In a major development, the Sher Bahadur Deuba government has allowed India's NHPC to study and develop two hydroelectric projects that will have the combined potential of generating 1,200 megawatts of energy.
A meeting of the Investment Board Nepal chaired by Prime Minister Deuba on Monday decided to allow the NHPC to study and develop the 750 MW West Seti Storage Hydropower Project and 450 MW Seti River-6 Hydropower Project in Sudurpaschim province. The West Seti project is one of the much-hyped projects envisioned for development about four-decades ago. Both the projects are located in the far west of Nepal.
Both are storage type projects.
The board approved the draft of the memorandum of understanding to be signed with the Indian company, according to a statement by the Investment Board.
The NHPC Limited, an Indian government hydropower board under the Union Ministry of Power, had submitted a proposal in May to develop the projects.
The West Seti project, first envisioned some six decades ago, is located on the Seti river in far western Nepal. The proposed dam site is located 82 km upstream of the confluence of the Seti and Karnali rivers, forming part of the Ganges basin.
The new project sites are located at elevations ranging from 550 to 920 metres and are spread across six districts. The estimated cost of the project, according to the Investment Board, is $2.4 billion.
Besides approving the MoU to be signed with the NHPC Limited, the board meeting also instructed the office of the IBN to initiate preparations for approving investment for the development of the 679MW Lower Arun Hydropower Project. India's SJVN Limited which is also developing the 900MW Arun 3 project was awarded the Lower Arun project in July last year.
As Nepal and India are seeking to increase cooperation in the hydropower sector lately, the Indian state-owned company came up with the proposal to develop the West Seti projects.
The development comes after Nepal and India in April issued a joint vision statement on energy, which talks about expanding mutually beneficial bilateral cooperation in the power sector including joint development of power generation projects in Nepal; development of cross-border transmission infrastructure; bi-directional power trade with appropriate access to electricity markets in both countries based on mutual benefits, market demand and applicable domestic regulations of each country; coordinated operation of national grids; and institutional cooperation in sharing latest operational information, technology and know-how.
Particularly, Indian state-owned companies have been more active and willing to develop hydropower projects in Nepal.