The Upper Karnali Deal

This news story has been covered by some major newspapers in Britain and India, but noone is saying Nepal got cheated. What's going on Comrade Narayan Kaji?



Nepal launches hydropower growth plan with $1.4bn deal
the biggest foreign investment deal in its history to build a $1.4bn project on the upper Karnali River...... Investment Board Nepal signed the agreement with Indian infrastructure group GMR for the 900-megawatt dam and tunnel system, which is expected to be the first of at least four such big projects exporting electricity to India as well as helping to end local power shortages. ....... Nepal’s hydropower potential is estimated to be about 80,000MW, of which only 700MW has been exploited. The country is one of the world’s poorest and suffers from long power cuts and a lack of exports, relying instead on remittance income from workers abroad and on tourism. Firewood accounts for three-quarters of the energy consumed ...... “It’s a major change for Nepal in that it’s actually opening up this hydropower on a large scale,” said Peter Young of Adam Smith International, which is advising the Nepalese government and financed by British aid. “It should transform the government’s financial position as well as dealing with the electricity shortage.” ......... Under the “build, own, operate and transfer” contract, the plant’s builders will give Nepal a 27 per cent free equity share in the project and provide Nepal with 12 per cent of the electricity output, also for free, before transferring the project to Nepal at the end of the 25-year operating-life concession. Construction of the project is due to be completed by 2021. ...... The projected total benefits to Nepal of the first four big hydropower plants reach about $17bn – close to the country’s annual gross domestic product – and include royalties, free energy, tax income, dividends, import duty and the value of the projects to be transferred. ...... , the four projects are worth $6.5bn-$8.7bn. “This is an important breakthrough for the country – that it’s finally managed to exploit its hydropower” ..... Bhutan, again with Indian help and with India as a market, has taken a lead over Nepal in hydropower plants, with 1,500MW of capacity already completed. The country plans to increase capacity to 10,000MW within six years

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