Govt, IPPs square off over hike in survey licence fees

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    KATHMANDU, MAR 29 –

    licence feesThe government and independent power producers (IPPs) have squared off over survey licence fees for hydroelectric projects. After the government jacked up the rates and started scrapping the permits of non-paying projects, IPPs rushed to court and obtained a stay order against its decision.

    According to the new license rates published in the Nepal Gazette on October 1, 2012, hydropower survey licenses have been divided into six categories. The minimum survey license fee for a hydropower project has been fixed at Rs 100,000. Earlier, the minimum license fee was Rs 50,000 and maximum Rs 200,000.

    A total of 50 projects went to court challenging the decision of the Department of Electricity Development (DoED) to increase the fee. “Among them, 40 projects have acquired a stay order from the Appellate Court, Lalitpur, so we have renewed their licence s by charging them at the old rate,” said DoED spokesperson Gokarna Pant. “We will decide whether to continue the licence s or cancel them after the court gives its final verdict.”

    However, the DoED has still been scrapping survey licence s. On Wednesday, it cancelled the permit of Jindal Power Company, India for the 454 MW Chainpur Seti Nadi Hydropower Project. According to the DoED, Jindal lost its survey licence for failing to submit its progress report. The DoED has cancelled the survey licence s of 40 projects after hiking the fee. These projects have a combined capacity of more than 1,400 MW.

    According to the DoED, it scrapped the licence s of these projects for failing to pay the increased licence fee and submit their progress report, environmental impact assessment (EIA), power purchase agreement (PPA) with the Nepal Electricity Authority (NEA), feasibility study and the project’s financial closure, among others.

    DoED officials said the government had started scrapping licence s for hydropower projects to discourage the trend of obtaining licence s and holding on to them without starting work on the scheme.

    DoED director general Anup Kumar Upadhya said that hiking the licence fee and scrapping licence s was an effort by the government to discourage middlemen and encourage genuine investors. “Real investors have been prevented from investing in the hydropower sector due to the practice of acquiring survey licence s and selling them,” said Upadhya.

    According to Upadhya, genuine developers have already paid the increased licence fee. He added that the department would continue scrapping the licence s of projects not paying the increased licence fee and producing progress reports.

    Meanwhile, IPPs have criticized the hike in licence fees as it would discourage investment in the hydropower sector. “The increment is 30 times than before,” said Subarna Shrestha, president of the Independent Power Producers’ Association, Nepal (IPPAN). “It will hurt local developers developing small projects the most.”

    Shrestha urged the government not to concentrate on collecting more revenue by increasing the licence fee by ignoring the long-term positive impact of hydropower projects in the country’s economy.

    Former energy secretary Surya Nath Upadhya said the government’s move to discourage fake developers was right, however, the way it has been done was wrong. According to him, issuing survey licence s on a first come, first served basis is wrong, and that is the reason behind all the existing problems.

    “It’s fine to increase the licence fee,” he said. “But what has the government done to increase the capacity of local developers who are contributing to the national economy by bringing in investment?”

    Source : Kathmandu Post