Upper Karnali’s Progress Almost Nil In Seven Years After GMR’s Dillydally

The Government of Nepal and Indian Energy Company GMR on September 19, 2014 had signed the Project Development Agreement ( PDA) in regard with the 900-MW Upper Karnali Hydro Electricity Project.

The agreement states that the project will be completed within seven years of the signing of the PDA. Coming September 19 marks the completion of the seven years of the PDA, but the progress of the project is almost nil.

The project promoter spends most of its time in survey and other research works. It is yet to make required preparations for the project construction.

The agreement has granted two years for the financial closing and remaining five years for the construction works of the project.
GMR was selected as the project promoter through a global tender in 2008 by the government. The company’s failure to give a pace to the project has pushed it towards uncertainty.

The project implementing body Investment Board has not extended the deadline of GMR that had ended in 2018. The company has not been able to make the Power Purchase Agreement (PPA).

The GMR Upper Karnali Hydropower Project has approached the Investment Board requesting for the extension of deadline with the PPA schedule, but the Board is yet to decide over the proposal.

The promoter company has said that activities to acquire private land and cutting down trees at project affected areas are underway.

The company has purchased 10 hectares of land out of 48.59 hectares so far. Mobilization of financial resources has been affected due to delay in PPA of the project.

The company has already signed MoU with Indian Power Trade Corporation to sell the produced power to Bangladesh.
According to GMR, Bangladeshi government itself would buy 500 MW out of the 900 MW electricity produced from Upper Karnali.

As per the agreement, the government of Nepal would get 27 per cent share or 12 per cent (9108 MW) electricity free of cost from the project. The project should be handed over to the Government of Nepal after 25 years free of cost. A total of Rs 116 billion cost has been estimated for the construction of the project.

The dam of the project would be in Dailekh while power house will be in Achham. A draft of the project has been made in a boot model (build, own, operation, transfer).

An arrangement has been made in PDA to provide 50 per cent discount on customs while purchasing cement, rod and steel materials imported for the construction of the project.

There is a provision in the PDA that the government has to pay all compensation if situation goes out of control, if there is a change in law and if the government fails to complete the work within stipulated time without fulfilling its responsibilities.

Some experts of water resources sector have been objecting the PDA, saying the government has to pay compensation even to end agreement with GMR due to this provision.

The project will be built as per the build, own, operate and transfer (BOOT) model. Although the government has given many facilities as tax exemption and subsidies, the GMR has not been able to do the PPA for the project.

The PDA has the provision that 50 per cent concession would be provided in customs duty while importing cement, rod, steel and other materials required for the construction of the project.

It is also stated in the PDA that the government will have to bear the entire compensation in case the project is not entitled to get tax exemption if the project is not completed within the deadline due to situation beyond control, there is a change in the laws or the government fails to fulfill its responsibility.

Many water resources experts have been objecting to the PDA, citing the government is instead made to pay the compensation even for terminating the agreement with GMR due to this provision.
Intention to ‘hold’ project

The Upper Karnali Project Concern Committee has accused GMR of lack of interest in expediting the project with the intention of ‘holding’ the project. Locals have alleged of unnecessary delay in works like cutting trees, land acquisition and distribution of compensation, rehabilitation and resettlement of the displaced people.

“There is no any progress in the project works since the last 13 years. There is only this publicity that the project will be constructed. When will the company be able to complete the project when it has not even been able to acquire the land for the project,” said one Jeevan Thapa, a resident of Dab, a project-affected area in Dailekh district.

Bam Bahadur BC, the Coordinator of the Committee and a local from Bhairabsthan in Achham district, said there is doubt regarding the company moving ahead the project when it has not been able to do so even when it has been enjoying various facilities.

“Many studies have proved that this project is cheaper in terms of cost and technologically appropriate. Still the GMR seems to be reluctant and it is stuck,” BC said, adding that either the government should extend the construction company’s term or terminate the agreement with it.

There is a lot of confusion at the local level as the project is stalled for many years. GMR has yet to acquire 622 ropanis of land for the project.

Source : RSS,