The Investment Board Nepal is gearing up to finalise the third hydroelectric Project Development Agreement since September 19, as its board of directors has issued a deadline of April-end to seal the PDA on 650-megawatt Tamakoshi-III hydroelectric project.

During a recently-held board meeting, the tenure of Tamakoshi-III Project Negotiation Agreement was extended by six months, providing IBN less than six months to conclude the PDA.

IBN had signed the PNA with the project developer in April 2013 to provide security of tenure over the project because of the expiry of survey licence.

The government, in March 2007, issued the project’s survey licence to SN Power, a Norwegian company owned by Statkraft, Norway’s largest utility company, and Norfund, a state-owned Norwegian investment fund for private companies in developing countries.

Since the tenure of survey licence cannot be extended by more than five years, Nepal and SN Power had signed the PNA with a validity of 18 months. During this period, IBN and the project developer were supposed to conclude the PDA, but despite holding 13 rounds of negotiation talks both the parties could not strike a deal.

“We could not sign the PDA within the 18-month deadline, as some of the issues raised by the developer, such as market access for electricity generated by the project, could not be immediately addressed,” Ghanashyam Ojha, head of external affairs at the IBN, told The Himalayan Times.

But now this is not going to be an issue anymore, as the country recently sealed a power trade pact with India, which allows project developers based here to export power in an unhindered manner to the markets in the south.

Also, state-owned Nepal Electricity Authority, the sole buyer of power here, had earlier taken a stance on not conducting business with developers of Khimti and Bhotekoshi hydel projects as a measure to renegotiate dollar-denominated power purchase agreements signed with these projects, which has inflicted huge losses on the utility company due to rapid depreciation of Nepali rupee over the years.

This position affected negotiations, as SN Power is one of the promoters of the 60MW Khimti hydel project.

However, NEA has now reversed this decision and the developer also does not need to rely solely on the state-owned utility company to sell electricity. So, this issue has also become a non-issue.

Tamakoshi-III is being built on the Tamakoshi River in Dolakha and Ramechhap districts at a cost of around Rs 111.30 billion. The project, which is expected to affect Lamidada, Namdu, Bhimeshwor and Jugu villages, has the potential to generate 2,350 gigawatt-hour of electricity per year.

The power generated by the plant will be evacuated using an 81-km 400 kV transmission line to be developed to Dhalkebar.