PDA negotiations with Satluj to begin today

KATHMANDU, JUN 17 -

The Investment Board Nepal (IBN) will start power development agreement (PDA) negotiations with Satluj Jal Vidyut Nigam — developer of the 600-MW Arun III Hydropower Project — on Monday.

IBN Chief Executive Officer Radhesh Pant will lead the negotiations on behalf of the government, while Satluj Executive Director RK Agrawal will lead his company.

The IBN had held a pre-PDA negotiation with Satluj a month ago.

“Preparations from both the parties have been completed. We will be on the negotiation table on Monday and Tuesday,” said a high-level IBN official.

The IBN, established in 2011 to facilitate large scale investment projects, has also been holding PDA negotiations with two other developers — SN Power and GMR Energy — for last three weeks. The IBN has completed the first round of negotiations with these two companies.

Norwegian SN Power is developing 880-MW Tamakoshi 3 project, while India’s GMR is developing Upper Marsyangdi (600 MW) and Upper Karnali (900 MW) projects.

“During the week-long negotiations, the developers and the IBN dealt with some of the contentious issues that need to be settled before moving towards the signing of the the final agreement,” said Pant.

The existing Bonus Act has appeared as a bottleneck during the negotiations, according to the IBN. As per the Bonus Act of Nepal - 1974, private and public firms should share at least 10 percent of the profit to respective employees annually.

“Developers have expressed serious concern over this provision as it means the foreign developers that are spending billions of rupees in Nepal have to spend a huge amount while sharing their profits with employees,” said the official.

Two taskforces have been formed comprising representatives from both the government and the developers (SN Power and GMR) to review legal, financial, technical and managerial issues. They have been given two weeks to identify a common point on which both the government and the developers can agree. “We are trying to achieve a win-win situation for both the developers and the country by trying to ensure maximum benefit and high utilisation of the country’s water resources,” said Pant.

If the PDA negotiations move ahead at the current pace, the government will sign the final agreement within next three months, according to the IBN.

Investors sign PDA with the government so as to avert any possible social, economic or policy-level uncertainties during the construction of the projects.

Source: The Kathmandu Post