China’s Three Gorges International has decided to pull out from the $1.2 West Seti Hydro project in Nepal, six years after it signed the MoU to build it. A high-level team of the CTGI, a subsidiary of the China Three Gorges, conveyed to the Nepal government Wednesday that the project is not cost-effective.
The 750-MW project, the first reservoir project in Nepal, was to be completed by next year as per the CTGI’s earliest commitment, but its pull-out without even beginning construction may have an adverse impact on China’s credibility.
According to sources, Nepal had offered to lower the capacity to 600 MW from 750 MW at the same cost and extend the power purchase agreement to 12 years from 10 years. But China insisted the resettlement and rehabilitation of the to-be-displaced people and the transmission cost would be too high.