Breaking the silence over the construction modality of 750MW West Seti Hydropower Project, the government has decided to build the project with domestic resources.

Finance Minister Yubraj Khatiwada announced that the mega project located in the far west region will be developed via government financing during the annual budget for the fiscal year 2018-19.

The announcement means the government will be scrapping the agreement signed with China Three Gorges Corporation for the development of the reservoir type project and take a lead role in its development.

While the annual budget has eliminated the uncertainty that was looming over the West Seti project, it has remained silent over the construction modality of the 1200MW Budhigandaki Hydropower Project, another mega hydropower project. Minister Khatiwada said the government will distribute compensation for the land acquired for the project and initiate the construction process.

However, the government has remained silent over the construction modality of the 1200MW project, casting doubts on whether the current government will give continuity to the previous government’s plan to develop the project with domestic resources.

The government on Tuesday rolled out an ambitious annual budget for the fiscal year 2018-19, giving high priority to the energy sector. Khatiwada has earmarked Rs83.89 billion for the energy sector, up 34.28 percent from Rs62.4 billion for the current fiscal year. The budget has focused on the development of the energy sector by implementing various hydropower and transmission line projects.

It has declared the period between the year 2018 to 2028 as energy and water resources decade. According to the government, efforts will be made to supply modern energy to every household across Nepal in three years and meet all households’ electricity demand within five years.

In a bid to develop at least one multipurpose hydropower project in each province, the government will complete the detailed feasibility study of projects like Tamor, Kankai, Uttar Ganga, Naumure, Sun Koshi 2 and 3, Kali Gandaki and Nalsing Gadh and initiate the construction process, according to Khatiwada. Similarly, the budget plans to implement an attractive hydropower project of installed capacity up to 3000MW through investment from the general public.

Likewise, the budget has given due attention for transmission line projects and Khatiwada claimed that adequate funds have been allocated to initiate the construction of Butwal-Gorakhpur Cross-border Transmission Line Project and complete construction of other power line projects that are currently under construction. He said the government will start preparing for detailed project reports of the cross-border transmission line projects like Lamki-Bareli, Duhabi-Purniya and Kohalpur-Lucknow.

The annual budget has also prioritised rural electrification, allocating Rs5 billion under the heading. Khatiwada also claimed that there will be adequate funds to provide subsidies to small hydropower and renewable energy projects.

The private sector, however, is not satisfied with the government’s priority toward the energy sector saying the fund allocated for the sector is not adequate to meet the recently announced plans from the Energy Ministry while unveiling the white paper on the sector. “The fund allocated for the energy sector is insufficient considering the government’s plan to develop 15,000MW of electricity within 10 years,” said Shailendra Guragain, president of Independent Power Producers’ Association, Nepal.

“The government ignored our suggestion regarding capital formation to finance energy projects. We had suggested the government to raise the capital for projects by levying additional tax on telecommunication services. But, the budget remained silent over it.”