Apex court scraps stay order, clears way for PDA negotiation Upper Karnali Hydropower Project

THE Supreme Court on Sunday scrapped its earlier interim order asking the government not to proceed ahead with the power development agreement (PDA) negotiation with GMR Energy for developing 900 MW Upper Karnali Hydropower Project. A division bench of Acting Chief Justice Damodar Prasad Sharma and Justice Prakash Wosti maintained that it was not necessary to continue the stay order as issues raised in the petition would be dealt with during the final hearing. “If the government wants to proceed ahead with PDA negotiation, it can do so with the scrapping of this interim order,” said Shreekant Poudel, spokesperson for the apex court. The court had on July 23 issued the interim order responding to a petition filed by 29 individuals of the affected districts. In a law suit filed at the court, they argue that the memorandum of understanding (MoU) signed between the Government of Nepal and GMR Energy to develop the Upper Karnali hydel project had ignored the rights of the locals in the affected districts. They claim that the Indian power developer failed to comply with the provision of starting the project within three months of signing the MoU and furnish a progress report every six months as per the Electricity Regulation. The Investment Board Nepal (IBN)—a government entity that facilitates mega projects including hydropower projects of 500 MW and above—is currently holding PDA negotiation with the Indian power developer that has already spent three years for signing the deal with the government. IBN Chief Executive Officer (CEO) Radhesh Pant said apex court’s latest ruling has paved the way to resume PDA negotiations that had been halted since the interim order was issued. “The PDA negotiation with the GMR is going well, as there has been convergence in most of the significant issues,” he said. Apart from Upper Karnali, the Indian developer is also developing 600 MW Upper Marsyangdi hydropower project. On the request of GMR Energy, the IBN had in mid-December, 2012 extended the Indian power developer’s survey licence for the Upper Karnali project by six more months to facilitate PDA negotiation. The Indian conglomerate’s licence had expired in November 2011. The IBN had also permitted GMR to increase its paid-up capital in the projects in response to the latter’s request for government approval to increase it to Rs 1.9 billion. The government had been granted GMR permission to open its office in India to explore markets for the power produced in Nepal. At the time of MoU signing on January 24, 2008, GMR had agreed to provide 27 percent free equity and 12 percent of the energy produced from the Upper Karnali project to Nepal.