05 | MONDAY, SEPTEMBER 14, 2020
MONEY
Solu corridor transmission line project
deadline extended for the fourth time
Promoters of private hydropower projects warn that delays by the power utility in executing the power line project would
cause more electricity spillage from hydel plants operating in the area and incur losses amounting to millions of rupees.
POST REPORT
KATHMANDU, SEPT 13
The state-owned power utility Nepal
Electricity Authority has decided to
give more time for the completion of
the Solu corridor transmission line
project in the wake of the ongoing
restrictions to fight Covid-19.
However, the private power produc-
ers said that while the project contrac-
tor agreeing to complete the transmis-
sion line project by December was
good, it does not look realistic and that
could make things more uncertain.
The 132 kV transmission line pro-
ject completion deadline has been
extended until December 30, the
fourth extension so far, since work on
the project started in 2016.
The Independent Power Producers’
Association Nepal said that the pro-
ject cannot be completed in the four
months given the current situation
and also the upcoming festive seasons.
“It’s an important project and
should be completed on time but there
should not be uncertainties to the pro-
ject which has already been delayed,”
said Ashish Garg, vice-president of
the association. “It’s not a realistic
extension. Frequent changes in the
deadline will make things uncertain.
The electricity authority should have
come up with a realistic extension
deadline.”
The extension will force the Upper
Solu Hydroelectric Project in
Solukhumbu district developed by pri-
vate power producers to incur more
losses as around 23.5 megawatts of
energy it churns out is going to waste
due to a lack of transmission line con-
necting it to consumers. The project
had started to generate energy on
February 20.
As per the power purchase agree-
ment, the electricity authority has to
pay fines amounting to 45 percent of
total losses caused by spillage of
power from those projects in absence
of transmission infrastructure. “But
unfortunately, the Nepal Electricity
Authority has not compensated the
producer,” said Garg. “It’s a failed
promise.”
Janardan Gautam, chief of the Solu
corridor project, admits that the
December deadline still looks uncer-
tain. He said that a mid-April deadline
for next year was more realistic. “But
we are doing our best to finish the
project on time.”
“The spread of coronavirus has not
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GASOLINE WATCH
The project envisages building 302 transmission towers and installing 132 kV double circuit
cables to evacuate power from hydropower plants in Solukhumbu and the surrounding region
to eastern Nepal and the national grid.
only disrupted the supply chain of
components used in projects but has
also impacted the availability of the
workforce,” said Gautam.
“It’s a tight deadline given the diffi-
culties to mobilize workers.” Recently,
the project contractor brought 31
workers but there is a requirement for
200 staff. “The contractors need to
conduct PCR tests on workers and put
them in quarantine for 14 days after
they are brought to the project site.”
The project is funded through gov-
ernment investment and a concession-
al loan from Export-Import Bank of
India. The Nepal Electricity Authority
had awarded the contract to the Indian
contractor Mohan Energy in March
2016. The 30-month project became
effective on September 25, 2016 with
117.96
Chinese investment to
139.75
150.94
Australia halved in 2019
11.11
REUTERS
MELBOURNE, SEPT 13
17.26
Chinese investment to Australia
32.39 roughly halved in 2019 on a shift
85.92 toward investment in emerging mar-
kets and negative perceptions in
28.40 China of doing business with
Australia, a report said on Sunday.
31.45
Investment dropped some 47 per-
cent to A$2.5 billion ($1.8 billion) from
A$4.8 billion in 2018, the third straight
decline from a 2016 peak of A$15.8 bil-
1,537.25pts lion, according to the Australian
1.09% National University’s Chinese
Investment in Australia database.
“The 2019 decline in investment
AHPC IGI
9.24% 8.13% coincides with lower flows of Chinese
investment abroad, but the fall in
flows to Australia was sharper,” the
NHDL API
7.5% 6.97% report says.
BBC ALBSL
-2.9% -3.01%
With airline fleets grounded, plane recyclers bet on parts boom
DHPL NBF2
-5.17% -9.26%
REUTERS
PRICE PER TOLA
MONTREAL, SEPT 13
Rs 96,500 As Covid-19 grounds swaths of airline
fleets, companies that profit off the
Rs 1,310 dismantling and trade of aircraft
parts are seeing early signs of an
SOURCE: FENEGOSIDA expected rebound in activity as carri-
ers accelerate plane retirements.
While companies that store, dis-
mantle, and buy and sell used aircraft
parts see opportunity in parked
planes, a sudden increase in the sup-
ply of used parts risks depressing
prices in the estimated $3 billion a
year industry, despite demand from
airlines seeking to lower maintenance
costs, executives and analysts say.
Even as aviation remains in a slump
because of the pandemic, the head of
US commercial aerospace company
GA Telesis was made aware of five
airlines calling for offers to dismantle
planes.
Across the border, Canada’s
Aerocycle is bidding to buy grounded
planes for the first time to dismantle
and resell for parts, instead of just
recycling aircraft on consignment
from carriers, its CEO said.
