US firm wins Nepalese hydropower contract

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Bishwanath Sapkota, the top government official at the Water Resources Ministry, said the US-based Eurorient Investment Group would construct the 402MW Arun III hydroelectric project in the eastern Arun Valley

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A senior Nepalese official has announced that an American company would be allowed to construct a hydroelectric power plant, a controversial smaller version of which was dumped by the World Bank five years ago. Bishwanath Sapkota, the top government official at the Water Resources Ministry, said the US-based Eurorient Investment Group would construct the 402MW Arun III hydroelectric project in the eastern Arun Valley. It was selected from among three bidders to develop the project. Other competitors were Canadian firm, ASTQ Holdings Corporation, and Nepal's Susasun Power Company. Nepalese officials said the US firm would get a construction licence only after it had provided financing details for the multi-billion dollar facility and an agreement with the buyer for the electricity generated from the plant. The power house is to be set up on the Arun river at a remote valley in the Sankhuwasabha district of the Himalayan kingdom. In August 1995, the World Bank withdrew from a consortium of Western donors to fund a smaller version of the Arun project to generate 201MW of hydropower, asking Nepal to develop smaller plants. The bank's concessionary lending arm, the International Development Association (IDA), had earlier proposed lending US$175 million for the plant which was planned as a government project at a cost of about US$1 billion. Environmental groups had criticised the scheme saying it would damage some of the region's pristine forests and would have required relocation of 155 families. Last year, Nepal invited private investors to develop a bigger version of the facility. Numerous rivers from the Himalayas have a combined potential to generate up to 83GW of hydroelectric power in Nepal. The country uses less than 0.5 per cent of this potential for want of funds and technical know-how. In 1998, US energy giant, Enron Corp , withdrew a multi-billion dollar dam plan on the Karnali river in west Nepal, citing uncertain energy markets. Australia's Snowy Mountain Energy Corporation (SMEC) which is to generate 750MW on the Seti river, also in west Nepal, is looking for potential buyers in neighbouring power hungry India. Nepali officials say export of hydroelectric power to India is the only hope to stem the trade deficit with New Delhi.

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