Preparations for the Power Development Agreement (PDA) of the West Seti Hydropower Project have officially begun. A negotiation committee led by Investment Board Nepal (IBN) CEO Sushil Bhatta has been formed to draft the PDA. The decision was made during the 65th meeting of the board chaired by Prime Minister KP Sharma Oli. The committee has been tasked with holding discussions with the project developer on the PDA draft, financial structure, and related matters, and then submitting recommendations to the board.
The committee includes joint secretaries from the Prime Minister’s Office, Ministry of Finance, Ministry of Energy, and Ministry of Law; the Director General of the Department of Electricity Development; IBN’s technical joint secretary; the Deputy Managing Director of the Nepal Electricity Authority; and a senior divisional engineer (hydropower) of the board, who will serve as the committee’s member secretary.
According to IBN spokesperson Pradyumna Prasad Upadhyay, the committee will work to resolve disagreements over the project’s financial structure and finalize the PDA. The main sticking point between Nepal and India’s National Hydroelectric Power Corporation (NHPC) is the provision of 21 percent free electricity to Nepal. While the board’s agreement with the developer includes this condition, NHPC has expressed reservations, citing high costs for a reservoir-based project.
In Sept 2022, IBN signed a pact with NHPC to develop the 750 MW West Seti and the 450 MW Seti River-6 projects. The agreement specified that Nepal would receive 262 MW—21.9 percent of the total installed capacity—free of cost. NHPC has since completed and submitted its Detailed Project Report (DPR), which proposes increasing West Seti’s capacity to 800 MW and developing it as a reservoir-based project, pushing estimated costs to nearly Rs 200bn with a construction timeline of about six years.
Technical studies show that while a reservoir-based model offers higher storage capacity, it will flood over 3,300 hectares of land, displacing communities in Baitadi and Bajhang districts. The commission’s study committee earlier highlighted the high resettlement and rehabilitation costs associated with this model. Despite these challenges, both sides are continuing discussions to resolve outstanding issues, including the share of free electricity and the sale market for the power generated. Once the West Seti PDA is finalized, IBN plans to move ahead with the Seti River-6 project.
