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Arun III survey licence


Eurorient, the American Investment Banking Company, formally applied for a survey licence to build the Arun 3 project on 10 August but that does not mean that the project is "on".

Ron Nechemia, the company\'s managing director, who was in the capital last week said the final decision to invest would be taken by his board, based on the rate of return the project would offer. He, however, did not specify what rate would be good enough. That would depend on both the project cost and the Power Purchase Agreement (PPA) it would be able to negotiate in India.

"We have an existing relationship in India where we are involved eight or nine projects already," said Nechemia. The PPA would be crucial for the project but it won\'t come easily, as is evident from the experience with the West Seti project-another foreign venture that has been waiting for just such an agreement for years.

He added that the company had set aside money for investment in Nepal two years ago. But that money would be committed for the 402-MW Arun III project only after detailed studies are complete. In its application Eurorient has asked for a year\'s period for survey, likely to be approved within a month. For a survey licence it would have to deposit Rs 42 million-at the rate of Rs 100 per kilowatt of installed capacity-as a guarantee of performance.

The company plans to proceed in four stages: begin initial exploration on the possible PPA in India: conduct confirmation survey of project data (detailed design was completed with World Bank support): carry out environmental analysis; and then construction. The initial work is expected to take up to 11 months, including the negotiation of multilateral insurance against political and other risks involved.

Eurorient expects to complete the project in seven years after beginning actual construction-two years for road building, one for procurement and transport of equipment and 3-4 years of actual construction, The company estimates the Arun III project to cost about $1.3 per megawatt, which Nechemia claimed was the industry average for hydro projects. That comes to $ 600-800 million, which includes the road component.

Though Eurorient is little known in this part of the world, Nechemia says his company was working on 30 or so power and other infrastructure projects in China, including two hydro-electricity development schemes, worth US $ 3.5 billion (3000MW and 1500 MW).


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638
(11 JAN 2013 - 17 JAN 2013)


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