Nepal, India sign deal to build hydropower plant

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Kathmandu on Friday (Sep 19) signed a long-delayed agreement with New Delhi to build Nepal’s biggest hydropower plant in a bid to kickstart economic growth and ease crippling electricity shortages in both countries.

A vast network of fast-flowing rivers through the Himalayas leaves huge untapped hydropower resources at Nepal’s disposal, but disagreements over perceived threats to Nepalese sovereignty have stalled earlier agreements to develop joint ventures with India. The deal will see Indian infrastructure giant GMR construct a 900-megawatt hydropower project on Nepal’s Karnali river that is forecast to generate electricity from 2021 onwards.

“This is a historic moment for Nepal and India as Nepal is signing a great agreement with GMR,” India’s Home Minister, Rajnath Singh, said at the signing.

According to GMR, 12 per cent of the power generated by the US$1.5 billion (S$1.9 billion) Karnali project will be given to Kathmandu free of cost, with the remainder exported to India and possibly Bangladesh.

“India is very happy with this deal,” said Singh, who was in Kathmandu for talks with his counterparts from the eight-nation South Asian Association for Regional Cooperation summit.

The deal will provide Nepal with a 27 per cent share of the equity, with GMR agreeing to transfer complete ownership of the project to Kathmandu 25 years after the plant begins generating electricity.

“This agreement has opened doors for future plans to utilise Nepal’s natural resources for the benefit of its people,” said Nepalese Home Minister Bamdev Gautam.

Kathmandu has also approved a power trade agreement with New Delhi, according to Nepal’s Information Minister Minendra Rijal but this will be signed at a later date.

Nepal’s total installed power generation capacity currently lags at just 750 megawatts – less than two per cent of its potential. That is insufficient even to meet Nepal’s own energy needs, forcing the country to endure power cuts of up to 12 hours a day and purchase fuel from India, itself an importer of petroleum products.

India’s new Prime Minister Narendra Modi has sought to deepen energy ties between the two neighbours, securing a commitment to fast-track the Karnali project during his visit to Kathmandu last month. Although New Delhi has traditionally exerted huge influence in Nepal, Beijing has recently intensified its engagement with the Himalayan nation, pumping billions of dollars into infrastructure projects ranging from roads to hydropower plants.

Nepal has endured prolonged political limbo over plans to draft a new constitution since 2006 when former rebel Maoists laid down arms and signed a peace deal, paving the way for constituent assembly polls two years later.

 

 

Source : Channel News Asia | September 20, 2014

Thomas D’Innocenzi

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Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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