Nepal parliamentary panel approves China’s Three Gorges Int’l Corp.’s US$1.6 billion project to build a hydroelectric plant in Nepal

Date: 02 Apr 2012

A Nepalese parliamentary committee has approved China Three Gorges Corp’s (CTG’s) US$1.6 billion Nepal hydroelectric-power project, provided the company meets certain criteria, including routing the project through the country’s newly formed Nepal Investment Board. This comes just months after the Chinese state-owned company last month threatened to abandon all negotiations entirely.

Problems first arose when lawmakers raised concerns that Nepal’s government awarded the contract without opening it up to international bidding, prompting CTG to write to the Nepalese government in March stating it would scrap the project all together unless approval was forthcoming in the near future.

“We have decided that the project should go ahead after due corrections in the agreement between the government and the company,” Shaunta Chaudhary, head of the parliamentary committee on natural resources, explained in a statement.

With agreements such as this, Nepal hopes to tap into the potential for hydroelectric power generation from its fast-flowing Himalayan river system, and the 750 megawatt CTG hydroelectric dam and power project is a crucial step towards realizing this goal. Some 40% of Nepalese do not have access to electricity and the government is thus eager to implement a hydropower program as soon as possible. Through such projects as the CTG development, Nepal not only hopes to meet its own power shortages but also hopes to create a power surplus that can be exported to neighboring India and China.

The delays came amidst hostile discussions between different political factions in the Nepalese parliament, the Constituent Assembly. A ten-year civil war was brought to a close in 2006, but key debates regarding the role of government have still not been satisfactorily settled. The coalition government, led by the Maoist Party, had to argue vehemently to force through the point that the country’s water resources laws allowed to the awarding of major dam construction contracts without a bidding process.

It is still unclear exactly why the parliamentary committee changed its stance on the scheme, but by forcing it to be re-routed through the investment board, a body formed last year to manage mega investment projects which is chaired by the Prime Minister, it has perhaps assuaged some of the fears regarding the extent of foreign ownership and profit-taking from Nepalese natural resources.

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