Monday, June 17, 2013

Negotiations about Arun III Dam to begin today

PDA negotiations with Satluj to begin today

The Investment Board Nepal (IBN) will start power development agreement
(PDA) negotiations with Satluj Jal Vidyut Nigam — developer of the
600-MW Arun III Hydropower Project — on Monday. IBN Chief Executive
Officer Radhesh Pant will lead the negotiations on behalf of the
government, while Satluj Executive Director RK Agrawal will lead his
company. The IBN had held a pre-PDA negotiation with Satluj a month ago.

"Preparations from both the parties have been completed. We will be on
the negotiation table on Monday and Tuesday," said a high-level IBN
official. The IBN, established in 2011 to facilitate large scale
investment projects, has also been holding PDA negotiations with two
other developers — SN Power and GMR Energy — for last three weeks. The
IBN has completed the first round of negotiations with these two companies.

Norwegian SN Power is developing 880-MW Tamakoshi 3 project, while
India's GMR is developing Upper Marsyangdi (600 MW) and Upper Karnali
(900 MW) projects.

"During the week-long negotiations, the developers and the IBN dealt
with some of the contentious issues that need to be settled before
moving towards the signing of the the final agreement," said Pant. The
existing Bonus Act has appeared as a bottleneck during the negotiations,
according to the IBN. As per the Bonus Act of Nepal - 1974, private and
public firms should share at least 10 percent of the profit to
respective employees annually.

"Developers have expressed serious concern over this provision as it
means the foreign developers that are spending billions of rupees in
Nepal have to spend a huge amount while sharing their profits with
employees," said the official. Two taskforces have been formed
comprising representatives from both the government and the developers
(SN Power and GMR) to review legal, financial, technical and managerial
issues. They have been given two weeks to identify a common point on
which both the government and the developers can agree. "We are trying
to achieve a win-win situation for both the developers and the country
by trying to ensure maximum benefit and high utilisation of the
country's water resources," said Pant.

If the PDA negotiations move ahead at the current pace, the government
will sign the final agreement within next three months, according to the
IBN. Investors sign PDA with the government so as to avert any possible
social, economic or policy-level uncertainties during the construction
of the projects.

Posted on: 2013-06-17 08:54

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