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Norway wins but UK withdraws offer for Nepalese hydro company

The UK’s Independent Power Corporation (IPC) has withdrawn an offer to buy small Nepalese state-owned hydroelectric generator Butwal Power Company, alleging problems in the bidding process. The UK firm claimed Nepal had ignored tender norms in favour of the Norwegian firm Interkraft, which also wants to buy Butwal, and which owns two hydro plants in the Himalayan Kingdom. IPC planned to buy the Nepalese firm for US$10M while the Norwegian firm had offered US$10.6M, officials said.

Meanwhile, Nepal will start getting electricity from an Indian hydro power plant this year, ending nearly a decade-long row between the two south Asian neighbours. A 15km transmission line from India’s 120MW Tanakpur hydroelectric facility to Nepal is ready and technicians are carrying out trial runs.

In 1991, Nepal leased a small stretch of land to India to complete a portion of the Tanakpur dam in return for 10M kWh of free electricity annually. But the deal ran into controversy when Nepal’s opposition parties insisted it demand more benefits from the facility, built in the northern state of Uttar Pradesh on the Mahakali river on Nepal’s western border. Under pressure from Nepal, India increased the amount of free power to Nepal to 70M units.

In 1996 India and Nepal signed another treaty, the Mahakali River Treaty, setting out terms for the construction of a US$3B dam complex to generate hydroelectric power and store water for irrigation purposes. However, a dispute over how the water should be shared delayed implementation of the project.