The fate of the world’s pool of
grounded planes is being closely
watched by players in the market for
used-serviceable material, with one
report from consultants Oliver
SHUTTERSTOCK
the completion deadline set for March
24, 2019. The project deadline, howev-
er, was extended by 10 months until
January 2020. It was again extended
by 4 months until May and another 45
days until mid-July.
The project envisages building 302
transmission towers and installing
132 kV double circuit cables to evacu-
ate power from hydropower plants in
Solukhumbu and the surrounding
region to eastern Nepal and the
national grid.
The contractor has so far finished
foundation works of 285 towers out of
302 transmission towers. According to
Gautam, 204 pylons are upright along
the 90-km-long route of the distribu-
tion infrastructure in Siraha, Udaipur,
Okhaldhunga and Solukhumbu dis-
Chinese investment fell sharply in
mining, real estate and commercial
property, manufacturing and agricul-
ture, while there were modest gains in
construction, education and finance,
the report found.
The ANU report is broadly in line
with estimates by KPMG and the
University of Sydney, which showed
investment in Australia fell by more
than half in 2019 was set for further
declines this year due to the pandemic
and heightened Australian scrutiny
of Chinese investment.
Australia’s relations with China, its
main trading partner, have worsened
steadily this year.
Beijing vowed trade reprisals
after Canberra called for an interna-
tional inquiry into the source of the
Covid-19.
An Airbus A310 airplane with its engine removed sits on the tarmac at airplane recycling
company Aerocycle in Mirabel, Quebec, Canada.
Wyman forecasting “a tsunami of
demand” for such parts, as airlines
seek to lower costs.
Used materials could compete with
new parts and defer immediate airline
demand for “aftermarket” spend,
referring to the maintenance, repair
and overhaul sector, now estimated by
Naveo Consultancy at $50 billion.
As a result, one industry executive
tricts. “Still, 98 pylons are yet to be
erected,” he said.
Lack of a proper transmission
infrastructure had worried the pro-
moters of under-construction inde-
pendent hydel plants in Solukhumbu
over possible spillage of electricity.
The promoters complained that delays
by the power utility in executing the
project in the stipulated time would
translate into losses amounting to mil-
lions of rupees.
Tower construction works have not
begun in Udaypur district owing to
obstruction by locals of Maruwa Harit
Community Forest in Katari. The pro-
ject has planned to install 12 transmis-
sion pylons in the community forest
area. “The mayor of Udaipur had
assured us that all issues would be
cleared. It has been two years
since the assurance was made but
so far nothing has been sorted out,”
said Gautam.
The country experienced an acute
energy crisis at the beginning of 2010,
with daily power cuts lasting almost
16 hours, and this continued to be a
major problem in the following year.
This prompted the government to
announce an ‘energy emergency’
which lasted four and a half years.
At that time, the government had
planned to generate 2,500 megawatts.
The private sector was tasked to gen-
erate electricity through six hydro-
power projects, named the Super Six,
on the Solu River, which together
would produce 217 megawatts.
The Nepal Electricity Authority
signed power purchase agreements
with the Super Six and five of them—
82 MW Lower Solu, 23.5 MW Upper
Solu, 18 megawatt Beni Hydropower
Project, 86 MW Solu Khola (Dudhkoshi)
and another 5 MW project—will
require power evacuation from the
Solu corridor transmission line into
the national grid through a new trans-
mission line.
“All issues need to be sorted out as
soon as possible, otherwise private
producers will incur massive losses,”
said Garg, who is also the director of
Lower Solu project. “However, the for-
est issue in Udaypur has still not been
sorted out.”
“Our project [Lower Solu] is 90 per-
cent complete. The completion date
was set for December but due to Covid-
19, it has been delayed,” he said, add-
ing that early completion of the trans-
mission project will assure investors
that their energy will not go to waste.
European governments must continue
spending to aid recovery, says Lagarde
REUTERS
FRANKFURT, SEPT 13
Euro zone governments must keep
spending heavily to aid the bloc’s
recovery from its historic pandem-
ic-induced recession, complementing
already super-easy monetary policy,
European Central Bank President
Christine Lagarde said on Sunday.
With debt levels blowing past 100
percent of GDP this year, concerns are
rising that politicians will struggle to
push through more support and some
subsidies, raising the risk that
employment and income schemes
could abruptly end.
“Confidence in the private sector
rests to a very large extent on confi-
dence in fiscal policies,” Lagarde said
REUTERS
said he has avoided buying parts, fear-
ing a slump if too many planes are
dismantled.
“I think we’re going to see a rapid
decrease in pricing,” said the execu-
tive, speaking on condition of ano-
nymity.
The number of planes dismantled
for parts or scrap could double to 1,000
annually through 2023, up from rough-
Japan’s Suga says
no limit to bonds
government can issue
REUTERS
TOKYO, SEPT 13
Japan’s Chief Cabinet Secretary
Yoshihide Suga, who is set to become
prime minister this week, said on
Sunday there was no limit to the
amount of bonds the government can
issue to support an economy hit by the
coronavirus pandemic.
He also indicated he could look
to a third extra budget to fight the
downturn caused by the Covid-19
pandemic if needed, adding the gov-
ernment had enough resources to tap
at present.
