Committee submits PDA recommendations to Prime Minister

    • Upper Karnali Project Development Agreement

    KATHMANDU, AUG 30 – With the technical committee to review the power development agreement (PDA) document for the 900MW Upper Karnali Hydroelectric Project submitting its report to Prime Minister Sushil Koirala on Friday, the deck has been cleared for the Investment Board Nepal (IBN) to sign the agreement with India’s GMR-ITD Consortium.

    The committee directed the IBN’s PDA negotiation team to make necessary amendments in the PDA document to ensure maximum benefits for Nepal. The committee headed by National Planning Commission (NPC) Vice-chairman Govinda Raj Pokhrel, in its report, has made a 24-point recommendation, which the IBN will incorporate in the PDA document.


    On one of the major contentious issues in the document—the impact on downstream irrigation projects—the report has suggested that the generation company (GMR) should carry out a study within six months of the PDA signing to ascertain the impact on all existing projects downstream as well as river training work, river banks and settlements. And, based on the study, GMR should take measures to ensure designed flow of water to the irrigation projects, including other planned projects. The downstream irrigation projects include Rani-Jamara-Kulariya, Rajapur, Suryapatuwa, among others.

    “Our concern is the irrigation output should not be affected as per their design. If the suggestion is implemented, we hope our concerns will be addressed,” said Madhav Prasad Regmi, secretary at Ministry of Irrigation.

    IBN Chief Executive Officer Radhesh Panta said the language to be incorporated in the PDA document will be worked out in coordination with the Irrigation Ministry.

    Although the committee members were divided over whether to offer Rs 5 million per MW cash incentive, the report has recommended it would be done as per the law. The budget for this fiscal year has announced providing cash incentive to projects that connect the generated electricity to the national grid by fiscal year 2017-18. As some of the committee members sought reduced liability to the government under ‘force majeure’, the report has suggested there should be more clarity on “political force majuere”. “It has been suggested that the political force majeure will be attracted only if there is a nation-wide strike,” said a committee member.

    Another major recommendation is GMR has been allowed to import fuel in the event of a shortage. In the existing PDA document, it was mentioned GMR would be compensated by the government.

    The report has also stated the employment opportunity, environment impact and social impact should be worked based on the criteria set by international organisations like International Finance Corporation (IFC) and Asian Development Bank (ADB).

    Also, the report has mentioned the project should be handed over to the Nepal government in a “healthy operational condition” after 25 years, and Nepal-made products should be used during the construction as far as possible based on the availability. With consensus over the PDA document reached, senior Energy Ministry officials say the deck has been cleared for the PDA signing. “The gateway for holding the PDA at the possible earliest has been opened,” said Rajendra Kishore Kshatri, Energy Secretary.

    The Energy Ministry, according to Kshatri, will hold discussions with the IBN, following which the latter will sit for final negotiations with the GMR based on the report of the committee.“The PDA signing will be done once the Cabinet endorses the PDA document. I don’t think it will take more than two-three weeks from now,” Kshatri said.

    IBN sources say, they will incorporate the 24-point recommendation in the PDA document and invite GMR for negotiations.

    Source : eKantipur