Private investment in hydropower in Nepal is growing rapidly, with $300 million being invested in small and medium-sized projects.

“In hydro, the risks are high but returns are reasonable,” said Sujeeb Shakya, general manager at Soaltee Group, which is building the 36 MWe Bhote Koshi hydropower project, due to start operation in May 2000. The 60 MWe Khimti hydropower project is due to begin generating electricity in July 2000. Both projects have power purchase agreements (PPAs) with Nepal Electricity Authority (NEA).

In July, NEA signed a PPA with the Chinese consortium Gitec Nepal to build the 14 MWe Upper Modi project. Two other agreed projects are the 5 MWe Indrawati project and the 20 MWe Chileme project.

Investors are looking beyond Nepal’s domestic market, and are looking at the prospect of exporting power to northern India. A test case is the 750 MWe West Seti hydro-power project being developed by Australia’s Snowy Mountain Engineering Corporation. The project is dependent upon SMEC’s ability to conclude a purchase agreement with India’s Power Trading Corporation and state electricity boards of Indian states bordering Nepal.