West Seti Project – Opportunities and Challenges

The Investment Board Nepal (IBN) approved China’s CWE Investment Corporation, a subsidiary of Three Gorges Company on April 2015. The CWE Corp will form a joint venture with Nepal Electricity Authority (NEA) for the development of West Seti Project. The hydro-project is storage-based with a capacity of 750 MW and costs $1.6 billion. This will be the biggest foreign investment project in Nepal’s history.

The West Seti project was envisioned more than couple of decades ago with the first feasibility study conducted in 1987. There were multiple companies showing interest in the project since then. During the early years, Snowy Mountain Engineering Corporation (SMEC) signed an agreement with the government of Nepal, however the license was revoked at the later date. Government then formed another company, West Seti Hydro Limited, and conducted environmental impact assessment and resettlement action plan in 1997 and later revised in 2007.

The annual electricity production from the West Seti project will be 636 gigawatt-hours (GWh). The project will have 195 m high concrete dam, 6.7 km headrace tunnel, 620m tailrace tunnel covering 2,060 hectare by reservoir. The project will also construct 20.3 km permanent access roads and 132.5 km 400 kilovolt (kV) double-circuit transmission.


The new developments in Nepal’s hydro sector and Three Gorges Chairman’s recent visit to Nepal provided the Seti project with renewed impetus. The project is going to generate much-needed dry season energy. As it is storage based, it can hold water during the rainy season and utilize it when most of the hydro-projects are generating at 1/3rd of their capacity during the dry season.

The West Seti project will be a great boost for Nepal. The project will be able to provide peak energy at a reasonable cost. The total cost of 750 MW West Seti project is $1.6 Billion – an average cost of $2133/kW. The average capital cost of run-of-river project in Nepal is around $2000/kW. This means that we are getting electricity from storage-based plant and the flexibility of water generation as needed at the same rate as the run-off-river project cost!

Moreover, the storage project can also be used flood control and dry season augmented flow. With the help of dam constructed for the hydro-project, the flow of water in the downstream river can be regulated.

However, there are many challenges associated with this project. First, the project is storage based which requires a large reservoir area and resettlement. Moreover, there will be loss in agriculture land. As the project will hold (store) water for the energy production, especially when the project is not operating, downstream water sharing can be challenging considering that this water is utilized for agriculture and other purposes.

The West Seti project report mentions that the project requires total land of 2,326 hectare (ha) containing 28% of cultivated land and 35% of forests. Another 678 ha will be needed to build transmission lines. The report submitted to ADB mentions that the project will impact 2,421 households directly with an estimated of 1,579 requiring resettlement. The resulting environmental, social, and anthropological impacts of the West Seti project will be huge, thus requires a careful assessment.

Moreover, next set of challenges stem from uncertainty associated with timely execution of transmission infrastructures and market availability for surplus electricity. The CWE Investment Corporation has already asked Nepal government to provide market guarantee for the electricity generated from West Seti Project. Without finding electricity market besides Nepal, it will be challenge for Nepal to utilize all electricity produced (assuming that Nepal’s power demand increases as the rate forecasted by Nepal Electricity Authority). There is a need to create viable alternate electricity market. Evacuating power to India and Bangladesh are possible options. However, we would need India’s cooperation to sell power to Bangladesh as transmission lines go through Indian territory.

The other challenge is associated with building necessary transmission infrastructures. It is not clear who responsibility it is for constructing high-powered transmission lines to evacuate power from West Seti project. The government recently asked Chinese Government for financial assistance, either in form of aid or soft loans, of $400 million to invest in hydro project and transmission lines. The project requires 400 km-long transmission lines to connect the West Seti project to the national grid.

Overall, the West Seti project is excellent from economic point of view. The project will increase Nepal’s national grid capacity substantially. It will also provide much needed dry season energy and help Nepal achieve a reliable and adequate electricity system. However, the project also has many serious challenges mainly environmental, social, and as well as building transmission infrastructures and creating a market for the surplus electricity.


Nepal Earthquake: Keys to recovery effort

Nepal is still coming to terms after the devastating 7.8-magnitude earthquake. Immediate relief effort has finally started to reach remote areas. With government, security forces, independent groups, international governments and organizations continuing their extra-ordinary work in the relief efforts, I would like to draw attention to simultaneously thinking about the long-term recovery process. The recovery process includes debris removal, post-earthquake health sector co-ordination, restoration of public utilities, and resettlement/reconstruction/ rehabilitation.

Recovery will be long and arduous. Although it is too early to assess the full cost of the catastrophic earthquake, an initial estimate by U.S. Geological Service reckons damages of $1 to $10 billion. An economist with IHS forecasts the cost of reconstruction to be around $5 billion.

nepal_bouncebackCentral Coordination is key

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How to Support Nepal’s Earthquake Relief Effort?

A massive 7.8-magnitude earthquake struck Nepal on April 25. As of now, nearly 2500 deaths have been reported and this number is expected to rise. To put things in perspective, Nepal’s recent earthquake is 22 times larger in its impact than the 2010 Haiti earthquake that claimed 110,000 – 160,000 lives. The aftershocks are making things even worse – Nepal has already experienced 50 aftershocks of more than 4.0-magnitude.

