January 19: The extended deadline for handover of the 60 megawatt Khimti Hydropower Project to the government is about expire. However, the state-owned Nepal Electricity Authority (NEA) and Himal Power Company, promoter of the project funded by foreign investors, is yet to reach an understanding for the handover. This is the first hydropower company that is about to be handed over to the government by the private sector.
The two sides have reached a short-term understanding to continue operating the project although the share transfer process has not yet completed. The short-term agreement expires in mid-February but the two sides have not yet reached any substantial understanding for the handover.
As per the agreement between the Government of Nepal and the promoter company, 50 percent shares of the company should have been transferred to the government by July 11. However, the deadline was extended till mid-February as the share transfer process could not be completed within the stipulated date. The handover process has not made any progress although the extended deadline is coming closer.
Looking at the current situation, it is unlikely that the handover process will be completed within mid-Fedruary.
Director of NEA Prabal Adhikari informed New Business Age that they are currently discussing the issue. He added that it is impossible to transfer the shares within mid-February.
The project which is being run by Himal Power Company since July 2000 is the first hydropower project built with investment from the private sector.
The then government had signed an agreement with the developers to transfer 50 percent of shares to the government after 20 years of operation. The project reached the milestone of generating electricity for 20 years on July 11 last year.
As per the agreement, the NEA will own 100 percent shares of the project in the next 30 years.
For the completion of share transfer process, stakeholders including the NEA and the promoters of the project should establish a joint venture. Then the new entity will have to finalize the power purchasing agreement (PPA) with the NEA. However, the joint venture company is yet to be established and the issue of PPA is also pending.