CMC, Sinohydro win 140MW Tanahu hydro contract

Wednesday, July 25th, 2018 | | Money

Tanahu Hydropower Limited (THL) has selected CMC Ravenna of Italy and Sinohydro Corporation of China to build the 140 MW Tanahu Hydropower Project. The two contractors will work on the two components of the storage-type project located on the Seti River in central Nepal.

CMC Ravenna will implement the first package of the hydroelectric project worth Rs20.64 billion. This includes formulation of a detailed design of the project and construction of the headworks. The Asian Development Bank (ADB) is providing a loan for the execution of this component of the project.

Similarly, Sinohydro Corporation, a Chinese hydropower engineering and construction company, has won contracts worth $114.18 million and Rs3.83 billion to execute the hydromechanical and electromechanical works under the second package of the project which includes construction of waterways and the powerhouse. The Japan International Cooperation Agency (Jica) is providing a loan to implement the second package.

The two companies have to sign their contracts with the developer THL, a wholly owned subsidiary of the Nepal Electricity Authority (NEA), within 28 days. THL has asked the winning bidders to submit their performance guarantees before signing the contract. “We are planning to sign the contract within a month and mobilise the contractors to the project site by October,” said Pradip Kumar Thike, managing director of THL.

The NEA subsidiary has completed the pre-construction works and an access road at the project site. It has also made compensation payments to around 90 percent of the landowners whose lands were taken over for the development of the reservoir project.

THL has also signed a power purchase agreement (PPA) with the NEA to sell the electricity generated by the plant. As per the PPA, the NEA will pay THL Rs12.40 per unit during the dry season, which lasts from December to May, and Rs6.08 per unit during the wet season, which lasts from June to November.

The PPA also includes a provision under which THL can increase the power purchase rate by 3 percent annually for eight years after it commences commercial generation. After the increase, the NEA will have to pay Rs15.38 during the dry season and Rs7.54 during the wet season.

The Tanahu Hydropower Project will be one of the biggest reservoir-type projects in the country with an estimated annual energy generation capacity of 587.7 GWh in the first 10 years of operation.

The project can generate energy for six hours daily during the dry season. The project is being built using a credit facility extended jointly by the ADB, Jica and European Investment Bank (EIB).