Nepal clears China plan for $1.6 bln hydroelectric dam

Nepal clears China plan for $1.6 bln hydroelectric dam

By Gopal Sharma

KATHMANDU, April 2
Monday Apr 2, 2012
Reuters
(http://www.reuters.com/article/2012/04/02/nepal-china-dam-idUSL3E8F25U420120402)

(Reuters) - A parliamentary panel cleared the way for a Chinese company
to build a $1.6 billion hydroelectric plant in Nepal, the Himalayan
republic's biggest foreign investment programme, Nepali officials said
on Monday.

Nepal's Maoist-led government signed an agreement with China's Three
Gorges International Corp in February allowing the firm to construct the
750-megawatt West Seti dam in the northwest.

The project, set to be completed in 2019, is expected to ease the
crippling power shortage in Nepal whose economy is still emerging from a
decade-long civil war - conflict that scared away investors and slowed
infrastructure projects.

Two weeks ago, the Natural Resources and Means Committee of the
parliament, asked for the project work to be halted due to allegations
of irregularities in awarding the contract to the Chinese company
without any international bidding.

The Chinese firm, which was to own a 75 percent stake in it while the
state-owned Nepal Electricity Authority would take the rest, threatened
to pull out after the parliamentary panel ordered an inquiry.

"We have now directed the government to let the Chinese company go ahead
with the project but with some corrections in the agreement," Shanta
Chaudhary, chief of the parliamentary panel, said after an investigation
of three weeks.

"But the project must be routed through the Nepal Investment Board as
required by law," she said without giving details.

According to Lakshman Ghimire, a member of the committee, the Chinese
firm should be given only 51 percent stakes instead of 75 percent and
the remaining distributed among the public in the remote villages where
the project is to be located.

Officials from the Chinese firm were not available for comment.

Nepal's economy grew 3.5 percent in 2010-11, down from 4.8 percent in
the previous year with the country facing 14 hours of daily power cuts
during the dry season when its rivers flow slowly.

Aid-dependent Nepal, with 900 megawatt of electricity shortage, is one
of the world's 10 poorest countries where tourism and hydropower are two
key areas in which the government is trying to attract foreign investment.

(Editing by Satarupa Bhattacharjya and Alison Williams)
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