Pandemic delays hydro projects, power producers decry govt’s inaction

“Construction cost of each hydro project went up by 20 percent due to the pandemic.”

Image for representation. Photo: RSS

Ashim Neupane

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Kathmandu: Already delayed due to the first wave of Covid-19 pandemic and lockdowns, the second wave of the pandemic and subsequent restrictions have further pushed the completion of hydropower projects by almost two years.

As the project’s completion date has been pushed further, the expected cost of each hydropower project has increased by almost 20 percent, according to Independent Power Producers’ Association – Nepal (IPPAN).

“As the expected cost has increased by a huge amount, hydropower projects have asked the government to provide relief, but there has been no positive response,” said Ganesh Karki, Vice-President at IPPAN.

Following the first wave of the pandemic, hydropower promoters had urged the government to waive license renewal fees for two years. “But the government refused. Even though the sector is hard hit by the pandemic, there has been no positive response from the government,” added Karki.

Despite the Ministry of Energy, Water Resources and Irrigation forming a committee to study pandemic-hit hydropower projects and provide relief, the Ministry of Finance did not address the concerns, hydropower stakeholders say.

“Other demands such as providing interest subsidies and refinancing were also rejected by the government. This has only put an additional burden on hydro projects,” Karki said, adding the government is ready to import electricity from India but is reluctant to provide reliefs to hydro projects in Nepal.

Karki gave an example of how the cost of hydro projects increased following the pandemic. “The Shingati Hydropower project was completed two years ago, but the Nepal Electricity Authority (NEA) refused to test the project citing a risk of the Covid-19 pandemic. As NEA did not conduct testing, the government did not construct transmission lines, and commercial power production got delayed. The project just had to pay interest to banks,” said Karki. “The government did not provide subsidies on interest even to such project.”

According to Shailendra Guragain, immediate past president of IPPAN, even though the construction has resumed, there are not enough workers on the site. “The construction has resumed with limited workers as most of them went home following lockdown,” said Guragain, adding that projects with a generation capacity of 3,000 MW, which are at the final stage of financial closure, have been impacted due to the pandemic.

“The pandemic and the recent floods have further delayed hydro projects, but the government has ignored the sector,” added Guragain. “We demanded relief in import, subsidies in interest rates, among a few others, but the government is reluctant.”