Tuesday, June 10, 2014

Norwegian government should “gift” Khimti project to Nepal

By an accident in history I happened to join HPL, owner of Khimti project (60 MW) as the financial controller and company secretary in May 1994 at the express request of Mr. Odd Hoftun (whom I consider my Guru and I have learnt many a things about water resources from him like Eklavya did from Dronacharya of Mahabharata fame, without having being taught by him directly or ever worked under him). It was he, an UMNer who initiated development of hydropower projects outside the ambit of GoN and NEA. He was instrumental in building Tinau project, 1 MW, near Butwal by securing financial grant from Norwegian government. Under the agreement signed between UMN and Norwegian government for the purpose, the project was “gifted” free of cost to GoN, which handed it over to NEA. Later under his very leadership Andhi Khola (5.1 MW) and Jhimruk (12 MW) projects respectively in in Syangja and in Pyuthan were built similarly, but were put under BPC’s ownership, shares in which were again “gifted” free of cost to GoN and GoN “earned” about Rs 1 billion in 2003 by privatizing BPC – selling shares of BPC.

In this manner Nepal received all three projects built with Norwegian government financial assistance as gift (free of cost). Again under the leadership of Mr Hoftun, the idea of developing Khimti (60 MW) was conceived by BPC, but for lack of fund, Norwegian assistance was again sought. This time Norwegian “private” sector, Statkraft SF was roped in and after protracted negotiation a PPA was signed on 30th March 1994 – couple of months before I joined HPL in May 1994 which was revised in January 1996. At that time I didn’t have a clue as to which bird’s name is hydro or power. I left HPL in late 1998 on grounds of principle and I started to study the sector deeply and also commenced to analyse, write and publish about the sector. I did an in-depth analysis of the risks involved and how was the various risks allocated/shared; culminating in publishing an article on “managing the risks of private hydro development in Nepal”, published in HRW (Hydro Review Worldwide) – an international magazine specializing in hydropower, in November 2000, based in Kansas City, Missouri, USA which can be viewed at http://www.ratnasansar.com/2009/01/managing-risks-in-private-sector-hydro.html

As I happened to sign as a witness in the revised PPA in 1996, media started to paint me as a “villain” and was being blamed for everything that had gone wrong due to this PPA, more than a decade after the PPA was executed. Those who made these comments seemed not to know that a company secretary is a glorified scribe drafting what was decided in a board meeting without any right to express own view and or be heard. Moreover, these people also seemed to be ignorant of the fact that a witness too doesn’t have right to decide who should get what, why and how. All these decisions were made by HPL board, which comprised of members in majority from Statkraft who dictated from Norway whatever was to happen. The situation was so bad that although I was appointed as HPL’s financial controller also, but all the financial controlling was done by a person working for Statkraft and at their instruction (some of my well-wishers had termed “behaviour” racist, to which I didn’t subscribe).

In my considered opinion, the only way out to mitigate the problem caused by Khimti PPA is for Norwegian government to gift (free of cost) the proejct to GoN if HPL is unwilling to review the PPA. What must not be forgotten is the fact that the PPA signed in March 1994 was revised in 1996 as HPL deemed the project unfeasible at the tariff of original PPA. Similarly, since NEA now is facing problem due to this PPA, it is time for HPL to agree to review the PPA in good faith.

The reason why I have come up with the idea of gift is that prior to Khimti all projects built with Norwegian assistance were gifted to Nepal. What also must be remembered is the fact that the owner of majority shares in Khimti (60 MW), Statkraft of Norway is also Norwegian government owned institution (not any private enterprise), and Norway, a superrich country of the world is raking profit from this project, which wasn't done in the case of previous 3 projects. I think Norwegian government has "earned" and taken out of Nepal more than enough profit from Khimti, built in a poor country like Nepal.

During discussions in parliamentary committee meetings people expressed the view that it is time for Nepal to “buy back” the project. I don’t agree with this idea. A super rich country doesn’t “pennies” from Nepal.
Therefore, it is time for Norwegian government to gift (free of cost) Khimti project to Nepal.

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