border review | 8 March 2012

The next gorge – reviving the West Seti dam project with Chinese help

Its official: last Wednesday, the China Three Gorges Corporation (CTGC) signed a memorandum of understanding with the Nepal government regarding the construction of the much-contested West Seti Hydro Electricity Project, eKantipur reports. GTGC gets a 75 percent stake in the 750 MW project; the Nepal Electricity Authority will hold 25 percent and CTGC has promised to help them obtain a Chinese bank loan to shoulder the investment.

There is no question that Nepal and especially the Kathmandu Valley lack electricity. However, West Seti is in far-western Nepal and the plan is to export most of the electricity to India. The dam has a long and complicated history. For sixteen years, the Australia-based multinational Snowy Mountain Engineering Corporation (SMEC) held a licence to develop the project.

Chinese Banks as well as the Asian Development Bank (ADB) had agreed to provide loans. About 13,000 people would have to be resettled and the Maoists said in 2009 that they would not allow the operation of the dam. After Kathmandu-based NGO WAFED showed that the project violated several of ADB’s policies (reports here and here), the bank pulled out in 2010. Finally, in summer 2011, Snowy Mountain Engineering Corporation (SMEC) lost its licence.

Now, the Maoist-led government comes back to the plan and provides the China Three Gorges Corporation (CTGC) with a next gorge for their ambitions.