Investment Board asks Finance Ministry to clarify on incentive
Investment Board of Nepal asked the Finance Ministry to clarify on cash incentive to GMR Group, the developer of 900-MW Upper Karnali hydroelectric project.
The board has asked us to clarify on Rs 5 million cash incentives for every megawatt of electricity produced by the developer as announced in the budget, said an official at the ministry.
The board is finalising the draft Project Development Agreement (PDA) to sing with Indian company GMR, he said, adding that it hass sought clarification on incentives to decide on either to include in PDA or not.
The cash incentive and downstream impact on irrigation projects are two disputed issues among the political parties.
The board is also consulting with the Irrigation Ministry on finding the solution to the impact of downstream impact of the mega hydel project.
The board had started PDA negotiations with GMR Group in April 2013. But the recent visit of Indian Prime Prime Minister Narendra Modi to Kathmandu on August 3-4 helped expedite the negotiation.
Though, the board had planned to sign th deal during Modi's visit, the dispute of cash incentives and downstream benefit delayed the signing. The opposition parties pressurised the government to revise the draft which according to them needed more homework.
The government then formed a 13-member high-level committee led by vice chair of the National Planning Commission (NPC) Dr Govind Raj Pokharel to study detail impact of the PDA.
Apart from rationale of cash incentives, the opposition also questioned the government to clarify the proposed mega hydropower project's impact on Rani-Jamara-Kuleriya, Rajapur and Surya Patuwa that lie downstream of the project site.
The two influential members of the committee – chief secretary Leela Mani Poudyal and central bank governor Dr Yubaraj Khatiwada – argued that the incentive was meant for projects that generate electricity for domestic consumption.
But the Upper Karnali project is an export-oriented hydro project, which intends to sell 88 per cent of the electricity in India. NPC