March 22, Kathmandu. The government is preparing to snatch the Buddhigandaki hydroelectric project from a Chinese company. The Ministry of Energy, Water Resources and Irrigation has submitted a proposal to the Council of Ministers to snatch the Buddhigandaki project from China Gejuwa Water and Power Group and build it with indigenous investment.
According to sources in the Prime Minister’s Office and the Council of Ministers, Energy, Water Resources and Irrigation Minister Pamfa Bhusal submitted a proposal to the Council of Ministers about two weeks ago.
A source in the Prime Minister’s Office said, “The ministry has held talks with the Chinese company to go ahead with the project as per its earlier decision, but now it has come up with a proposal to go ahead with domestic investments.”
The proposal had reached the Council of Ministers even before the visit of Chinese Foreign Minister Wang Yi to Nepal. An official in the Prime Minister’s Office said the issue could not be discussed in the Council of Ministers as Prime Minister Sher Bahadur Deuba was to visit India soon.
“Now a new decision is being taken to go ahead with the construction of Buddhigandaki,” the official said.
The government had announced in the budget of the current financial year to determine the construction structure of the project and manage it by deploying resources. Energy Minister Pampa Bhusal had in November given a three-month ‘deadline’ to China Gejuwa Water and Power Group, which is discussing the construction of Budhi Gandaki, to decide on taking the project forward. Since it is a multi-purpose project, Minister Bhusal had asked Gejuwa to take a quick decision on the project.
However, the ministry concluded that the Chinese company would not wait for the project as Gezuwa was not interested in resolving the issue within the time frame. Energy Minister Pampha Bhusal has announced to go ahead with the Buddhigandki Hydroelectric Project as per the plan to build a reservoir project in each state.
In the year 2075, under the then Prime Minister KP Sharma Oli, the Council of Ministers decided to entrust the Ministry of Energy with the responsibility of working out the modalities to be given to Gejuwa in Engineering, Procurement, Construction and Financing (EPCF). Sample. According to this model, the company had to look after the technical and financial aspects of the project.
As per the modalities of EPCF, after the construction of all investment projects taken up by Gejuwa, the Government of Nepal will have to pay Sawa and interest in installments for a fixed year. The investor and the interest rate for such loans should have been agreed upon by both the parties at the outset.
However, the Ministry of Energy has not been able to reach an agreement with Gejuwa as mandated. During the talks held from January 19 to 20, it was agreed from both the sides to bring a suitable proposal soon. Though the potential of the project, cost, loan and interest rate were discussed, no agreement was reached. After that there was no conversation with Gejuwa.
So the ministry has also started technical homework to move forward in a new way. Presently, NEA Engineering Company under Nepal Electricity Authority is updating the cost estimate of the project. The estimated cost of the Buddhigandaki in 2073 BS was Rs 311 billion (US thousand 2,593 million). The study is designed to study the rising cost of the project in line with the increase in dollar value and the increase in construction materials and cost over the past six years.
Government has four options
Now, the government has done its homework to take the Budhi Gandaki project forward with various modalities. According to sources in the Ministry of Power, the idea is to create a separate authority or company within the ministry to make Buddhigandki.
Swarnim Wagle, the then Deputy Chairman of the National Planning Commission, is preparing to build the Budhi Gandki project with indigenous capital as suggested by the committee’s report. The committee had given three options for making Buddhigandki with indigenous investment.
Government of Nepal, Nepal Electricity Authority, Employees’ Provident Fund, Civil Investment Fund, Hydropower Investment and Development Company, National Insurance Institute, Insurance Companies, Nepal Telecom, Upper Tamakoshi, Chile Hydropower Company etc. The committee concluded that investment can be raised by setting up ‘Budhigandaki Hydropower Company’ as a subsidiary. While building such a project, the government had to finance a viability gap of about Rs 94 billion, including land acquisition and resettlement.
