The Independent Power Producers’ Association, Nepal (IPPAN), has demanded three alternatives regarding the “Take and Pay” provision introduced in the budget for the purchase of electricity generated from run-of-river (RoR) hydropower projects.
Energy producers became outraged after Finance Minister Bishnu Poudel, while speaking in Parliament on Monday, stated that the “Take and Pay” provision was introduced deliberately.
At a press conference on Tuesday, the energy producers said that, because of the commitments made by the Energy and Finance Ministers, they had not launched a protest. However, after the Finance Minister signaled in Parliament that the provision would not be withdrawn, they have begun preparations for a protest.
They have demanded three options from Finance Minister Bishnu Poudel. If a resolution is not reached on these options, they have warned of launching a strong protest — ranging from street demonstrations to a complete blackout.
Here are the three options they have expected from the Finance Minister:
- They stated that the best option would be to withdraw the “Take and Pay” provision from the budget.
- Similarly, the second option is related to electricity trade permission. They have stated that the government must publicly guarantee the issuance of electricity trade licenses within one month.
- The third option they mentioned is that the government should publicly guarantee that the responsibility for constructing transmission lines will be given to the private sector within one month, and that an ‘open access’ system should be implemented.
“Since the bill that was registered in Parliament 17 years ago (in the year 2008) is still under discussion, the private sector cannot agree with the argument that it will automatically receive trade permission once the bill is passed. Therefore, there must be a guarantee that the trade license will be issued within one month,” said IPPAN President Ganesh Karki.
He stated that although the private sector was encouraged by the energy roadmap aiming to generate 28,500 megawatts of electricity by 1978, the budget has now left them discouraged.
“The budget declares the next 10 years as the Energy Decade. We had expected that additional PPAs would be opened to develop 28,500 megawatts. But instead, the ‘Take and Pay’ provision was introduced. This arrangement, which aims to crush the private sector, is unacceptable,” he said.
He complained that the government introduced such a provision with the mindset that electricity is only needed for turning on lights.
“There has been no plan on how to increase consumption, nor any plan for export. There is an agreement to sell 10,000 megawatts of electricity to India, but there is no plan on how to sell it. How is that possible?” he questioned.
President Karki stated that banks and financial institutions will not provide financial management for PPAs based on the “Take and Pay” provision, which will create complex problems.
He stated that currently there are about 350 megawatts worth of projects that have received survey and construction permits or have applied for them under the run-of-river (RoR) category. These projects have a capacity of 17,117 megawatts, and he complained that their construction remains uncertain.
He pointed out that about NPR 6.622 billion (6 billion 22 crore 14 lakh rupees) already invested in these projects is at risk of being lost.
He stated that recently the Electricity Authority issued a notice indicating that the PPAs of projects totaling 4,965 megawatts, which have applied for PPAs, will also be affected.
IPPAN Vice President Ananda Chaudhary stated that the government should first open the way for the private sector to start electricity trading, and only after trading begins should the “Take and Pay” provision be implemented.
“In the current situation, we haven’t even received permission for trading. It also takes time to practice trading,” he said.
IPPAN General Secretary Balram Khatiwada accused the government of introducing the “Take and Pay” provision by listening to the interests of selfish groups. He stated that this provision is objectionable and should be withdrawn.
“We are saying that there is an excess of electricity just because people think electricity is only for lighting. Even now, the industry is not receiving the promised amount of electricity. We are surprised by the government’s mindset,” he said.
Out of the 4,200 megawatts under construction, 4,000 megawatts belong to the private sector.
There are 4,000 megawatts of projects at the financial management stage with PPAs. A total of 12,889 megawatts of projects have applied for PPAs with the Electricity Authority.
Source: Setopati