Despite the government according top priority and fast tracking these projects, possible delays in transmission lines creates uncertainty
Sujata Awale
Kathmandu
The super six projects, which are envisioned by the government to mitigate the soaring power crisis in 2009, is still in limbo. Although the government had awarded licenses to private sector companies in June 2010 based on competitive bidding, developers have not been able to construct the projects till date.
Despite the government providing top priority to their construction, negligence over evacuation and transmission lines has invited an uncertain situation in hydel development. Delay in proper planning for both project construction and transmission lines and lack of coordination between ministries and government agencies, contradictory and unclear policies, cumbersome lengthy processes and instable government are other reasons for the delays.
As per the National Electricity Crisis Mitigation Plan 2008, the super six projects were envisioned to minimise the acute problem of load shedding. The government intended to develop eight hydel projects of different capacities under the Build, Own, Operate and Transfer (BOOT) model through competitive bidding as per provisions in article 35 of the Electricity Act, 2049. However, developers showed interest in six projects which later on took on the term of super six projects. Solu (23.5 MW), Lower Solu (82 MW), Khare Khola (24.1 MW), Maya Khola (14.9 MW), Singati Khola (16 MW) and Mewa Khola (50 MW) are the projects.
Except for Mewa Khola, Nepal Electricity Authority (NEA) has concluded the power purchase agreement (PPA) for the other five in November 2013.
Unmet commitment
After four years of struggle, Solu reached financial closure on September 28. CEO of Upper Solu Hydroelectric Company, Shashi Rajbhandari, said, “We have taken high risk and finally arranged loans from banks to initiate construction work.” Citing that it took them more than three years to sign the PPA, he complained, "Although 'Request for Proposal' clearly mentioned that NEA shall purchase electrical energy generated from the super six projects at the posted rate at the time of signing the PPA and that NEA would construct the trunk portion of transmission lines, time and again we were troubled unnecessarily." According to him, the government in its preliminary study showed that the total project cost would be Rs 1.2 billion but the project cost has soared and the present target completion cost of the project is Rs 4.1 billion.
With assurance from NEA to complete the transmission project by April 2018, the company had arranged a loan of Rs four billion. Rajbhandari said, “If the government fails to complete the transmission line as per its commitment, we will face huge losses. In four years we have already spent Rs 242 million."
Elaborating on the hassles that they faced since the license was gained, Rajbhandari said, “It shows the failure of the government that despite having written commitments, it could not implement what it committed to. Developers get nothing but a loss and unnecessary hassles." He also stated that the blame game and lack of coordination between NEA, Department of Electricity Development and Ministry of Energy further worsens the situation.
Transmission delays?
Agreeing with him, Sandeep Garg, Director of Essel Clean Hydropower Project (ECHP) the developers of Lower Solu, said, “The government has trapped private developers with attractive commitments which were never delivered." Citing that the super six was supposed to 'super fast track' projects, he said, "Lack of strong political will, stereotype work culture of government officials, lack of coordination and frequently changing governments delayed the whole process."
Reportedly, the private sector bid and paid Rs 43 million for license of six projects, which were many folds higher than the normal price. "Despite paying five times higher royalty, guaranteed performance bond and 45 per cent penalty if developers don't complete their work, we have not enjoyed any special consideration. Rather we are tangled in the whole government process," he said with disappointment. As per the PPA, a penalty can be charged to both investors and the government if any party does not finish their work within the scheduled time.
According to him, the project cost of Lower Solu has increased by Rs three billion during these four years. Reportedly, the 82 MW project is in the process of achieving financial closure within a few months from the Dutch Development Bank with a cost of Rs 180 million per MW. Garg said that the government should not delay the construction of transmission lines if it is serious about making this a government and private sector success story. He said that there should be a one door system and problem mitigation committee. But most importantly the government must deliver on its commitments.
Uncertainty over constructing of transmission lines by the stipulated date is a major reason that developers are in wait and watch mode even after the PPA. As per plans, the Koshi Corridor 220 kV double circuit transmission line will evacuate Maya and Mewa Khola projects, while Solu Corridor 220 kV double circuit transmission line will take care of Lower Solu and Solu. Lamosangu Singati 132 kV transmission line will evacuate generated power from Singati.
Snail pace work
According to NEA, the process of transmission line projects is not delayed, it is on track. Rajan Dhakal, Deputy Manager at Grid Development of NEA, said, "There is no doubt that the government has neglected the importance of developing transmission lines before providing license to private developers." He further said, "While issuing license of the super six projects, no work had been done for Solu Corridor and Koshi Corridor transmission line projects."