Doing so would cost the project 176 billion and 30 percent or 53 billion equity and 70 percent or Rs. The committee, which had to bear the debt of 123 billion rupees, took the measure. The committee was of the view that the money spent by the government on the viability fund would be recovered from the infrastructure tax on petroleum products.
The committee had also given another option of development and construction of the project by Nepal Electricity Authority with full investment of Government of Nepal. The government was asked to provide resources through share and loan investment to Nepal Electricity Authority and Nepal Electricity Authority would implement the project.
The committee also gave a third option for project development and construction in engineering, procurement, construction and investment methods. The committee recommended that the financing of engineering, procurement and construction of the project should be entrusted to a single company through competition. The committee concluded that the project may be handed over to the Government of Nepal/Nepal Electricity Authority or may be operated for a fixed period.
The builder will himself manage the source of the loan and ask the Government of Nepal/Nepal Electricity Authority to refund the investment annually once the project comes into operation. The report said that the Nepal Electricity Authority (NEA) will refund the investment from the proceeds from the sale of electricity generated from the project.
Apart from this, the ministry has also discussed the concept of building reservoir with dam and power house as separate projects in the project, which would require huge investment and would not be possible with government and private sector investment alone. . The government plans to separate the reservoir and power house and attract the private sector.
The government plans to construct a reservoir with its own investment and hand over the accumulated water to the power house and the construction of the power house to the promoter company. The promoter company plans to pay a fee to the government for using the reservoir.
This is the basic concept of the government to invest in the construction of reservoirs and encourage other promoters to generate electricity from it. The Japan International Cooperation Agency (JICA) has proposed this modality for the Nalsingad project. JICA has said that it will provide a long-term concessional loan from the Japanese government at 0.01 percent interest rate for the construction of the reservoir. Buddhigandaki is also contemplating whether it can be made or not.
A project that has been ruined by politics
The Budhi Gandaki project has been the victim of political manipulation time and again. Initially, the government led by CPN-Maoist Central Committee chairman Pushpa Kamal Dahal Prachanda decided to award the project to Gejuwa for construction on the EPCF model. An agreement was reached on June 6, 2006 at Baluvatar between the then Energy Minister Janardan Sharma and the representative of Gejuwa.
However, on September 9, in the meeting of the Agriculture and Water Resources Committee of the then Parliament, it was directed to be repealed. Based on the same instructions, the Sher Bahadur Deuba-led government snatched Buddhigandaki from Gejuwa on 12 November 2006 and announced on 26 December 2014 that the project would be constructed with indigenous investment. However, the then electoral alliance of CPN-UML and UCPN (Maoist) made it an election issue and said that the Budhi Gandaki project would be handed over to China.
After the election, the KP Oli-led government had decided to give Gejuva the National Pride of Buddhigandki Hydroelectric Project in the EPCF model.
Gejuwa applied to the Prime Minister’s Office on 20 September to take over the construction work of Budhigand for the second time. After the Prime Minister’s Office asked Gejuwa to bring a proposal to discuss the modalities of the construction, the then Energy Minister Bershaman Pun submitted the proposal to the Council of Ministers accordingly. Although the decision was taken accordingly and the discussion went ahead, Gejuwa is not yet ready to invest.
Although the project was identified from a study conducted by the then Electricity Department in BS 2046, the government started allocating the budget from FY 2069/70 to prepare a detailed project report. The government has so far spent over Rs 40 billion to prepare the Detailed Project Report (DPR) and distribute compensation to the affected areas.
The project has started distribution of compensation of land in Duwan area since 2074 BS. So far, it has distributed 47 thousand 439 ropes of individual land to Gorkhas and Dhadings for about 35 billion rupees. A total of 58 thousand 153 plantation land is being acquired for the project.
Compensation for houses, cowsheds, structures and plants in Duwan area has been fixed on Monday itself. There has also been delay in the identification of places for rehabilitation in the project and management of complaints received in disbursement of compensation.