Nepal Parliament OKs China Dam Project

By KRISHNA POKHAREL(WSJ)NEW DELHI: A parliamentary committee in Nepal has given the go-ahead for China Three Gorges Corp.’s $1.6 billion hydroelectric-power project after the Chinese state-owned company threatened last month to pull the plug on its investment.

Lawmakers had raised concerns that Nepal’s government awarded the contract without opening it up to international bidding, prompting the company to threaten in March in a letter to the government that it would scrap the project unless things moved forward.

Shanta Chaudhary, head of the parliamentary committee on natural resources, said Monday the committee has decided to approve the project, providing China Three Gorges Corp. meets some criteria, including routing the investment through the country’s newly formed Nepal Investment Board.

“We have decided that the project should go ahead after due corrections in the agreement between the government and the company,” Ms. Chaudhary said, adding that the committee made the decision in a meeting Sunday.

Nepal is hoping to tap huge hydroelectric potential from its fast-flowing Himalayan river system, and the 750-megawatt hydroelectric dam and power project is key to these ambitions. The development is one of a suite of overseas infrastructure projects that China’s state-owned companies are undertaking.

China is building infrastructure projects, from dams to ports, in neighboring countries and further afield. But the country also has faced setbacks, including Myanmar’s decision last year to cancel a $3.6 billion hydroelectric dam, citing environmental concerns. The Chinese state-owned company involved in that project said last month it still hopes to proceed.

The delays over the project in Nepal come amid a tussle between political groups in the country’s Constituent Assembly, which is the nation’s parliament. The country emerged from a 10-year civil war in 2006, but debates continue to rage over issues such as what form of government the country should follow.

The coalition government, which is led by a Maoist party, argued it was allowed under the country’s water-resources law to award major dam construction contracts without a bidding process. Some 40% of Nepalis don’t have access to electricity and the government is keen to quickly exploit the nation’s hydropower possibilities.

It’s unclear exactly why the parliamentary committee changed its stance, allowing the project as long as it is re-routed through the investment board, a body formed last year of which the prime minister is chairman. The government set up the board to handle mega investment projects, including hydroelectric projects larger than 500 megawatts.

On Feb. 29, China Three Gorges and Nepal’s Ministry of Energy signed an agreement for the project on the Seti River in northwestern Nepal. After the parliament raised concerns, China Three Gorges last month wrote a letter to the Nepalese government threatening to pull out unless it cleared the project.

Arjun Kumar Karki, joint secretary in the policy and foreign-coordination section of Nepal’s Ministry of Energy, said the government has yet to receive the decision and recommendations of the committee. “The government will decide how to proceed after going through the recommendations,” Mr. Karki said.

China Three Gorges couldn’t immediately be reached for comment but the company has said in the past that it’s up to Nepal’s government to decide whether to push ahead with the dam.

Nepal not only hopes to meet its own power shortages through such deals but also to sell surplus energy to its neighbors, India and China.

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