There
are no export oriented projects in operation as of now. But the PDA with GMR
(an Indian company developing 900 MW Upper Karnali project) is suddenly in the limelight.
Some experts are claiming to be an anti-national deal while others calling a
breakthrough.
Breakthrough
Investment
Board of Nepal (IBN) claims that it has managed to set an example by doing PDA
with GMR. IBN has claimed that it serves Nepali interest as Nepal will get 12
percent free electricity and 27 percent free equity. Further, it claims that
the project will come under government basket after 25 years of operation.
Anti-national
Those
who were against the PDA claimed to be an anti-national agreement. Their
arguments are.
a) The full potential has been killed. The full
capacity of Upper Karnali is 4,180 MW if a storage project is constructed. Storage
project does have its own benefits. GMR is going to construct a simple RoR
project.
b)
Upper Karnali, with a design flow of 236 cubic meters per second and a mere 2.2
km headrace tunnel to obtain a head of 141 meters, is termed as “the jewel in
the crown” by the Canadian consultant. Hydrocrats claims that Nepal should
construct the project since per unit cost is one of the lowest in the world.
c)
GMR is entitled to claim NPR 5 million per MW from the government. In addition,
it is entitled to get 100 percent corporate tax exemption for the first ten
years of operation and 50% tax has been waived off for the next five years.
Government
of Nepal announced NPR 5 million per MW and introduced tax holiday to encourage
developers. The main idea behind such subsidy and tax holiday is to solve the
energy crisis in Nepal. Since Upper Karnali is an export-oriented project, such
incentives should be granted, according to the experts.
d)
Further, GMR is entitled to get 50% discount on custom tax of cement, iron and
steel product. This facility is not even provided to hydropower projects for
internal demand.
e)
GMR can select contractors without a competitive bidding.
Sometimes
we become extremely emotional when it comes to the usage of our rivers. But in
reality, emotional sentiments do not work in business. No investors will invest
unless they are convinced that they will get a good return. This is a fact.
At
the same time, signing a cheap deal for the sake of foreign investment is also
not a good idea. However, I am not in a position to make any comment since I do
not have the project details.
In
an interview, Radhesh Pant, CEO of IBN, said that “Nepal will earn NPR 800
billion over a period of 25 years from two PDAs with Indian companies”. The
next one is Sutlaj Jal Vidyut Nigam developing 900 MW Arun III. I hope he has
done the calculation considering the time value of money.
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