Planned to be built in the Dolakha district, about 100km northeast of Kathmandu and close to the border with Tibet, the 650MW power plant was intended to export to power to India under an agreement with Nepal.
Statkraft said that the decision, which has been notified to the Investment Board of Nepal (IBN), comes due to increased technical hurdles for foreign investments, a fragile political situation and a geo-political situation.
The withdrawal decision has been made by the company follows completion of assessment of the commercial, technical and regulatory factors.
Statkraft vice-president and country director Sandip Shah said: "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.
Investment Board Nepal (IBN) external affairs chief Ghanashyam Ojha was reported by Reuters as saying that the withdrawal plan comes as the company is uncertain on exporting power to the India market due to delayed cross-border transmission lines.
Ojha added that the decision could also be the result of earthquake occurred in 2015.
Statkraft senior vice-president Tima Utne Iyer said: "As majority owner of Himal Power (HPL), Statkraft has a long-term commitment to Nepal as the license agreement for the 60MW Khimti hydropower plant runs until 2045.
"Our decision is purely linked to the Tamakoshi-3 Project and does not influence our activities in South Asia."