The road to recovery is going to be very long and arduous. We need to coordinate with the Government in this rescue process. It is heartening that international governments – India, China, Pakistan, France, England, Israel, Russia – and international organizations – UN, PLAN, Oxfam, and others – are responding promptly to Nepal’s situation.

nepal_bouncebackWe can also contribute to the rescue process by donating in any amount we can. While choosing the organization for donation, please make sure that you choose a registered 501©3 charitable organization so that your contribution will not be taxed. Please note that this tax situation only applies to people donating from United States.
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Foreign investments in Nepal’s Hydropower sector

With Nepal’s domestic power producers focusing on developing small-to-medium hydro projects, mainly because of lack of capital and technical expertise, there is a need for foreign investments in Nepal’s hydro sector. In the last few months, Nepal Government has successfully signed project development agreements (PDA) with two Indian companies regarding 900 MW Arun III and 900 MW Upper Karnali projects. Three George Corp., a Chinese company that is doing electromechanical work for Upper Tamakoshi (456 MW project), is also vying to get into Nepal’s hydro business through the West Seti project. Foreign investment in hydropower is definitely welcoming as the country is facing dire energy crisis. A research done for Britain’s Department for International Development suggests that four big hydro projects could earn Nepal a total of $17 billion in the next 30 years— this is not bad considering Nepal’s GDP last year was a mere $19 billion. However there are also some challenges mainly in building trust and cooperation, timely execution, electricity load management, and finding markets for surplus electricity. This post briefly summarizes these mega projects and also discusses the impact of foreign investment to Nepal.


Source: Ekantipur

Nepal Investment Board (IBN) and GMR-Energy signed an agreement in September 2014 to build a 900 MW, $1.4 billion plant in Upper Karnali. The commercial operation of the project is expected to begin in September 2021 with financial closure to be completed by September 2016. GMR has also partnered with International Finance Corporation (IFC) in developing Upper Karnali project and two high-powered transmission lines. The Upper Karnali development project was agreed in principle in 2008 but delayed primarily because of political instability in Nepal. GMR is also in advanced stage of developing another big project, Upper Marsyangdi-2 (600 MW). Nepal Investment Board (NIB) and GMR signed the agreement with the aim of providing greater security to foreign investors in Nepal and also asserting foreign entities’ responsibilities to protect Nepal’s national interests. Similarly, India’s state-owned power company, Satlij Jal Vidyut Nigam, will construct a 900 MW Arun III hydro river project after signing the agreement in November 2015. The deal was completed during SAARC summit in the presence of Prime Ministers of India and Nepal and is expected to generate electricity from 2021.

Boost Energy Access & Economy

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Global Warming Impacts in South Asian Regions

Global warming is the gradual rise in earth’s surface temperature due to the effect of greenhouse gases released from burning fossil fuels and deforestation. Over the period of 1880-2012, the combined land-ocean temperature increased by 0.85° Celsius[1]. Global average temperature is expected to rise between 1.4 – 5.8°C in the next 100 years.

 A recent report by Intergovernmental Panel on Climate Change (IPCC) confirmed that human activities are ‘dominant cause’ of global warming since 1950s (IPCC, 2014).The climate change alters hydrological systems through precipitation change or melting of snow or ice and affects the quantity of available water, seasonal activities, and migration patterns.

In this post, I focus on global warming’s consequences in South Asian regions and the imminent need to collaborate to identify and reduce climate change related risks.

Serious Consequences of Global Warming

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Proposed Power Agreement between Nepal and India

There are a lot of ongoing discussions on the proposed power agreement between Governments of Nepal and India. With Nepal’s untapped hydropower resources, India’s power need, and recent changes in Indian politics, the discussions for power treaty is again back on the table. I was lucky enough to get a copy of the draft of the agreement. In this post, I discuss the important points of the agreement and few areas that need clarification.

Both countries realize the importance of meeting electricity demand for socio-economic development and the progress of people. The agreement aims to facilitate cooperation in the fields of power generation, power transfer, grid connectivity, energy efficiency, renewable energy, and power related consulting and research services. More importantly, both countries are emphasizing the importance of developing additional hydropower potential by cooperating in the construction and operation of hydropower.
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Getting into Nepal’s Hydropower? – Few Things to Consider and Opportunity to Invest

The hydropower business is booming in Nepal, mainly due to massive untapped resources and huge power shortages. The data from Department of Electricity Development (accessed July 2013) shows that it has issued Survey License to 674 projects totaling 20,756 MW in capacity. Whereas, 59 projects of 1357 MW capacity have obtained Construction License. Please see the table at the end of the post for detailed information. With the limited transmission capacity and lack of India-Nepal intercountry grid connection, will all these projects get built? I doubt. Then, how do you choose the right project to invest? This post discusses few points to consider in analyzing the project and intends to help potential investors choose the right one.

Things to Consider

The following paragraph considers few questions to consider while choosing hydro projects to invest.

Road: Is there road access to the project location? If not, how far is it from the highway? How much road construction is necessary? How much does it cost?
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