Environmental assessment backs Nepal’s 750-MW West Seti

An environmental assessment of Nepal’s 750-MW West Seti hydroelectric project finds the development will bring US$991 million in economic benefits to Nepal over 30 years and will mitigate adverse effects on ecosystems and residents.

Construction of West Seti is expected to begin by late 2007 on the Seti River in Doti District of Nepal’s Far Western Development Region. (HNN 7/13/07) The project is expected to require 5.5 years to build, 400 kilometers west of Kathmandu.

The environmental assessment report, released this month, was completed for the Asian Development Bank (ADB) by a team of in-house SMEC International specialists and local and international specialists. ADB, which is to provide partial funding for the project, has scheduled fact finding in September and board action on the project for December.

�The project will generate 3,636 GWh of electricity per annum for export to India, and provide significant economic and development benefits to Nepal,� the report said. �The direct economic benefit from annual payments by the project to the government is estimated to total US$991 million during the 30-year generation license.�

The report said the project also will create 6,000 construction jobs and 200 permanent jobs and provide an additional 20 percent of land to all project-affected landholders being resettled. It is to lift the living standard to the subsistence level for 38 percent of the people being resettled from the main project area. It also will provide community development initiatives near the reservoir and downstream area.

Main effects: hydrology, ecosystems, resettlement

Main adverse effects of the project are altered river hydrology, ecosystem loss or degradation, land take, and resettlement of affected people. The effect on river hydrology and ecosystems will be mitigated by base flow releases, dry season flushing flows, and operation of a re-regulation weir.

A resettlement plan will implement resettlement and compensation for land and for other losses, including a land-for-land exchange. Environmental monitoring also will be conducted during project operation.

The US$1.2 billion project is being developed by West Seti Hydro Ltd., a subsidiary of Snowy Mountains Engineering Corp. (SMEC), which received a concession to develop the project in 1994.

The project is to include four 187.5-MW vertical-shaft Francis turbine-generators with a head of 259 meters in an underground powerhouse, a 195-meter-tall concrete-faced rockfill dam, a 2,060-hectare reservoir, 6.7-kilometer headrace tunnel, a 620-meter tailrace tunnel, re-regulation weir, switchyard, access roads, and a 132.5-kilometer transmission line to India.

SMEC is to operate the project for 30 years and export power to India under a 25-year contract with Power Trading Corp. of India Ltd. At the end of the concession, the project is to be transferred to the government of Nepal. Nepal is to receive 10 percent of power revenues as royalty payment.

Shareholders in the project include ADB, the government of Nepal West Seti Holdings, China’s National Machinery Import and Export Corp., and a special purpose vehicle of Nepal financial institutions. Financing is being provided by China Export-Import Bank, Industrial and Commercial Bank of China, and Bank of China.

SMEC signed a development agreement in 2005 with China National Machinery Import and Export Corp. It signed Italian-Thai Development Public Co. Ltd. of Thailand to act as engineering-procurement-construction contractor in 2002.

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