Maoists driving Nepal towards hydro disaster

New Zealand News.Net
Thursday 30th September, 2010 (IANS)

Set to generate about 6,500 MW of additional hydropower from 2016 onwards, Nepal is facing the spectre of generation but no buyer, thanks to the obstructive policy announced by its largest party, the Maoists.

The Maoists, now sitting in opposition, have announced their resistance to 14 hydropower companies that would be able to generate about 6,500 MW additional power, with most having Indian investment.

A main reason given by the former guerrillas is the current power scarcity in Nepal, which has seen power outages go up to nearly 20 hours daily during the dry season.

However, power producers say Nepal currently requires about 800 MW of power. Of this, nearly 635 MW is generated domestically while about 70-80 MW is imported from India. About 50 MW comes from thermal plants.

In the next few years, even if the domestic power consumption goes up exponentially, it will still not have the potential to utilise the additional power generated by new projects.

Indian companies investing in Nepal's hydropower projects are regarded by the Maoists as having obtained the deals by arm-twisting the government in order to sell the power generated to India at the expense of Nepal's industries.

But the truth is that most of the projects were allocated on the basis of competitive bidding. Two of them - the 900 MW Upper Karnali awarded to a consortium led by India's GMR Group and the 402 MW Arun III to be developed by India's public sector Satluj Jal Vidyut Nigam - were approved by the cabinet when the Maoists were part of the ruling coalition and subsequently, were endorsed by the appropriate parliamentary committee.

During the brief government headed by the Maoists, their chief Pushpa Kamal Dahal Prachanda himself courted Indian investors for hydropower projects during his visit to India and the Maoist power policy envisioned generating 10,000 MW by 2018.

Hydropower companies say it is more lucrative for them to sell power in Nepal and they would be more than willing to do so if there was a buyer.

A company developing a hydel project for domestic consumption has to pay lower royalty to the government. Moreover, it has a 35-year period to run the project before handing it over to the Nepal government whereas companies generating power for export are given a licence for 30 years.

Currently, Nepal is going through its worst economic crisis with trade deficit soaring by 41.5 percent to NRS 314.66 billion.

According to the Trade and Export Promotion Centre under the ministry of commerce and supplies, imports in the last fiscal grew by over 29 percent to NRS 375.6 billion while exports fell by 11 percent.

Nepal's two biggest export items currently are polyester and other fibres, followed by carpets. However, with its rivers capable of producing nearly 42,000 MW, power could become the biggest export commodity, boosting the economy.

Ironically, some of the hydropower projects that could have helped perk up the economy have not been able to get off the ground due to politically motivated protests.

The 750 MW West Seti Hydropower Project was awarded to Australia's Snowy Mountain Engineering Corporation in 1997.

However, more than a decade later, it is yet to be up and running due to obstruction.

After the fresh Maoist opposition triggered widespread condemnation by Nepal's government, power producers and the media, the former rebels changed their tune, saying the threats were issued by local-level leaders.

However, this has become the standard excuse trotted out by the leadership every time the party faces criticism due to anarchical acts. Investors feel either the leadership is lying or it is fast losing control over its cadre.

The Maoist action has also been scaring away financial institutions with banks wary of lending capital