Chilime at the verge of closure

The Chilime Hydropower Company Limited, a project acclaimed as an exemplary model of hydropower in Nepal, has fallen into a new debate over its resource ownership and benefit sharing between the locals and the project promoters.
With this dispute, the project is now on the verge of closure.
The typical project, which was developed by Nepalese engineers and technicians, has fallen into controversy after it announced the allotment of Public Initial Offerings (IPOs).
A case regarding this has been under consideration at the Supreme Court. The local people and different organizations have claimed the ownership of the project and created obstructions in the operation of the project.
In an effort to address the burning issues related to the project, the Chilime Hydropower Project organized an interaction with the concerned stakeholders with top level government officials, energy experts and project promoters.
Prem Tamang, member of the Constituent Assembly from the Rasuwa district, said that ensuring locals’ ownership of the project should be a top priority.
Tamang suggested that the project should ensure 50 per cent ownership of the locals, who had given their land, water and resources to the project.
He claimed that the government’s ambitious plan to generate 25,000 MW power within 25 years was possible but the level of confidence of the state and project developers was getting low. “Politics in water is lessening the potential of power development in Nepal,” he claimed.
Ratna Sansar Shrestha, an energy expert, blamed that the increasing public attraction towards the Chilime shares was leading the project to controversy. “The project should ensure the locals’ rights first,” he said.
Laxmi Devkota, former member of the National Planning Commission (NPC), asked the government to be honest toward the development of any hydropower project.
“There is a need for the formation of a task force comprising of locals, journalists, policy makers and other stakeholders to identify issues with their dimensional analysis regarding the benefit sharing and project ownership,” Devkota added.
Dr. Govinda Nepal, another energy expert, pointed out that revenue sharing, providing development funds to locals, equity sharing and exemption of power tariff were the common practices of developing hydropower. “In this context, the project should ensure a minimum of 10 per cent shares for the locals.”
He said that the locals and the Chilime management should join hands to pressurize the government to amend the existing rules and regulation. “Obstructing the project will not be an ultimate solution,” he added.
Shankar Prasad Koirala, Secretary of the Ministry of Energy, emphasized the need for building a national consensus for the development of hydropower in the country.
Koirala said that the government was mulling over new provision that would ensure rights of the local people.
He said that providing a 10 per cent share to locals, distributing free electricity to them and ensuring employment opportunity for them was a positive indicator of power development in the future.
“Similarly, the tax exemption in electro-mechanic equipment and developing transmission line will give a boost to the development of power sector,” he said.
Dr. Prakash Sharan Mahat, Minister of Energy, said that the government had allocated Rs.14.69 billion for the development of power and energy.
He said that there was a huge attraction among investors toward hydropower sector in recent times. “This should be tapped well,” he said.
There should be a win-win situation to balance the investor’s investments and ensure the fundamental rights of the locals as resource owners, he said.
The 22-MW project, which lies 150 kilometers north of the capital, is the first of its kind built wholly by the Nepalese engineers.
This is one of the cheapest projects ever built in Nepal with a total cost of Rs.2.32 billion. Construction work of the project was started in 1995.
Chilime is producing 130.7 million unit of electricity annually and per unit costs Rs.2.19. Nepal Electricity Authority (NEA) pays Rs.3.00 per unit. The price will increase 8 per cent annually for 12 years.