KATHMANDU, Aug 12: Nepal will invite US power giant Enron Corp for talks on a proposal to build a multibillion dollar hydropower plant in the Himalayan kingdom, officials said on Tuesday.

They said a formal letter of invitation would be sent to the Houston-based company, whose Enron Renewable Energy Corp unit has proposed building a dam on the Karnali river in West Nepal.

The project would produce hydroelectric power for export to neighbouring India and China.

Purna Bhadra Adiga, a spokesman for the water resources ministry, said Nepal's communist-dominated coalition government would hold talks with Enron on their proposal, which was submitted to the Nepalese government last year."Further progress will depend on the outcome of the talks," Adiga told Reuters.

Officials said the Karnali river in West Nepal could generate up to 10,800 megawatts of hydroelectric power and produce billions of dollars of foreign investment.

Nepali officials said in January that Enron also wanted to develop the $1-billion, 201-megawatt Arun III project in east Nepal. The Kathmandu Post newspaper said on Tuesday that the government had yet to take a decision on the project.

The World Bank abandoned plans in 1995 to lend $175 million for the Arun III project, saying Nepal needed to focus on smaller, less ambitious power projects on its many rivers.

Late last month, the government allowed Australia's Snowy Mountain Engineering Corp to build a $1-billion, 750-megawatt dam in western Nepal.

One of the world's poorest nations, Nepal is rich in water resources. Its towering mountains send huge volumes of water cascading down hundreds of rivers with great potential for production of hydroelectric power.

But only 15 per cent of Nepal's 22 million people have access to electricity and the kingdom uses less than 0.5 percent of its potential.India and Nepal signed an agreement on private electricity sales in June this year during a visit by Indian Prime Minister Inder Kumar Gujral.Two of India's biggest states, Uttar Pradesh and Bihar, have an acute shortage of electricity and share a 1,500-km (900-mile) border with Nepal.

Water resources and tourism are two key areas in which the government is trying to attract foreign investment.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.