Rs. 58 bn FDI in Hydro in last three years

Kathmandu, Dec. 29: In the past three years, nine hydroelectricity projects, seven large-scale and two medium-scale, with Foreign Direct Investment (FDI) worth Rs. 57.80 billion have come to Nepal. 

India and China have emerged as the largest FDI source countries in terms of hydropower investment with a venture commitment of Rs. 34.15 billion and 21.75 billion respectively in two projects each, according to the Department of Industry (DoI). 

Switzerland is the third largest FDI contributor, with a pledge of Rs. 3.70 billion while South Korea, Finland and Italy are also likely to develop hydropower projects in Nepal. 

These projects will generate 770 megawatts of power and generate employment for 1,295 people.

The FDI projects have a total capital investment of Rs. 70.37 billion and have a 5- 53 per cent local share. 

As per the DoI, the Indian company, KSK Ventures Limited, is investing in the 420 MW hydropower project in Kalikot. The total cost of the project is Rs. 42.10 billion, of which Rs. 33.68 billion is in foreign investment while S. C. Power Company Pvt. Ltd. will have a 20 per cent share in the project.

Another Indian company, Shiva Ganga Hydropower, is conducting a feasibility study of a 10 MW power project in Okhaldhunga. 

Two Chinese companies from the mainland and Hong Kong are investing in a 100 MW hydro project in Manang and 65 MW project in Myagdi. The projects have a 20 per cent and 5 per cent local share respectively. 

Three Chinese companies are developing a project in Manang as a joint-venture with Butwal Power Company, in which the Chinese firms have committed to invest Rs. 1.52 billion.

Similarly, Sino Hydro Holdings Limited of China has a 95 per cent stake worth Rs. 20.24 billion in the Upperdaki Hydroppower Company in Myagdi. 

Likewise, a South Korean company, Byuksan Engineering, is conducting feasibility study of the 149 MW Chera Khola Hydropower project in collaboration with a Nepali company. 

Switzerland is developing two hydroelectricity projects in Ilam and Rasuwa, while Finland and Italy are working in Mustang and Kaski districts. 

The immediate past president of the Independent Power Producers' Association of Nepal Khadga Bahadur Bista said that the trend was not encouraging compared to the hydropower potential of the country. 

"We lack a clear policy in terms of Power Purchase Agreement (PPA) and have numerous hurdles at the central as well as local level while an uncertain power market in the neighbouring countries has also made the foreign investors apprehensive," he said. 

Although the country has successful FDI projects such as the Khimti, Bhotekoshi and Upper Marsyangdi, large-scale projects initiated recently like the Upper Karnali, Arun III and West Seti have made sluggish progress. 

The Investment Board of Nepal (IBN), an agency established to provide one-window services to large-scale foreign investment projects, says that it was putting its effort to facilitate the projects and, at the same time, trying to make its policy more investor-friendly.