Twenty-eight hydel projects ask govt to declare them sick

At a time when the government is going all out to woo international investors, domestic hydropower developers say they are battling for survival. As many as 28 hydropower projects promoted by the private sector have knocked on the government doors seeking relief measures, saying that they turned sick due to high bank interest rates. They have formally asked the Ministry of Energy formally to declare them sick and provide necessary relief. Independent Power Producers (IPPs) have been saying that they cannot move ahead with their projects until the interest rate comes down or some other relief measures are taken by the government. “As many as 28 hydropower companies have requested us for relief, saying that they turned sick due to increased interest rate,” said Energy Secretary Balananda Poudel, adding that projects including Tamakoshi, Modi and Maikhola, have demanded relief such as relaxation in interest rate. The ministry has formed a committee under the coordination of its Joint Secretary Sriranjan Lakaul to look into issue. IPPs say increasing cost of construction materials and increased interest rate are the major factors making hydropower projects costlier. Over the last two years, the interest rate has increased by 5-7 percent points. Gyanendra Lal Pradhan, chairman of the Hydropower Development Committee at Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said other projects except Khimti, Bhotekoshi, Chilime and Butwal Power Company are in trouble. “The projects that started construction at an interest rate of 8 percent now have to pay as high as 16 percent interest,” said Pradhan. The liquidty crunch in the banking sector over the last two years triggered rise of interest rates on both deposits and lending. Alarmed by the scenario, the government has adopted a policy of offering value added tax (VAT) exemption on construction materials instead of subsidising the interest rate. “We are in the process of exempting VAT even on cement and steel that hydropower projects use,” said Poudel. However, the exempted VAT amount is payable after the completion of the project. IPPs say they have to pay VAT worth Rs 9 million per megawatt of electricity. Pradhan said the projects are in such a situation that they can no longer pay bank instalments. “We are also discussing at FNCCI on what types of relief measures they need,” he said. The IPPs have demanded relief in interest, facility of refinancing or purchase of the project by the Nepal Electricity Authority. They have also demanded hike in power purchase agreement (PPA) rate. The government had hiked PPA rate by 20 percent for new projects three months ago, but the rate has not been increased for projects that are under construction and completed.

NTA directs telecos to improve service

The government has directed the three major telecom operators— Nepal Telecom, Ncell and United Telecom— to expand and improve their network coverage and Quality of Service (QoS) along major highways. The telecom sector regulator, Nepal Telecommunications Authority, has also sought the operators’ work plan to this effect after its survey found that none of the operators has good signal and service quality in jungle areas and scattered settlements along the East-West and Kathmandu-Pokhara highways. NTA said the call drop was higher even in locations with sufficient signals. The survey had focused primarily in call success rate and network signal available in every five km distance along Mugling-Kakadbhitta, Narayanghat-Kanchanpur and Kathmandu-Pokhara sections. According to NTA, service of Nepal Telecom’s CDMA, Ncell and United Telecom Limited were relatively better although they do not meet the benchmark. However, Nepal Telecom’s GSM mobile service was found poor. “We have directed all three operators to improve their network and QoS along highways at the earliest,” said Kailash Prasad Neupane, spokesperson for NTA, adding that the service signal gets poorer as soon as the forest area starts along highways. Normally, the authority conducts service quality survey based on parameters such as call setup success rate‚ service access delay‚ call completion rate‚ call drop rate, reason for call failure, call quality from the performance test‚ consumer perception, billing accuracy and overall call quality perception of consumers to map the quality of service. This time, the survey had only focused on availability of service and signal strength. Baburam Dawadi, assistant director of the authority, said the operators will be treated strictly if they do not improve services. He added that improvement of service in jungle areas will help curb buss robberies and timber smuggling. In the current fiscal year, the authority aims to conduct the QoS study at least in nine remote areas and major cities of the country, apart from the Kathmandu-Tatopani road section. Currently, Brazen Consultant-an engineering firm-is carrying out the survey in four cities— Kathmandu, Pokhara, Biratnagar and Nepalgunj. Similarly, the authority will also soon initiate a survey on call service. Dawadi said from the next fiscal year, the authority will start scrutinising telecom QoS through Drive Testing Equipment that analyses telecom service automatically.