Bhote Koshi Project

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The Bhote Koshi Project is a power plant in Nepal. It was constructed from 1997 to 2000 and started operating in January 2001. The project cost about US$ 98 million, the majority of which was provided by Panda Energy International, making it the largest American investor in Nepal. However, in 2003 problems emerged as the power plant increased the capacity from 36MW to 45MW without official approval. As Nepal Electricity Authority (NEA) entered a contract that it will buy all of the produced electricity until 2020, the company demanded payment for the energy produced, while at the same time the department of Electricity Development slapped a fine on the firm for exceeding the capacity. A conflict has emerged, where the company is interested in getting an official approval to produce the additional power, while at the same time they have agreed to pay the fine in order to settle the matter.

During monsoon season (2000 hours each year) Bhote Koshi can operate at full capacity, while during winter season they can only produce 15MW. The energy produced during monsoon season is wasted due to low demand during this time and excess supply, making the energy more expensive. Furthermore the plant has had some problems with Maoist rebels and on one occasion had to shut done the plant as the rebels were threatening to blow up the plant.

Furthermore, NEA is currently forced to buy electricity from Bhote Koshi Power plant at a cost higher than its own tariffs. The oversupply during monsoon season and the fact that NEA’s own plant, which can generate electricity at a third of the cost.