“Only when we have economic
growth can we push through fiscal
reform. What’s most important is to
create jobs and protect businesses,”
Suga said on a television programme.
“I don’t think so,” he said, when
asked if there was a limit to bond issu-
ance. “What’s important now is to
improve current [economic] condi-
tions,” he added.
Suga made the remarks on a pro-
gramme where he appeared alongside
his two rivals in the ruling Liberal
Democratic Party’s (LDP) leadership
election, to be held on Monday.
Speculation is mounting that Suga,
who has seen his popularity rise in
opinion polls since announcing his
bid for the top job, may call a general
election as early as next month to
improve his chances of winning a full
three-year term as LDP leader in a
party election that must be held in
September 2021.
Japan’s Chief Cabinet Secretary Yoshihide Suga.
in a speech. “Continued expansionary
fiscal policies are vital to avoid exces-
sive job shedding and support house-
hold incomes until the economic
recovery is more robust.”
Employment subsidy schemes have
already been extended in several
countries but some are advocating
longer, one- or two-year extensions to
bolster confidence while the bloc
recovers from recession that could
slash 8 percent from output this year.
“Keeping job support schemes in
place is critical to avoid a sharp
increase in unemployment later in the
year,” she added in a speech to the
Annual Meeting of the Council of
Governors of the Arab Central Banks
and Monetary Authorities.
Lagarde also urged a final deal on
ly 400 to 500 planes a year since 2016,
according to data firm Cirium.
Naveo estimates 60 percent of glob-
al passenger and cargo fleets are cur-
rently flying.
In 2020, Naveo expects 2,000 aircraft
will be retired, or parked and not
returned to service, up from 680 in
2019. But those planes would not all be
immediately dismantled, as some car-
riers wait in case market conditions
improve, Managing Director Richard
Brown says.
Indeed, UK-based Air Salvage
International, which normally dis-
mantles between 40 and 50 aircraft a
year, has parked more planes without
a buyer for their parts since the Covid-
19 outbreak. Founder Mark Gregory
expects most will eventually be dis-
mantled.
Before the pandemic, planes arrived
at Air Salvage with a buyer, reflecting
healthy demand for coveted parts
like engines.
Airlines seek viable used parts from
retired aircraft for their younger
planes that are due for heavy
maintenance. That allowed airlines to
avoid costly repairs and keep their
aircraft flying.
GA Telesis, which counts Tokyo
Century Corp as its largest sharehold-
er, has seen airlines use spare parts
from their grounded aircraft to put off
He also said that
the government has
enough resources
to tap for a third
extra budget.
Finance Minister Taro Aso told sup-
porters in eastern Japan on Sunday
that Suga’s cabinet may be criticised
for not having a popular mandate and
that in that case, “imminent” snap
elections could be possible, the Nikkei
daily said.
LDP junior coalition partner
Komeito has spoken against snap elec-
tions anytime soon. Suga has been
vague on the subject.
Prime Minister Shinzo Abe said last
month he would resign due to ill
health. The winner of the party vote is
virtually assured to become prime
minister because of the LDP’s parlia-
mentary majority.
Suga also told a separate pro-
gramme on Sunday that he could
consider another stimulus budget if
necessary.
“Japan’s GDP suffered its biggest
postwar contraction in the second
quarter, so we need to do whatever it
takes to support growth. We have
reserves set aside, so we can of course
tap that. But if additional steps are
necessary, we would act,” he said.
REUTERS
the European Union’s 750 billion euro
recovery fund, which is still under
negotiation and subject to political
bickering.
For its part, the ECB is ready to
adjust all of its instruments as needed
since there is no place for complacen-
cy, Lagarde said, largely repeating the
bank’s standing message.
The ECB has eased policy several
times this year and now estimates that
its measures will add 1.3 percentage
points to growth and 0.8 percentage
point to inflation through 2022.
Lagarde also repeated her com-
ments from Thursday that the ECB
would “carefully” assess incoming
data, including the euro’s strengthen-
ing, which risked dampening both
growth and inflation.
maintenance at the company’s repair
business, chief executive Abdol
Moabery said.
The pandemic, which is expected
result in a 55 percent drop in 2020 pas-
senger numbers, has prompted early
retirements of older planes, including
the grounding of B747 jets by British
Airways, some of which are headed to
Air Salvage.
Fewer twin-aisle planes flying inter-
nationally means less demand for
their parts, with the exception of cer-
tain aircraft used to transport cargo.
Gregory said Air Salvage was
approached by an aircraft leasing
company about dismantling several
A380s, but with only about 5 percent
of the jumbo jets still active according
to Naveo, demand is slim for their
parts.
Airlines are looking for narrow-
body parts, since around 64 percent of
that single-aisle aircraft type are
active, flying domestic routes.
James Benfield, a UK partner with
Baird Capital, expects increased
demand for disassembly services for
single-aisle B737 and A320 aircraft,
after the private equity company
acquired a disassembler in August.
While maintenance companies and
new engine producers also deal in
used materials, a parts surplus could
weigh on their sales.
C M Y K