Money

New guidelines upset power developers

  • Land acquisition
- BIBEK SUBEDI, Kathmandu
The project developers worst affected by the new guidelines are the developers of the 900 MW Upper Karnali and 900 MW Arun 3 hydropower projects

Jun 14, 2017-

Stringent new guidelines on forest land acquisition have upset potential hydropower developers as they expect land acquisition costs to swell.

A provision in the forest clearance guidelines launched recently by the Forest Ministry requires developers to provide compensation for the entire area affected by their project.

During a meeting held with developers before publishing the guidelines, the ministry had agreed that they would have to pay compensation only for the land on which permanent structures like powerhouse and dam are built. It was settled that a nominal lease fee would be charged for the rest of the area affected by the project.

Likewise, developers are required to plant 25 new trees elsewhere for every tree that is cut down for the construction of the project. They also have to nurture the saplings for a period of five years, according to the guidelines, a copy of which was obtained by the Post.

However, there had been a verbal agreement between the ministry and developers that they would have to plant only twice the number of trees that are cut down. The reversal is expected to significantly increase the cost of forest land acquisition for hydropower developers.

They said that the only positive thing in the guidelines was they could acquire forest land by paying a fee determined by the Forest Ministry instead of buying an equivalent area of land in a similar ecosystem, creating a forest on it and handing it over to the ministry, as per the previous provision.

However, the fee to acquire forest land will shoot up after the introduction of the guidelines. 

The project developers worst affected by the new guidelines are the developers of the 900 MW Upper Karnali and 900 MW Arun 3 hydropower projects who had already been complaining about delays in issuing permission to clear forest land.

The two Indian developers have strongly opposed the new guidelines saying there is no such provision in the project development agreement (PDA) they signed with Investment Board Nepal (IBN), the government agency responsible for implementing large projects.

The developer of the Arun-3 Hydropower Project has even claimed compensation from the government under the ‘change in law’ provision in the PDA for its failure to provide the forest land required to develop the scheme.

With both developers reluctant to comply with the new guidelines, they might not meet the September 2017 deadline to complete the financial closure of the project. This is because probable lenders will not agree to finance the project without getting forest clearance.

Published: 14-06-2017 08:20

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