According to him, Indian Exim Bank has already agreed to invest USD 250 million on the Solu and Koshi Corridor transmission line projects. "We have appointed Wapcos India for Koshi and Lahmeyer India as consultants for the Solu Corridor projects and by the end of December we will open bidding for project contracts," adding that these consultants are working on formulating detailed project reports and estimating the project cost.
Dhakal stated that if everything goes smoothly, the construction of the Koshi Corridor transmission line will be completed by 2019. However, even he had his doubts. He said, "The situation of no law and order in the country has created difficulties working in the field. Moreover, lack of coordination and assistance from various ministries and government authorities further delays development of transmission lines."
Right of way, land acquisition problem, unfavourable and contradictory policies further make developing transmission lines a challenge. He complained that they do not have sufficient manpower, instruments, equipment, technology or the allocation of budget to expedite the construction of projects.
Janardhan Gautam, Project Manager of Solu Corridor Transmission Project at NEA, said, “We have completed paper work for the bidding process. But in the absence of a managing director at NEA the process has been delayed.” According to him, a 90-km 132 kV transmission line is expected to be completed by April 2018. Reportedly, there will be approximately 300 towers in the corridor from Mirghaiya, Siraha to Pingala, Solukhumbhu. “If the project is completed by the stipulated date, the corridor will be able to evacuate power from six hydropower projects in pipeline,” he added.
He further said if objection from locals and forest clearance does not create problems, it will surely be accomplish on time. The government has already agreed to provide Rs three billion in loan for the project in the initial phase.
On the need to appoint an MD at NEA, Rajendra Kishore Kshatri, Secretary of MoE, said, "The absence of the MD in NEA certainly impacts decision making. However, it is not a major excuse." He informed that the Cabinet has already appointed Mukesh Kafle as the new MD for NEA and he will resume office within few days. Agreeing that lack of serious concern over transmission line construction is a major reason for delays in the project, Kshatri said, "We have found that transmission line projects were not given priority during PPA which is why the construction of projects is getting delayed."
According to him, the transmission line project is plagued with problems of land acquisition, right of way, compensation of demand to locals, unclear policies to coordinate with government agencies. He stressed on the need of clear policies to develop hydel projects along with transmission lines. "There should be consolidate national interest among all government agencies, stakeholders and locals, only then the development of the hydropower sector will be possible," he opined.
Published on November 2, 2014 / THT Perspectives
Sujata Awale
Kathmandu
The super six projects, which are envisioned by the government to mitigate the soaring power crisis in 2009, is still in limbo. Although the government had awarded licenses to private sector companies in June 2010 based on competitive bidding, developers have not been able to construct the projects till date.
Despite the government providing top priority to their construction, negligence over evacuation and transmission lines has invited an uncertain situation in hydel development. Delay in proper planning for both project construction and transmission lines and lack of coordination between ministries and government agencies, contradictory and unclear policies, cumbersome lengthy processes and instable government are other reasons for the delays.
As per the National Electricity Crisis Mitigation Plan 2008, the super six projects were envisioned to minimise the acute problem of load shedding. The government intended to develop eight hydel projects of different capacities under the Build, Own, Operate and Transfer (BOOT) model through competitive bidding as per provisions in article 35 of the Electricity Act, 2049. However, developers showed interest in six projects which later on took on the term of super six projects. Solu (23.5 MW), Lower Solu (82 MW), Khare Khola (24.1 MW), Maya Khola (14.9 MW), Singati Khola (16 MW) and Mewa Khola (50 MW) are the projects.
Except for Mewa Khola, Nepal Electricity Authority (NEA) has concluded the power purchase agreement (PPA) for the other five in November 2013.
Unmet commitment
After four years of struggle, Solu reached financial closure on September 28. CEO of Upper Solu Hydroelectric Company, Shashi Rajbhandari, said, “We have taken high risk and finally arranged loans from banks to initiate construction work.” Citing that it took them more than three years to sign the PPA, he complained, "Although 'Request for Proposal' clearly mentioned that NEA shall purchase electrical energy generated from the super six projects at the posted rate at the time of signing the PPA and that NEA would construct the trunk portion of transmission lines, time and again we were troubled unnecessarily." According to him, the government in its preliminary study showed that the total project cost would be Rs 1.2 billion but the project cost has soared and the present target completion cost of the project is Rs 4.1 billion.
With assurance from NEA to complete the transmission project by April 2018, the company had arranged a loan of Rs four billion. Rajbhandari said, “If the government fails to complete the transmission line as per its commitment, we will face huge losses. In four years we have already spent Rs 242 million."
