Govt hands over West Seti and SR-6 hydropower to Indian NHPC

Kathmandu; The government has handed over the construction of 750 MW West Seti to NHPC, an Indian company. In addition, the Indian company also gets a responsibility to construct Seti River-6 (SR-6).

Chief Executive Office of Investment Board Nepal (IBN) Sushil Bhatta and Chairman and Managing Director of NHPC Limited Abhay Kumar Singh, on Thursday, signed a memorandum of understanding into the effect. Prime Minister Sher Bahadur Deuba along with the Minister for Energy, Water Resources and Irrigation Pampha Bhusal, Finance Minister Janardan Sharma, Minister for Industry, Commerce and Supplies Dilendra Prasad Badu, Minister for Forest and Environment Pradeep Yadav, Chief Minister of Sudurpashchim Province Trilochan Bhatta and high ranking officials of the Indian Embassy were among the present in the signing ceremony.

The IBN board meeting held on June 14, decided to award the contract for the feasibility study and construction of the West Seti and SR-6 projects to NHPC. Earlier, the government had signed an agreement with an Australian company and a Chinese company to hand over the project. Over the period, the projects saw dilly-dallying of more than a decade, when the Australian company spent a wasteful 17 years while the Chinese company spent more than six years in the process.

According to the Thursday agreement, NHPC will have to submit to the IBN a detailed study report on issues like economic, financial, technical, social and environmental, accessibility to the energy market and transmission lines, among others, of both the projects in the next two years.

Speaking at the program, Prime Minister Deuba said the agreement is a landmark for Nepal-India energy cooperation. He said it could help Nepal to reduce its trade deficit via electricity exports.

“The project will aid in the social and economic development of Sudurpashchim Province while helping to reduce the trade deficit,” Deuba said. He also solicited the cooperation of local people for the completion of these projects on time.

IBN’s CEO Bhatta said with the development of these hydropower projects, Sudurpashchim Province will enter into the mainstream of economic and social development. “Along with these projects, infrastructure like roads and transmission lines will be developed in the West Seti corridor,” he said.

NHPC’s Chairman Singh expressed his commitment to complete the projects on stipulated time and investment. According to him, they are investing a total of INR 180 billion in both projects.

Citing problems in the construction of West Seti, the government took forward the project with SR-6 under a single package. The IBN showcased these projects also in the Nepal Investment Summit 2019. Since that time, NHPC has been expressing its interest in developing these projects.

The Australian company Snowy Mountain Engineering Corporation (SMEC) was assigned to construct West Seti Hydropower Project 17 years ago. But the company did nothing but hold the project's license for 17 years. The government scrapped licenses to the company on July 27, 2011.

Later on, the government awarded the project to the Chinese company, China Three Gorges International Corporation (CTGI) on February 29, 2012. But the Chinese company, too, did not build it. Then the government scrapped the license to the Chinese company four years ago.

Projected cost

The proposed 750 MW West Seti storage hydroelectricity project is estimated to cost US $1.32 billion, while the 450 MW SR-6 Hydropower Project is projected at US $800 million. The amount that NHPC is investing amounts to around Rs 288 billion.