Nepal government to ink deal with GMR despite Maoists

KATHMANDU - Nepal’s caretaker government is set to ink an agreement with Indian construction major GMR and its consortium for the 900 MW Upper Karnali hydropower project despite warnings by the former Maoist guerrillas that they would oppose it as well as 13 other projects, mostly involving Indian investors.

The energy ministry is set to sign a project development agreement with the GMR-led consortium Sunday, said Anup Kumar Upadhyay, spokesperson at the Energy Ministry.

“We had planned to sign it Friday but it was delayed due to various reasons. If we can’t wrap it up by Sunday evening, the understanding is that it will be done after the GMR representatives return from a China trip,” Upadhyay told IANS.

In 2008, a consortium comprising GMR Energy Ltd, GMR Infrastructure and Italian-Thai Development Project successfully took part in an international bidding for the Upper Karnali project, then estimated to generate 300 MW.

However, after winning the contract for feasibility study, the consortium proposed to the government that it could be upgraded to 900 MW.

Nepal will receive 12 percent free energy as well as royalty from both the sale of the power generated and the generation capacity.

Upadhyay said the agreement was delayed due to the time taken by the state authorities to issue an environmental clearance as well as the frequent general strikes called by political parties.

After the agreement with GMR, Nepal will sign five more project development agreements in quick succession. Three of these are with Indian investors: the public sector Satluj Jal Vidyut Nigam for the 402 MW Arun III; with Green Ventures, an Indian joint venture in Nepal founded by IIT alumnus K.R. Krishnan for Likhu 4 (120 MW); and Himtal Hydropower, in which GMR has 80 percent stake, for the Upper Marsyangdi (600MW).

Besides, agreements with seven more Indian companies, including Jindal Power Ltd, Maytas Estates and PES Energy, are in the pipeline.

Upadhay said the warning issued by the Maoists this week that all hydel projects above 100 MW would have to seek the approval of parliament or face obstruction had been dismissed by Energy Minister Prakash Sharan Mahat.

Mahat trashed the allegation by the opposition party that the government was favouring Indian companies and awarding contracts to them to the detriment of national interests.

According to him, the Indian companies bagged the projects after taking part in an international bidding process. He also said that in the coming days, the ministry was set to sign deals with a Norwegian and a Brazilian company as well, which gave the lie to the accusation.

The minister also warned that the Maoist threat was alarming investors as well as financial institutions and could prove damaging for the economy of Nepal.

The Maoist move has also been condemned by the Independent Power Producers’ Association as well as the Chamber of Nepalese Industry.

There are reports that the Maoists have been targeting GMR after the Indian company resisted extortion bids.

The fresh threat to Indian companies comes as the former rebels are blaming New Delhi for the failure of their party to win the prime ministerial election even after seven rounds of vote.