LIKHU-4 HYDORPOWER: Stuck Over Wheeling Charge

Due to the delay in signing the agreement on the wheeling charge, a 1.6 billion rupees investment made in Likhu-4 Hydro has been trapped sending the wrong message to the investors

Oct. 26, 2013, 5:45 p.m. Published in Magazine Issue: Vol: 07 No. -9 Oct. 25- 2013 (Kartik 08, 2070)

As the country has been passing through a severe power crisis due to lack of investment in hydropower sector, some 1.6 billion rupees of foreign investment in Likhu-4 hydropower project is getting uncertainty in dividend because of the failure of the government to decide on the policy regarding the wheeling charge.

Situated in Ramechhap district, 120 MW Likhu-4 hydropower projects has Fall Back PPA with Nepal Electricity Authority. Although it is an export-based project aiming to supply energy to India, it will continue to supply energy to Nepal till the resumption of export of power to India.

Promoter India's Bhilwara Energy Limited has already applied for wheeling charge fixation to NEA two years ago. However, the application is yet to proceed ahead. "We have already completed the process. As soon as the wheeling charge is settled, we will go for construction immediately," said Bipin Arora, vice president of the company.

According to Arora, the project is feasible in case of wheeling charge of 48 NPR. The DPR prepared in 2009 has clearly spelled out this. "Even if the wheeling charge fixes for Rs. 1.00, the project is unviable for investment," said Arora. If the wheeling charge is accepted as our proposal, we will start the construction as soon as possible. Although we have applied twice, NEC is yet to take a decision," complained Arora.

According to Arora, the construction of the 45 kilometer road to reach the dam site has already been completed. The company has also completed the process of land acquisition in the project site. "We don't have any financial problems. Once we fix the wheeling charge, the project will kick off," said Arora. "Since we have all the infrastructure, we don't have to worry about the project. “

Nepal-India Cross Border Transmission line is going to be complete by 2015. The company has already signed fall back agreement with NEA to sell 52.4 MW of power to NEA. According to PPA signed in 2011, NEA will buy the electricity of the project in 5.99 US Cents till the completion of construction of Nepal-India Cross Border transmission line.

According to company, IDBI Bank Ltd is the lead banks with other. Oriental Banks of Commerce, Punjab and Sind Bank, Exim Bank, PIC Financial Services and Everest Bank-are the members of the consortium.

Nepal and India have separately established transmission companies to construct 140 kilometer Cross Border Transmission line between Dhalkebar (Nepal) and Muzafararpur (India). Nepal Electricity Authority has 50 percent share holding in Power Transmission Company Nepal. Exim Bank of India has already agreed to provide 13.2 million dollar to the project. "Our electricity will go for export to India through this line. The project is now uncertain due to the failure in signing the wheeling agreement," said Arora. So far as the Indian side is concerned, we have already arranged for using of the transmission line to export power. There is no doubt over the completion of the project. The main problem with us is decision on wheeling charge."

According to Energy Secretary and member of Board Member of Nepal Electricity Authority Bishow Prakash Pandit, the ministry has already issued policy guidance to NEA on the issue of wheeling charge. The ministry is determined to settle this issue. "The process has already started," said Pandit.

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