Elaborating on the hassles that they faced since the license was gained, Rajbhandari said, “It shows the failure of the government that despite having written commitments, it could not implement what it committed to. Developers get nothing but a loss and unnecessary hassles." He also stated that the blame game and lack of coordination between NEA, Department of Electricity Development and Ministry of Energy further worsens the situation.
Transmission delays?
Agreeing with him, Sandeep Garg, Director of Essel Clean Hydropower Project (ECHP) the developers of Lower Solu, said, “The government has trapped private developers with attractive commitments which were never delivered." Citing that the super six was supposed to 'super fast track' projects, he said, "Lack of strong political will, stereotype work culture of government officials, lack of coordination and frequently changing governments delayed the whole process."
Reportedly, the private sector bid and paid Rs 43 million for license of six projects, which were many folds higher than the normal price. "Despite paying five times higher royalty, guaranteed performance bond and 45 per cent penalty if developers don't complete their work, we have not enjoyed any special consideration. Rather we are tangled in the whole government process," he said with disappointment. As per the PPA, a penalty can be charged to both investors and the government if any party does not finish their work within the scheduled time.
According to him, the project cost of Lower Solu has increased by Rs three billion during these four years. Reportedly, the 82 MW project is in the process of achieving financial closure within a few months from the Dutch Development Bank with a cost of Rs 180 million per MW. Garg said that the government should not delay the construction of transmission lines if it is serious about making this a government and private sector success story. He said that there should be a one door system and problem mitigation committee. But most importantly the government must deliver on its commitments.
Uncertainty over constructing of transmission lines by the stipulated date is a major reason that developers are in wait and watch mode even after the PPA. As per plans, the Koshi Corridor 220 kV double circuit transmission line will evacuate Maya and Mewa Khola projects, while Solu Corridor 220 kV double circuit transmission line will take care of Lower Solu and Solu. Lamosangu Singati 132 kV transmission line will evacuate generated power from Singati.
Snail pace work
According to NEA, the process of transmission line projects is not delayed, it is on track. Rajan Dhakal, Deputy Manager at Grid Development of NEA, said, "There is no doubt that the government has neglected the importance of developing transmission lines before providing license to private developers." He further said, "While issuing license of the super six projects, no work had been done for Solu Corridor and Koshi Corridor transmission line projects."
According to him, Indian Exim Bank has already agreed to invest USD 250 million on the Solu and Koshi Corridor transmission line projects. "We have appointed Wapcos India for Koshi and Lahmeyer India as consultants for the Solu Corridor projects and by the end of December we will open bidding for project contracts," adding that these consultants are working on formulating detailed project reports and estimating the project cost.
Dhakal stated that if everything goes smoothly, the construction of the Koshi Corridor transmission line will be completed by 2019. However, even he had his doubts. He said, "The situation of no law and order in the country has created difficulties working in the field. Moreover, lack of coordination and assistance from various ministries and government authorities further delays development of transmission lines."
Right of way, land acquisition problem, unfavourable and contradictory policies further make developing transmission lines a challenge. He complained that they do not have sufficient manpower, instruments, equipment, technology or the allocation of budget to expedite the construction of projects.
Janardhan Gautam, Project Manager of Solu Corridor Transmission Project at NEA, said, “We have completed paper work for the bidding process. But in the absence of a managing director at NEA the process has been delayed.” According to him, a 90-km 132 kV transmission line is expected to be completed by April 2018. Reportedly, there will be approximately 300 towers in the corridor from Mirghaiya, Siraha to Pingala, Solukhumbhu. “If the project is completed by the stipulated date, the corridor will be able to evacuate power from six hydropower projects in pipeline,” he added.
He further said if objection from locals and forest clearance does not create problems, it will surely be accomplish on time. The government has already agreed to provide Rs three billion in loan for the project in the initial phase.
On the need to appoint an MD at NEA, Rajendra Kishore Kshatri, Secretary of MoE, said, "The absence of the MD in NEA certainly impacts decision making. However, it is not a major excuse." He informed that the Cabinet has already appointed Mukesh Kafle as the new MD for NEA and he will resume office within few days. Agreeing that lack of serious concern over transmission line construction is a major reason for delays in the project, Kshatri said, "We have found that transmission line projects were not given priority during PPA which is why the construction of projects is getting delayed."
According to him, the transmission line project is plagued with problems of land acquisition, right of way, compensation of demand to locals, unclear policies to coordinate with government agencies. He stressed on the need of clear policies to develop hydel projects along with transmission lines. "There should be consolidate national interest among all government agencies, stakeholders and locals, only then the development of the hydropower sector will be possible," he opined.
Published on November 2, 2014 / THT Perspectives
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