PGC comes aboard power line project
KATHMANDU, MAY 17 -
The much delayed 400 kV transmission line project linking Dhalkebar in Nepal with Muzaffarpur in India is expected to move forward with the entry of Power Grid Corporation (PGC), India as a major shareholder in Power Transmission Company Nepal (PTCN).
PTCN has been formed to construct a 40-km long transmission line on the Nepali side. Another company Cross Border Power Transmission Company (CPTC) has been formed to build a 100-km long transmission line on the India side. The entry of PGC has raised hopes that construction will start soon as the existing shareholders have not been able to put together the money required to build the power line.
Initially, the Nepal Electricity Authority (NEA) and Infrastructure Leasing & Financial Services Limited (IL&FS) of India held a 50-50 stake in PTCN. The entry of PGC became possible after IL&FS sold most of its shares to the NEA and PGC. As per the new share structure, the NEA will have a 64 percent stake in CPTC while PGC will hold 26 percent and IL&FS 10 percent.
“The NEA came to an understanding with the two shareholders a week ago with regard to the new share structure in the construction of the transmission line in Nepal,” said Ganesh Prashad Raj, general manager of the NEA’s Grid Development Department. “Lack of funds with the existing shareholders delayed construction of the transmission line.”
He said that with the newly set up share structure, it would be easy to accelerate the construction works of the 40-km transmission line in Nepal.
The estimated total cost of the 40-km long Nepali portion of the project is Rs 2.263 billion while the Indian portion will cost Rs 2.352 billion. The Indian government has provided Nepal a soft loan of Rs 13.2 million to build its portion of the power line.
Though the project was initiated in 2006, no physical work has taken place so far. In November 2009, the NEA and Power Trading Corporation (PTC) signed a memorandum of understanding to construct a cross-border transmission line by forming two companies to conduct the project in the respective countries.
Officials said that the NEA could finance the project as the World Bank and the Indian government had pledged soft loans to Nepal to implement the project on the Nepali side. The World Bank agreed to provide a loan package of US$ 99 million for design, supply, installation and commissioning of the Hetauda-Dhalkebar-Inaruwa 400 kV transmission line.
Pushpa Raj Khadka, director of the NEA, said that the authority had submitted letters to both the investors to sign a shareholder agreement to construct the transmission line on the Nepali side. “Once the formal agreement is inked, construction of the 40 km lines in Nepali will start promptly,” he said.
He also said that there has been much delay in the construction of the transmission line as the project being a joint venture needs to have mutual understanding in every single step. Besides, the lack of fund also had played major role in the delay.
“As the project is based on mutual understanding and collaboration with the Indian government, the NEA alone can’t make decisions resulting in the project being delayed,” he said. Khadka added that there had been no work on the Indian side too.
Source: The Kathmandu Post
