ETFC and NEA Bicker about PPA

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    The Electricity Tariff Fixation Commission (ETFC) and the Nepal Electricity Authority (NEA) are bickering about their respective authority after the former instructed the latter to take its permission even while signing power purchase agreement (PPA). The NEA, stating that the ETFC with mandate of determining electricity tariff has intervened even in PP, has said it will not comply.

    The ETFC, arguing that signing of PPA with promoters of projects is also its domain, has instructed the NEA to take its final consent through its 100th meeting. The ETFC on Sunday wrote to the Energy Ministry and the NEA to implement the decision. The letter says the decision will not be retrospective. ETFC Chairman Jagat Kumar Bhusal claimed the decision was made as the Electricity Act clearly mentions about PPA rate in context of electricity tariff. “The practice of a body signing PPA and another fixing tariff is not practical. The instruction has been given as the body fixing tariff also has the rights to decide about PPA as per the act. The NEA must comply,” he argued.

    The ETFC has concluded that the NEA is in loss as it has been selling electricity at a lower rate after buying at a higher rate. “The ETFC will study about the PPA and will give approval ensuring that there is no loss. The NEA will not be in loss after that. Signing PPA in foreign currency will be stopped after this decision comes into implementation. It is being stopped as the NEA is in loss due to PPA in dollar,” he elaborated.

    Managing Director of NEA Mukesh Raj Kafle claimed that PPA is being signed with the promoters as per the rights vested by the Electricity Act. “The ETFC’s duty is to only review tariff. The ETFC now seems to step back from its main duty by deviating from the subject,” he accused. “We will send our response seeing the ETFC’s letter. It would be better if the ETFC were to raise tariff soon instead of setting its eyes on PPA,” he answered on Karobar’s query about whether the ETFC’s instruction will be obeyed or not.

    Preparation to raise tariff by 20 percent

    Chairman Bhusal said the ETFC has been preparing to raise tariff by 20 percent on an average. He clarified that the NEA’s proposal will be implemented. “Discussion about review of tariff for domestic user has finished. We will now hold discussion about tariff for commercial sector and take final decision on tariff hike. Tariff will now be fixed on the basis of consumption,” he added.

    He revealed that tariff will be charged on the basis of consumption by removing the current provision of a single flat rate for all the consumers consuming up to 20 units. “We will charge a minimum tariff of Rs 50 and set tariff on the basis of consumption,” he stated. The NEA has been saying it is in loss as it has to sell electricity, procured at a higher rate, at a lower rate. It says it suffers a loss of Rs 2.49 in every unit. Its accumulated loss has now reached Rs 27 billion.

    Source : eKantipur