Indian firms in fray for Nepal power project

As peace talks resume in Nepal between the government and Maoist insurgents, at least three Indian companies are eyeing a hydropower project in the country's north.

The 300 MW Upper Karnali hydropower project, once considered a risky venture because of the presence of Maoists in the region, has become an attractive proposition for Indian investors as the rebels have signed a pact with the government to allow the industrial sector to operate without hindrances.

New Delhi's Jaypee Group, Andhra Pradesh's GVK and the Bangalore-headquartered GMR Group have begun talks with the government for staking the power project.

In 2003, India's National Hydroelectric Power Corp had reached an understanding with Nepal Electricity to develop the project as an independent power producer without any links to the Indian government.

NHPC chairman and managing director Yogendra Prasad had visited Nepal and met power officials and strengthened the understanding that NHPC would have a majority stake (80-85 percent) with the produced power being sold to India.

However, even three years later, the project failed to take off. Held back at first by a disagreement over power rate, last year talks were almost abandoned after King Gyanendra seized power and the political turmoil and royal regime's cold war with New Delhi kept Indian investors away.

Last year, the cash-strapped and power-starved royal regime announced it would look for other investors if NHPC did not show up.

Now, four months after the fall of the royal regime, NHPC is yet to pick up the threads of the old understanding whereas three new Indian companies are showing keen interest.

Of them, the Jaypee Group, which has interests ranging from construction, hospitality, engineering and IT and boasts of an annual turnover of over $650 million, already has the experience of running a hydropower project outside India.

Besides operating 12 hydropower projects in six Indian states, it is also involved in the Tala hydroelectric project in Chukha Dzongkhag in western Bhutan.

GVK, currently developing hydel projects in Himachal Pradesh and Uttaranchal, this year formed a consortium with the GMR Group to upgrade the New Delhi and Mumbai airports.

More Indian investors could turn their attention to Nepal with the Confederation of Nepalese Industries and Independent Power Producers of Nepal planning two separate hydropower marts for small and medium-size projects.

While the Hydropower Invest Mart 2006 would be held Aug 21-23 to identify small projects up to 10 MW and match them with investors, later during the year a mart would be organised to identify medium projects, ranging from 10-100 MW.

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