Nepal Electricity Authority (NEA) has turned down China Three Gorges Corporation’s (CTGC) proposal to revise down the installed capacity of West Seti Hydropower Project to 600MW from 750MW.

Terming West Seti as “one of the strategic projects of the country”, the state-owned power utility, which is also the joint-venture partner of the Chinese developer, said the should be built at its original capacity considering the national demand for electricity. 

During a tripartite meeting held between CTGC, Investment Board Nepal (IBN) and NEA in the second week of January, the Chinese company had suggested downward revision of the project’s capacity, citing the drop in water level in the river. 

The authority did not make any comment during the meeting, but later sent a letter to IBN, the government agency implementing the project, stating its disagreement with the proposal. Subsequently, IBN forwarded NEA’s message to the Chinese developer. 

In its response, CTGC on Wednesday wrote to IBN stating any changes in the installed capacity of the project will be made only through consultations with stakeholders in Nepal. 

The Chinese developer has also sent a high-level team of hydrological experts to study the water level in the Seti River in the Far West region of Nepal where the proposed project is located.

“Currently, the Chinese team is conducting a detailed survey at the project site,” said Madhu Prasad Bhetuwal, joint secretary at IBN. “The developer has said it will come up with a concrete information regarding the installed capacity of the project after the study team submits its report.” 

In August 2012, the government and CWE Investment Corporation, subsidiary of CTGC, signed an MoU to construct the hydropower project. As per the MoU, the Chinese company will have a 75 percent stake in the joint venture company, while the NEA will hold the rest.

Of the 75 percent equity, CWE will allot 10 percent to locals residing around the project site. CWE also holds the right to float shares to the public in Nepal. However, it must keep at least 51 percent of the company’s shares, according to the joint venture agreement.

On January 17, NEA Managing Director Kulman Ghising and CTGC Vice-President had initialled the joint venture agreement to be followed by ratification by the boards of the respective organisations. 

The NEA board immediately approved the agreement, but the Chinese developer has been dillydallying. 

According to an IBN source, one the reason behind the Chinese developer delaying the endorsement of the pact is the possible downward revision of the installed capacity. 

The reservoir-type project, which will be spread over Baitadi, Bajhang, Dadeldhura and Doti districts, is being built at a cost of $1.6 billion.