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Norway firm quits $1.5bn Nepal hydropower project

Kathmandu - Norwegian company Statkraft says it's dropping plans to build a $1.5bn hydropower plant in Nepal, citing bureaucratic hurdles and political instability in the troubled Himalayan nation.

A vast network of fast-flowing rivers through the Himalayas means Nepal has huge untapped hydropower resources, making it a significant potential supplier to its energy-hungry neighbour, India.

Yet the country's total installed power generation capacity is only about 800 megawatts - 1.9% of its potential - and fails to fulfill even local demand, meaning Nepalis endure blackouts of up to 15 hours a day.

Severe damage

The Norwegian firm entered an agreement in 2007 to build the Tamakoshi III plant and generate 650 MW for export to India and other neighbouring countries before transferring ownership to Nepal after 25 years.

Statkraft's Nepal country director, Sandip Shah, said the company's decision to quit "reflects the increased bureaucratic hurdles for foreign investments, a fragile political situation and a geo-political situation leading to a non-conducive project development environment".

The project would have covered the districts of Dolakha and Ramechhap, which suffered severe damage when a massive earthquake hit Nepal in April last year, killing about 8 900 people.

The disaster and protests against a new national constitution adopted in September have devastated Nepal's economy, pushing growth forecasts down to 3% and derailing hopes of raising crucial foreign investment.



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