ERC Conduct Public hearing from power purchase rates consent for 3 hydro project

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Kathmandu. The Electricity Regulatory Commission has held a public hearing  to determine the power purchase rates for 3 hydropower projects on 3th July,2023. The Commission held a public hearing on Monday to determine the PPA rates of the 102 MW Upper Marshyangdi-1, 139 MW Lower Manang Marshyangdi and 166 MW Super Tamor hydropower projects on the power purchase rates submitted by the Nepal Electricity Authority.

In the first phase, a public hearing was held to determine the PPA rate and agree on PPA for the 102 MW Upper Marshyangdi-1 Hydropower Project to be constructed on the Marshyangdi River by the Upper Marshyangdi Hydropower Company Pvt. Ltd.

While giving a presentation on the financial and technical aspects of the project at the public hearing, Ananda Chaudhary, the vice president of the company, said that after completing the PPA and managing the finances, the construction work would start from October 2024. He said that this project of economic reservoir nature is going to be built with direct foreign investment .

According to our preliminary estimate, it will cost 32 billion rupees to complete the project, he said as it is a foreign investment project, the size of the tunnel, hedging cost, etc. seems to be a bit expensive. He said that after the approval of the PPA rate proposal made by the authority from the Commission, the PPA project development agreement will be signed within the next month in December.

He said that around 1,500 people will get employment opportunities during the construction period of the project and 60 percent of those opportunities will be given to locals. He also informed in the public program that 45 hectares of area is required for the construction of the project.

The electricity authority had proposed a rate of Rs 4.80 per unit in wet season and Rs 8.40 per unit in dry season,  Rs 8.50 per unit during peak season to purchase electricity for this project and sent it to the Commission for approval.

Brief description of the project

Project name: Upper Marsyangdi-1
Promoter: Upper Masryangdi Hydropower Company Pvt. Ltd
Installed Capacity: 102 MW
Type: Peaking (1.13 hours peaking)
Proposed PPA rate: Rs 4.80 (wet season), Rs 8.40 (dry season) and Rs 8.50 (peaking) Production Unit

Total annual energy production: 58,30,31,977 units
Wet season production: 17,49,32,443 units
Dry season production: 40,80,99,554 units
Estimated Project cost: 32,71,40,00,000 rupees

Similarly, a public hearing was also held on Sunday on the proposed PPA rate of the 139 MW Lower Manang Marshyangdi Earth Reservoir Hydropower Project to be constructed by Butwal Power Company. Highlighting the economic and technical aspects of the project to be built with Chinese investment, Butwal Power Company Senior Manager (Business Development) Ganesh Prasad Khanal said that the construction of the structure will start from the beginning of 2025.

He said that the study of the project has been completed and the production permit has also been obtained, and now that the financial management is finalized and the construction is ready to go after the completion of the PPA, According to him, the supplementary EIA of the project has been completed.

Addressing the program, Chief Executive Officer of Butwal Power Company, Uttar Kumar Shrestha, said that the construction of this project will not affect the project in the lower coastal area. Although the permit for the project is currently in the name of Butwal Power Company, the company modality will be prepared soon.

Upper Marshyangdi-1 and Lower Manang Marshyangdi projects are currently operating in the lower coastal area Sino Sagarmatha, the promoter of the 50 MW Upper Masryangdi ‘A’ Hydroelectric Project. On behalf of the company, Prasiddha Shrestha, suspected that the construction of a large semi-reservoir project on the upper coast would reduce the amount of water needed to run his power plant.

Brief description of the project

Project Name: Lower Manang Marsyangdi
Promoter: Butwal Power Company
Installed Capacity: 139.2 MW
Type: PRoR (1.66 hours peaking)
Length of main tunnel: 6.192 km
Proposed PPA Rate: Rs 4.80 (wet season), 8.40 Rs (dry season)

Production Unit: Due to cascade peaking, peak hour rates are not given for this project

Total annual energy production: 790.270 GW hours
Wet season production: 55,26,69,693 units
Dry season production: 23,76,00,616 units
Estimated Cost: 278.48 million USD

Addressing both the public hearings, Commission Chairman Dilli Bahadur Singh said that it is good for the country to go for foreign direct investment projects. He said that going into the construction of more than 100 MW is a big achievement as Nepal is creating an environment to improve the country’s economic situation by exporting electricity.

Director of Nepal Electricity Authority and Head of Power Trade Department Prabal Adhikari clarified that the peaking-reservoir project to be constructed in the Marshyangdi River will not technically pose a problem to the hydroelectric power plant in the down stream. He said that the system operation department of the authority will take care of the responsibility after the project is built and operational, and if there is any problem, it will be addressed immediately from there. He said that peaking for up to 6 hours will cause problems, but peaking for one to one and a half hours will not make much difference in the down stream project. He suggested the stakeholders to focus on the construction of the project by taking into account the impact of climate change and preparing the design.

Gautam Dangol, a member of the commission, suggested the promoters to reduce the cost of large projects as much as possible. He opined that if the promoter can take insurance from the construction period of the hydropower project, it will be easy to compensate for the damage caused by flood.

On Sunday itself, a public hearing was also held on the proposed PPA rate of the 166 MW Super Tamor hydropower project. Crystal Power Development Pvt Ltd is constructing this project on Tamor River in Taplejung.

For this project, according to the prevailing posted rate, the authority fixed the PPA rate of Rs 4.80 per unit in summer and Rs 8.40 per unit in winter and sent it to the Commission for approval.

Brief description of the project

Project Name: Super Tamor
Promoter: Crystal Power Development Pvt
Installed Capacity: 166 MW
Type: Run-of-River (ROR)
Proposed PPA rate: Rs 4.80 (wet season), Rs 8.40 (dry season) per unit of production
Total annual energy production: 983.19 GW hours
Wet season production: 67,98,92,454 units
Dry season production: 30,32,97,454 units
Estimated Cost: 34,59,00,00,000

 After the Commission approves the proposed rate of these 3 projects based on the opinions and suggestions received during the public hearing, the PPA will be signed with the Electricity Authority. According to the legal provision of public hearing for projects above 100 megawatts, the Commission has conducted a public hearing of these projects today.

Source : Nepal Purbadhar (Translated)