thike, the project couldn’t release the advance payment because the Italian contractor didn’t submit the full bank guarantee to qualify for such payment. "Therefore, we had no other option but to send the contract termination letter to the CMC,” Thike, said, adding that the project will initiate a new process to appoint another contractor. "But it will delay the project by at least six months."
Though, the Chinese contractor – Sinohydro Corporation hired to execute hydromechanical and electromechanical works under the second package of the project – has started work at the site, the construction of the entire project will be affected as the tasks of the two contractors are interrelated.
Earlier, Melamchi Water Supply Development Board has also terminated the contract with the Italian contractor after it failed to come back after the warning notice.
The reservoir-type project – with an estimated annual energy generation capacity of 587.7 gigawatt hours in the first 10 years of operation – can generate energy for six hours daily during the dry season. The project is being developed with credit facility extended jointly by the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA) and European Investment Bank (EIB). 

JICA provides ODA loan in 12 years, to be used to construct Tanahu hydropower plant

The Japan International Cooperation Agency (JICA), today, signed an Official Development Assistance (ODA) loan agreement worth 15.137 billion yen (approximately Rs 14.168 billion) with the government for the Tanahu Hydropower Project.

The 140MW reservoir hydropower project to be constructed in Tanahu district will boost the current power generation capacity — that stands at 706MW as of 2011 — by 20 per cent and is expected to contribute to economic growth and improve the lives of Nepali citizens, said ambassador of Japan to Nepal Kunio Takahashi during the signing ceremony.

The project will be co-financed by Asian Development Bank (ADB), European Investment Bank (EIB) and Abu Dhabi Fund for Development. Among them, JICA is the largest partner and the first to sign the loan agreement.

Though Nepal has an abundance of water resources, it struggles with blackouts that last up to 16 hours during the dry season. The new hydropower plant is expected to produce stable power even during the dry season as most of the other power plants are run-of-the river types and cannot generate enough electricity in the dry season.

For the first time in the country, Tanahu Hydropower Project will introduce a unique sediment flushing system, which Japan has developed over the years. The advanced system regularly discharges sedimentation accumulated at the bottom of the reservoir to maintain the reservoir capacity, JICA said, adding that if all the facilities are put into service, the project will be completed by October 2020.

Joint secretary and chief of the International Economic Cooperation Coordination Division under the Finance Ministry Madhu Kumar Marasini and director general of South Asia Department at JICA Masataka Nakahara signed and exchanged the 40-year repayment — that also has a 10-year grace period — loan agreement that will attract 0.01 per cent interest annually, on behalf of their respective institutions.

Likewise, finance secretary Shanta Raj Subedi and ambassador Takahashi signed the Exchange of Note of the project on behalf of their respective governments.

Due to the political instability since the 1990s, no new Japanese ODA loans had been signed with Nepal since 2001. In response to the people of Nepal, who desired the 'dividends of peace', JICA decided to extend the loan agreement, the first in the last 12 years, JICA said, adding that it will continue to contribute towards economic growth and social development in Nepal by organically linking its three types of assistance — Japanese ODA loans, technical cooperation and grant aid.