The government is in the process of selecting a Chinese joint venture partner for the Nepal Electricity Authority (NEA) to develop the Tamor Storage Hydroelectric Project, making the state-owned power utility unhappy as it wants to execute the scheme on its own.

The Energy Ministry is currently evaluating the applications filed by three Chinese companies that are willing to execute the project in eastern Nepal by teaming up with the NEA.

According to a highly placed source at the Energy Ministry, one of the three companies will be awarded the 762 MW reservoir-type project without free competition.

The selected company will then enter into a contract with the NEA to form a joint venture company which will execute the project. The NEA is not happy with the government’s decision to bring in a Chinese company as it wants to implement the project on its own.

The government is firm about awarding the project to the Chinese developer, and it has been trying to do so for quite some time.

A few months ago, the Prime Minister’s Office had asked Investment Board Nepal (IBN) to make preparations to sign an accord with a Chinese company to build the Tamor project.

IBN then wrote to the NEA asking it if it would be willing to undertake the project by forming a joint venture with Sichuan ANHE Hydraulic and Hydro Election Engineering Company. The state-owned power utility said it was not interested.   

The NEA has already initiated the public procurement process to appoint a consultant to conduct a detailed feasibility study for the project. The NEA holds a survey licence for the project with an installed capacity of 200 MW, but it wants to hike the installed capacity to 762 MW and develop it. It has filed an application at the Department of Electricity Development for a survey licence with the increased installed capacity.

If the storage project is built with the increased capacity, it will inundate the 37.5 MW Kabeli-A and 21.5 MW Lower Hewa projects currently being developed downstream of the proposed site, and the project developer will have to compensate their owners to abandon them.

The department has clearly asked the NEA to first get the consent of the two projects that face being submerged in order to qualify for the licence. The NEA has convinced the promoters of the two projects to abandon them for compensation if the power utility executes the project with the increased installed capacity.

In 1985, the Japan International Cooperation Agency (Jica) had proposed building a 696 MW hydroelectric project on the Tamor River by building a 153-metre high dam. However, the government did not show much interest in the proposal at that time.

Now, when the NEA management is very keen on developing the project with the increased installed capacity by paying compensation to the smaller schemes downstream, the government has moved to award the contract to the Chinese developer.