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🇳🇵 Nepal /Energy & Infrastructure

Nepal court orders more free electricity from Phukot Karnali as developer says provision will make project unviable

From Kathmandu Post · () English

Summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • Nepal's Supreme Court has ordered the government to renegotiate an agreement for the Phukot Karnali Hydropower Project to increase Nepal's share of free electricity.
  • The current memorandum of understanding (MoU) grants Nepal 21.9 percent free electricity, which the developer, NHPC, argues makes the project unviable.
  • The court directed authorities to amend the MoU to maximize Nepal's free electricity share fairly and ensure a revised work schedule for project implementation.

In a significant ruling, Nepal's Supreme Court has intervened in the Phukot Karnali Hydropower Project, mandating a renegotiation of the free electricity provision for the nation. The current agreement, a memorandum of understanding between the government-owned Vidhyut Utpadan Company Limited (VUCL) and India's National Hydroelectric Power Corporation (NHPC), allocates a mere 21.9 percent of the generated electricity to Nepal free of cost. The court's directive is clear: this share must be increased as much as possible in a fair manner.

The government should renegotiate the agreement under which Nepal is entitled to receive only 21.9 percent free electricity from a high-return project for which Nepal had already completed preparations for construction.

· Supreme Court OrderThe court's directive to renegotiate the MoU to increase Nepal's share of free electricity.

This decision directly challenges the developer's claim that providing a higher share of free electricity would render the project financially unviable. The court's order, issued following a writ petition filed by residents of Kalikot district, emphasizes the need for a more equitable distribution of benefits from a high-return project. VUCL has already initiated steps to invite NHPC for discussions, signaling a commitment to implementing the court's directive.

We have sent a letter to the NHPC inviting them for discussions to implement the court’s directive.

· Hiraman WaibaWaiba, acting CEO of VUCL, confirms the company's action to engage NHPC following the court's order.

The Phukot Karnali project, estimated to cost around Rs92 billion, has faced delays, partly due to the legal proceedings. The Supreme Court's order also includes a revised work schedule, aiming to expedite the project's implementation once the parties agree on the terms. This ruling underscores Nepal's determination to secure greater benefits from its hydropower resources, asserting national interests in energy development projects, especially those involving international collaboration.

Both parties should negotiate and determine the amount of free electricity in line with the court’s directive. VUCL must present its bottom line and negotiate whether the company can prov

· Dinesh GhimireFormer energy secretary Ghimire advises on the negotiation process required to implement the court's directive.
About this summary

Originally published by Kathmandu Post. Summarized and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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