Norway’s Statkraft quits $1.5bn project in Nepal
Norway’s energy company, Statkraft, has announced its decision to cancel plans for the construction of a hydropower plant worth USD 1.5 billion in Nepal.
The Oslo-based company said on Tuesday that it made the decision due to bureaucratic hurdles and political instability in the troubled Himalayan nation.
Nepal boasts a vast network of fast-flowing rivers through the Himalayas, which means that the country has huge untapped resources for hydropower generation, making it a significant potential supplier to its energy-hungry southern neighbor, India, AFP reported.
However, the impoverished country's total installed power generation capacity does not exceed 800 megawatts – which is tantamount to 1.9 percent of its potential -- and cannot meet even the local demand for power, as a result of which Nepalis have to put up with blackouts, which sometimes take up to 15 hours a day.
The Norwegian firm entered an agreement with the Nepalese government in 2007 to build the Tamakoshi III hydropower plant and generate 650 megawatts for export to India and other neighboring countries. The ownership of the plant was to be transferred to Nepal after 25 years.
Statkraft's Nepal country director, Sandip Shah, released a statement on Tuesday, saying that the company’s decision to quit the project "reflects the increased bureaucratic hurdles for foreign investments, a fragile political situation and a geopolitical situation leading to a non-conducive project development environment."
The electricity produced as a result of the project would have covered the districts of Dolakha and Ramechhap, which suffered severe damage after a massive earthquake hit the country last April, killing some 8,900 people.
The natural disaster and later protests against a new national constitution adopted in September have practically devastated Nepal's economy, causing growth forecasts to fall to three percent and dashing hopes about the country’s ability to raise much needed foreign investment.
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