Nepal Gives Go-Ahead to China Dam

According to Reuters, construction of a dam in Nepal, which relies on China’s Three Gorges International Corp investment, was halted two weeks ago, but Nepal’s lawmakers have once again given the go-ahead to continue the project:

The project, set to be completed in 2019, is expected to ease the crippling power shortage in Nepal whose economy is still emerging from a decade-long civil war – conflict that scared away investors and slowed infrastructure projects.

The Chinese firm, which was to own a 75 percent stake in it while the state-owned Nepal Electricity Authority would take the rest, threatened to pull out after the parliamentary panel ordered an inquiry.

“We have now directed the government to let the Chinese company go ahead with the project but with some corrections in the agreement,” Shanta Chaudhary, chief of the parliamentary panel, said after an investigation of three weeks.

“But the project must be routed through the Nepal Investment Board as required by law,” she said without giving details.

This is one of China’s more recent attempts to build infrastructure in neighboring countries, such as the construction of a dam in Myanmar. The Washington Post adds:

The committee cited a recent Nepali legal manual on hydroelectricity to contest the government’s claim that it had power under domestic law to award hydroelectric projects without a bidding process.

The committee, however, said the project should be implemented nonetheless given Nepal’s energy needs and a desire for good relations with China. The committee directed the government to ensure the similar “procedural and legal mistakes” aren’t repeated in the future.

It also advised the government to negotiate so that Nepal’s state power utility gets 25% in the project, local residents of the project area 10% and domestic industrialists and other residents 14%.

On Feb. 29, China Three Gorges and Nepal’s Ministry of Energy signed an agreement for the project on the Seti River in northwestern Nepal. Nepal’s state power utility would hold 25% and the Chinese company the rest. The two sides have agreed to complete the project by December 2019. Nepal is hoping to tap huge hydroelectric potential from its fast-flowing Himalayan river system and the 750-megawatt hydroelectric dam and power project is key to these ambitions. The development is one of a suite of overseas infrastructure projects that China’s state-owned companies are undertaking.

April 3, 2012 1:38 PM
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