IBN, Statkraft to extend PNA time limit of 650 MW Tamakoshi III Hydropower Project
15 April 2015 | The Kathmandu Post
KATHMANDU, APR 14: Investment Board Nepal (IBN) and Norwegian company Statkraft will extend the current project negotiation agreement (PNA) for the development of the Tamakoshi III hydropower project as the IBN board has okayed lengthening the deadline. The time limit had been temporarily extended after the initial deadline expired in October 2014. A PNA with a validity of 18 months had been signed in April 2013. With the negotiations moving forward positively, the IBN board on 12 April decided to extend the deadline and authorise its chief executive officer (CEO) Radhesh Pant to fix the duration. UBN officials said that the board would be concluding the PNA, of which the project development agreement (PDA) is a part, at the earliest possible so that the PDA could be completed within a year for the 650 MW project. “The project needs extensive geological investigation before construction begins. Our plan is to continue with the negotiations and the PDA while the Norwegian company continues with the geological investigation,” said Pant. He added that the geological structure of the project needed to be studied by drilling at least four tunnels 500 metres deep.
With the government deciding to extend the PNA deadline, the Norwegian developer Statkraft is hopeful about completing the PDA within a year. “We have a PDA template in place now. Hence, we hope it won’t take much time for us to complete this process,” said Sandip Shah, vice-president and country director of Statkraft. He added that the power trade agreement (PTA) with India and the development of a transmission line project to evacuate the energy generated has made the company more confident regarding the project. One of the major issues of the Norwegian developer was market, which has been addressed largely by the PTA. According to Shah, a technical team from Norway is scheduled to arrive on Wednesday to conduct geological tests at the project site. Technical manpower and equipment will be brought from India to conduct deep drilling.
Likewise, deep level testing will be done by a technical team from Germany. The actual project cost will be determined based on the reports of the geological test. As of now, the project to be developed on the Tamakoshi River situated in Dolakha and Ramechhap districts is estimated to cost around Rs111.3 billion. IBN will be holding further negotiations with Statkraft as it has been assigned to look after the business in Nepal. The board had initially held talks with SN Power which is owned by Statkraft and Norfund. The government had issued the licence for the project to SN Power in March 2007. As per Electricity Act 1992, a survey licence is automatically terminated if no progress is made within five years from the date of issue. A PNA with a validity of 18 months had been signed in April 2013 to save the survey licence awarded the company. The project’s future was uncertain until the country signed a PTA with India in October 2014. The Nepal Electricity Authority (NEA) had been unable to assure a market for the proposed project considering that the country would have surplus energy during the wet season by 2017 or 2018. According to Shah, site activities at the project had wound up in 2012 as there was no assurance of a market, PDA modality and transmission line capacity to evacuate the power. Likewise, according to IBN, it is mulling discussing long-term pricing of the energy generated by the project as its per MW cost will be higher compared to Upper Karnali and Arun III.