Norwegian firm Statkraft is withdrawing plans for the 650MW Tamakoshi III hydropower project in Nepal, citing lack of transmission capacity, regulatory issues, and political issues amongst others.
The company had been planning to invest $1.5 billion in the project in the Dolakha district.
In a statement, Statkraft said it made the decision after a thorough assessment of all aspects of the project, including commercial, technical and regulatory factors.
"These factors include a lack of viable power offtake option, lower electricity price forecasts, insufficient transmission capacity for power evacuation and absence of necessary policies and regulatory framework for operationalizing power sales," said Dr. Sandip Shah, VP and Country Director Nepal for Statkraft. "It also reflects the increased bureaucratic hurdles for foreign investments, a fragile political situation and a geo-political situation leading to a non-conducive project development environment."
The company said it is still interested in further developments in Nepal, but projects need to demonstrate attractive returns on investment and stable long-term conditions in which to operate.