Govt has 25 days to sign PTA‚ PDA

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    Can the deals be sealed as scheduled?

    Flag-Pins-Nepal-India_20120210094839KATHMANDU: The clock is ticking on signing of Power Trade Agreement (PTA) with India and Project Development Agreement (PDA) on 900MW Upper Karnali Hydroelectric project with GMR Group. Yet, the power trade deal seems unachievable as of now, while efforts are gradually being made to clear the deck for putting the rubber stamp on PDA.

    On August 4, Prime Minister Sushil Koirala and Indian Premier Narendra Modi had agreed to sign PTA and PDA within 45 days.

    Now, only 26 days are left to seal those deals, but the government has made little headway in starting negotiations on PTA, which is sending wrong signals to the international market.

    On the other hand, PDA with GMR Group of India seems achievable within the date pledged by premiers of the two countries, unless politicians dither in the last minute as in the past, which could once again propel foreign investors to harbour suspicion against the government.

    “Nepal has to send credible signals … that can create a scope for investors to put money here,” Stefan Dercon, chief economist at the Department for International Development, a UK government agency, told a talk programme in Kathmandu today. “(The country) can do so by signing PTA and PDA on time.”

    Pressures are being built to conclude PTA and PDA on time as they are considered crucial for the development of the country’s energy sector.

    PTA allows the country to import as much electricity as it needs when production here falls and export power when there is surplus.

    Similarly, signing of PDA would demonstrate that Nepal is open to investors who want to build export-oriented hydroelectric projects and pave the way for the government to generate income of Rs 5.51 billion through royalties, Rs 3.10 billion through income taxes and Rs two million through other taxes per year.

    Despite these advantages, the PDA could not be signed in the past as politicians objected to the government’s decision to extend cash incentive as promised through this year’s fiscal policy. They had also complained that the project would affect irrigation projects downstream of the project site.

    To deal with these contentious issues, a committee under National Planning Commission Vice Chairman Govind Raj Pokharel was formed.

    During the committee’s meeting today, Chief Secretary Leela Mani Poudyal and Nepal Rastra Bank Governor Yubaraj Khatiwada objected to the government’s decision to extend cash incentive of Rs five million for per megawatt of electricity generated by the project, a reliable source said.

    “However, their voice was marginalised, as Finance Minister Ram Sharan Mahat, NPC VC Pokharel and Energy Secretary Rajendra Kishore Kshatri said such incentive should be given because it was announced through the budget,” the source added.

    All this while, senior leaders of CPN-UML, many of whom were against the deal in the past, did not make any comment, giving tacit approval to the proposal to extend incentive, the source informed, adding, “With regards to the concern on effect on irrigation projects downstream, a decision has been taken to form a joint committee with GMR and settle the issue within six months of signing the PDA.”

    These developments indicate that the government is inching closer to signing the PDA.

    However, things are not looking up for power trade deal.

    To start negotiations on power trade agreement, the Indian government sent an invitation to Nepal more than two weeks ago. Nepal now has to propose a date for the meeting to be led by Energy Secretary Rajendra Kishore Kshatri.

    “But we still have not been able to fix a date,” Keshab Dhoj Adhikari, joint secretary at the Ministry of Energy, told The Himalayan Times. Such protracted delay in proposing a date has raised doubts over signing of the PTA within the next 26 days.

    Source : The Himalayan Times