Government rolls back 13 per cent tax on internet fee

The government today rolled back its decision to raise internet fees by 13 per cent from 11 per cent.
This is the second time the government has rolled back its decision – announced in the budget for the current fiscal year – after West Seti. The government had – against the agreement between the Chinese company and Investment Board of Nepal – in the budget for the current fiscal year claimed to construct West Seti on its own. However, the Chinese government protested claiming that it is going to construct the hydropower project as the agreement has not yet been terminated. The government through the investment board – which has the Prime Minister as its chair – rolled back the decision to construct on its own and reassured China that the hydel project will be constructed by the Chinese company as according to the agreement.
Likewise, the government rolled back the decision to hike tax on internet fee after a meeting between the internet service providers and Ministry of Industry and Communications today.
The internet service providers will not charge additional 13 per cent tax levied by the Nepal Telecom (NT) now, according to the agreement. "They will pay the telecommunications service fee to the government from the amount they have been charging to the customers."
The agreement will be implemented for those customers, who have been taking the service only for home service. The corporate customers, however, still have to pay the 13 per cent tax, though the internet is not the end product and is a tool that could boost the productivity and also profit, which will be returned back to the government. The government will get more benefit, if it decreases the tax than increase.
The government earlier had formed a committee comprising internet service providers, Nepal Telecom (NT) and ministry officials.

Chinese company to develop 750-MW West Seti

A meeting of Investment Board Nepal chaired by Prime Minister Sushil Koirala today approved investment from a Chinese company to develop the 750-megawatt West Seti Hydropower Project.
The project that is estimated to cost Rs 160 billion will now be developed by a joint venture with Nepal Electricity Authority (NEA) and CWE Investment Corporation, a subsidiary of China’s Three Gorges Corporation (TGC). The state power utility, NEA will have 25 per cent in equity, and CWEI will inject investment for the equity and borrow the remaining amount.
The joint venture will conduct geological tests before monsoon for the mega hydropower
project that is going to be constructed in Baitadi, Bajura, Dadeldhura and Doti districts of Far Wester Region, according to the chief executive officer of the Board Radhesh Pant.
Soon after completion of geological and hydrological tests, we will begin negotiations on Project Development Agreement (PDA) with the Chinese company,” he said, adding that the project will start generating power in 2023, if everything goes according to the plan.
Earlier in August 2012, the government had formally handed over the West Seti hydropower project – that was then aimed at domestic consumption – to the CWEI, after a memorandum of understanding was signed between the company and the Board. The board – that looks after mega projects – had then started preliminary negotiation with the project developer. But the NEA was hesitant to seal the deal as it was worried of power surplus by 2017 – as more power producers are generating power lately – whereas the Chinese developer was also not sure of the market, in case of power surplus in Nepal. The state power utility is the sole buyer of electricity developed by all the developers.
However, after Nepal-India Power Trade Agreement (PTA) recently, NEA and the Chinese developer, came near to agreement. The PTA allows both Nepal and India to buy and sell electricity.
The 750-MW project also got back on leak after the visit – in March end – of China Three Gorges Corporation chairman Lu Chun, who met with the premier Koirala to discuss the issues of resettlement and rehabilitation of the displaced families by the project.
The Board has also decided to charge $1,500 per MW in negotiation fee for Power Development Agreement (PDA) as the project is not handed through open bidding like Upper Karnali and Arun III. The developer has to pay the fee either the negotiations become successful or unsuccessful. A seven-member team has been formed under Pant for the negotiation.
The project was envisioned some two decades ago as Snowy Mountain Engineering Corporation (SMEC) had shown interest in developing the project. The first study was also conducted in 1987. The government was however forced to revoke the licence of the Australian company as it failed to start work after repeated renewal.
Meanwhile, the Board also decided to amend the project negotiation agreement for Tamakoshi III hydropower project. The chief executive is authorised for the amendment. It has also decided to form an expert committee to review the amendment.

West Seti completion to be delayed by two more years

The Investment Board said that the 750-MW West Seti Hydropower Project will be delayed by two more years to 2021 as the developer has demanded changes in rehabilitation and resettlement modality of the project.
The CWE Investment – a subsidiary of power developer China Three Gorges Corporation (CTGC) – that is developing the project has recently asked the government to help land acquisition and resettlement,” said Investment Board chief executive Radhes Pant, during an interaction organised by GP Koirala Foundation here today. “Though, it had agreed to carry out land acquisition and resettlement, itself,” he said, adding that the government will have to change the law to address the request of the Chinese investor. “It will take some more time as the domestic law do not allow such changes.”
The law of the land needs to be changed, if the government takes over the responsibility of acquiring land and managing resettlement, Pant added.
The existing Land Acquisition Act 1894 reads that the government shall provide the land, if it is under its ownership, while the private developer has to acquire the land on its own for any project development.
The CWE has demanded one-and-a-half years to complete the project from earlier schedule of 2019 due to difficulties in land acquition and resettlement.
However, energy secretary Bishwo Prakash Pandit, on the occasion, said that the government is ready to help the developer in land acquisition and resettlement. “But the investor will have to bear the cost,” he added.

Likewsie, energy minister Umakant Jha, stressed on early completion of the project to end the current power crisis. “The government will make revise the law, if necessary, for the project implementation,” he added.

According to the memorandum between Ministry of Energy and the Chinese company CWE Investment on March 1, 2012, the project was planned to start from July 2014 and completed by 2019.

Likewise, the revised memorandum signed between the IBN and CWE on August 27, 2012 also accepted the time frame and given Chinese company an additional six months compensation time to make up for the time lost due to the investigation of parliamentary committee for natural resources.

According to the agreement between the Board and CWE Investment, the 10 per cent equity will be offered to the locals, apart from 150 MW of electricity to in the far West and multipurpose benefits. The agreement has also explored new possibilities of developing an industrial hub in the Far West with assistance from CTGC.

The Board will hold a meeting with the Chinese investors soon, Pant said, adding that they will discuss problems in land acquisition and resettlement, optimitisation of the project – making it a multipurpose one – and to hold studies on seismic condition of the project site.
Earlier, an Australian company Snowy Mountains Energy Corporation (SMEC) had conducted study but a separate seismological studies need to be done to ensure safety of the project area.

The Board and CWE Investment – that has invited the Board to come to China for discussion – has not yet signed a power development agreement (PDA), though the CWE had completed technical evaluation of the project on March 8 and financial evaluation on July 30.

However, Chinese ambassador to Nepal Wu Chuntai, on the occasion, claimed that the West Seti project is a milestone for Nepal-China relationship and Chinese government and the CWE were fully committed to realise it.

China has agreed to provide $1.6 billion loan for the project development.