NEA mgmt’s authority to sign PPA withdrawn

THE Nepal Electricity Authority (NEA) Board has withdrawn from the NEA management the authority to sign the power purchase agreement (PPA) with projects up to 25 MW. The authority now lies with the board itself. An NEA board meeting chaired by Energy Minister Umakanta Jha on Monday took the decision, arguing the NEA management discriminated promoters, according to an NEA source. “The decision was taken amid the NEA management’s tendency to sing the PPA with some developers, while refusing to do so with others on various pretexts,” said a board member. “Such a tendency discouraged real hydropower investors.” In case of projects above 25 MW, the board is responsible for signing the PPA based on the management’s recommendation. NEA management has been delaying signing the PPA even with the “super six” projects which have paid Rs 450 million in revenue to the government. The projects are Singiti (16 MW), Khare (24.1 MW), Upper Solu (23.5 MW), Lower Solu (82 MW), Maya Khola (14.9 MW) and Mewa (50 MW). These projects are called “super six” as they were the first to be issued survey licenses based open competition. They have already spent around Rs 1 billion for land acquisition and construction of physical infrastructure, but the NEA management has been reluctant to sign the PPA with them for the last three years. These projects are all set to enter the construction phase, but the lack of PPA is preventing them from doing so. The NEA board has constituted a committee headed by board member Laxman Agrawal to recommend on holding talks and signing PPA with the “super six” projects. “As some of the projects have capacity higher than 25 MW, while some are bringing in foreign investment too, the committee has been formed to determine the PPA rate and the ratio of payment to be made in foreign exchange,” the board member said. In case of projects below 25 MW, the PPA rate has been fixed at Rs 4.8 during the rainy season and Rs 8.4 during winter. There is a tradition of fixing the PPA rate based on mutual discussion for the projects above 25 MW. The board has also formed another committee headed by Agrawal to submit a proposal on providing relief to 13 projects whose construction began during the conflict era, and faced financial crisis due to the conflict. Although they have agreed for a relatively lower PPA rate, the NEA is seeking to provide them the revised PPA rate until they complete loan repayment. The facility, however, will be provided to projects below 25 MW only. The committee has been told to find out whether the projects are actually facing financial crisis and whether they deserve the relief.