India key to Nepali hydropower ambition - Prachanda

Nepal's Prime Minister Prachanda attends a meeting with his Indian counterpart Manmohan Singh before the second summit of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) in New Delhi in this November 12, 2008 file photo.

SOLBERGFOSS, Norway - Nepal aims to boost its hydropower generation capacity more than 15-fold in 10 years, and the government is working to gain access to the vast Indian market for electricity exports, its premier said on Tuesday.

The Himalayan nation's goal is to build 10,000 megawatts of hydropower plants by 2020, from around 630 MW now, as part of the ruling Maoists' pledge to create a "new Nepal."

"We are trying to go ahead with this huge target," Prime Minister Prachanda told reporters on the dam of the Solbergfoss hydroelectric plant on the River Glomma in Norway.

"We have huge hydropower potential, and India is a huge market," the premier, who goes by his guerrilla name Prachanda, told Reuters on a two-day Norway visit. "We are in discussions and are trying to develop a unified understanding with India."

Nepal, among the world's poorest nations, will need to import technology from industrial nations like Norway and secure international financing to pursue its goal.

It hopes exporting power will bring revenues to help fund the hydropower ambition, but cross-border cables to energy-hungry India are lacking.

"If they (India) commit to buying power from us, we could be like Norway," Manoj Bahadur Shrestha, chairman of Himalayan Bank, told Reuters, referring to Norway's power exporter role.

Mountainous Norway, with many waterfalls and rivers, is the world's fifth biggest hydropower producer. Hydroelectricity helped transform Norway from one of Europe's poorest countries at the end of the 19th century into one of the richest.

A drought in Nepal has hit supplies, forcing power cuts of up to 18 hours a day and heaping pressure on Prachanda's coalition government to fix the problem.

"People have huge difficulties in their lives," said Prachanda, the former Maoist guerrilla who won a surprise election victory in April last year.

NORWAY COMPANY EAGER

Preliminary plans have been drawn up for about 2,000 MW of new capacity in several projects, including the government's 456 MW Upper Tamakoshi project and the 600 MW Tamakoshi 2/3, which is under feasibility studies by Norwegian firm SN Power.

SN Power, which invests in hydropower plants in Asia and Latin America, is the main partner in the 60 MW Khimiti plant east of Kathmandu. It and its parent company Statkraft have been developing hydropower in Nepal since 1993.

"Nepal is part of our growth strategy," SN Power's Chief Executive Oistein Andresen told Prachanda and accompanying Nepali officials in a presentation at company headquarters in Oslo.

"It would be very important to have power lines between India and Nepal," he said.

Nadia Sood, SN Power's Executive Vice President for South Asia, said: "Until those go up, there will be less incentive for developers of large hydropower projects."

SP Power got a survey licence this month for Tamakoshi 2/3, so it can proceed with more studies for the $1.5 billion investment. If all goes well, it would aim to put financing in place in 2011 and start building in 2011 or 2012, Sood said.

More permits, including a generation licence and export licence, will be needed, and the company also wants reassurance that the regulatory framework works and smoothes bureaucracy.

"Without an export licence and without the transmission lines, (international financiers) will be reluctant," Sood said.