GMR Group suggested for Arun III, Upper Karnali

Budhi Gandaki shelved, GMR Group suggested for Arun III, Upper Karnali
eKantipur.com, 27-April-2007
BY BIKASH SANGRAULA

A committee constituted by the Ministry of Water Resources (MoWR) in October last year to evaluate the proposals of 14 companies interested in developing the 600 MW Budhi Gandaki, 402 MW Arun III and 300 MW Upper Karnali hydroelectric projects, has recommended India's GMR Group for both Arun III and Upper Karnali, sources said.

However, none of the companies that applied for Budhi Gandaki have been recommended for license award, as all the applications were ajudged sub-standard.

The committee, which is coordinated by former finance secretary Bhanu Prasad Acharya, submitted its recommendation to Minister of State for Water Resources Gyanendra Bahadur Karki Friday afternoon.

Sources close to the developments said that the five-member committee allotted points to each of the applications on the basis of 20 different parameters, including free energy and free equity offered to Nepal, financial capability, experience, royalty and construction deadline.

"Based on these parameters, GMR's proposal was judged the best for both Arun III and Upper Karnali," a source said. "Proposals made by KSK Electricity Finance India Ltd and Sutlej Jalbidhyut Nigam were judged second best for Upper Karnali and Arun III respectively," the source added.

Sources said GMR has offered substantial free equity and nominal free energy to Nepal for Upper Karnali. "The government had asked for free equity for Upper Karnali, as the project is listed in Nepal Electricity Authority's generation plan," a source said. Meanwhile, for Arun III, which does not feature in the state electricity body's generation plan, GMR has offered substantial free energy and nominal free equity.

The recommended company, upon being awarded project survey licenses by the government, will be required to produce bank guarantees that would be forfeit if the awarded projects are not completed on time. Under government policy, total ownership of the projects must be handed over to Nepal 30 years after the issue of license.

GMR Group, which entered India's power sector more than a decade ago after the sector was opened up for private investment, has three power plants in operation in India. They are GMR Energy Ltd in Mangalore, GMR Power Corporation Pvt Ltd in Chennai and Vemagiri Power Generation Ltd in Andhra Pradesh.

Three more power projects, also owned by the group, are being development. They are GMR Badrinath Hydro Power Generation Pvt Ltd in Alaknanda, Uttarakhand, Kamalanga Power Project in Orissa and Talong Power Project in Arunachal Pradesh, according to the company's official website.

Fourteen companies, namely Reliance Energy, GMR Energy, Jindal Steel and Power Ltd, Sutlej Jalbidhyut Nigam, Maytas NCC Consortium India, Jayprakash Associates, Larson and Tourbo, Bhilwara Energy Ltd India, National Hydroelectric Project Corporation of India Ltd, KSK Electricity Finance India Ltd, Athena Consortium, Brackel Corporation Netherlands, Sino Hydro Corporation and China National Oversees Engineering Corporation had applied for one or more of the three projects.

Reliance Energy and Jindal Steel and Power Ltd were close in the race, sources said.

Arun III and Upper Karnali are two of the most attractive run-of-river projects in the country. Both are meant for power export to India.

The committee has as members former chief of the Department of Electricity Development Lekh Man Singh Bhandari, Water and Energy Commission Secretariat chief Rajendra Kishore Chhettri, and Nepal Electricity Authority chief Arjun Kumar Karki. MoWR joint-secretary Anup Kumar Upadhyay is member-secretary of the committee.