Highest number of power project licences scrapped in 2012-13

INDEPENDENT power producers (IPPs) had a hard time in fiscal 2012- 13 due to the spectre of losing their licences. The government cracked down on the tendency of obtaining licences and not implementing the project, and scores of them had their permits revoked. It the last fiscal year, 68 power projects

with a combined capacity of 2,716.5 MW lost their permits. According to the Department of Electricity Development (DoED), the figure was an all-time high. The Energy Ministry scrapped the survey licences of 59 projects with a collective capacity of 2,229 MW that year. It also cancelled the energy generation licence of a project which had a goal to produce 26.5 MW. Similarly, applications for generation licences from eight projects with a combined capacity of 461 MW were trashed. DoED spokesperson and senior divisional engineer Gokarna Pant said the licences scrapped during fiscal 2012-13 represented 77 percent of the total projected capacity. The department has so far annulled the permits of 103 projects with a combined capacity of 3,498 MW. “The reason behind the scrapping of such a huge number of licences is a hike in the licence fee and the unwillingness of IPPs to pay the new rates,” said Pant. He added that the government had cancelled a larger number of applications for generation licences as they had not fulfilled the requirements. The government had jacked up the licence fee for hydropower projects in a bid to discourage “middlemen” in the sector. According to the new licence rates published in the Nepal Gazette on Oct 1, 2012, hydropower survey licenses have been divided into six categories. The minimum survey license fee for a hydropower project has been fixed at Rs 100,000. Earlier, the fees ranged from Rs 50,000 to a maximum of Rs 200,000. Since then, the government and IPPs have been at loggerheads with each other over the issue of licence fees. When the government started cancelling project licences, IPPs rushed to court and obtained a stay order against its decision. DoED sources said a total of 86 projects went to court challenging the government’s decision, among which more than 45 projects acquired a stay order from the court and got their licences renewed accordingly. “Most of the IPPs whose licences were renewed based on the court’s stay order have lately paid the revised licence fee,” he said. Meanwhile, IPPs claimed that they added 41 MW to the national grid in the last fiscal year. According to them, no project of the Nepal Electricity Authority (NEA) has come online since the 70 MW Middle Marsyangdi Hydropower Project began commercial operations in 2008. “However, IPPs have added 70 MW to the national grid since 2008,” said Subarna Das Shrestha, president of the Independent Power Producers Association of Nepal (IPPAN), adding the scrapping of the licences despite the contribution IPPs have made to hydropower development is pure discrimination. Generation licence 1 26.5 MW Application for generation licence 8 461 MW Total 68 2,716.5 MW