KATHMANDU, June 16 :
Monday´s cabinet decision has called back Managing Director of Nepal Electricity Authority Arjun Karki amid controversy over signing of Power Purchase Agreement (PPA) in foreign currency.
Multiple sources confirmed that Minister for Energy Radha Gyawali had insisted on the removal of Karki from the post of MD at the cabinet meeting, but Finance Minister Ram Sharan Mahat was against such move saying that Karki was playing an important role in promoting foreign investment in the hydropower sector.
Gyawali felt the need to remove Karki a day after legislature-parliament´s Public Accounts Committee summoned the minister, the energy secretary and the NEA´s MD to clarify why NEA was signing PPA in US dollar along with all such contract papers.
Gyawali was dissatisfied with Karki over a number of issues including the singing of PPA in foreign currency in case of projects with foreign investment. Sources said Karki was preparing to table the agenda of signing the PPA for Upper Trishuli I project in US dollar at the NEA´s board.
However, both Minister Gyawali and MD Karki denied that the PPA issue was behind latter´s removal from the NEA top post.
Meanwhile, Karki, who was forced to step down as NEA´s MD, has been promoted to the acting secretary level and appointed as Regional Administration Chief of the western region. Asked why Karki was promoted, Minister Gyawali refused to elaborate, saying that the cabinet decided differently than she had expected.
Karki, who was serving at the Water and Energy Commission, was deputed to the NEA´s top post in September last year.
Within hours after the cabinet decision, Minister Radha Gyawali told the media that she would not sign any PPA decisions in foreign currency during her tenure. Speaking at the Reporters Club, she also revealed that she was trying to review the PPA rates in US dollar that the NEA signed with Bhotekoshi and Khimti hydropower projects about two decades back saying that the decisions have incurred irreparable losses to the state power monopoly.
The NEA pays about 40 percent of its income to both projects annually for only 96 MW project.
Talking to Republica over telephone, Arjun Karki said that his removal from NEA top post was not linked to the PPA issue but because of his differences with the minister over her proposal on solar and coal projects.
He also revealed that Minister Gyawali had already hinted that she would remove him from the post just a few days after she assumed charge of the power ministry.
Asked his opinion on singing PPA in foreign currency, Karki said hydropower development is impossible in the country without foreign investment and signing PPA in dollars.
He also stressed that foreign currency exchange risks can be divided between the developer and NEA.
It is said that a consortium of Korean developer of Upper Trishuli I hydropower project has been lobbying for signing the PPA with NEA in US dollar since last year. The developer has demanded 6.9 cents per unit electricity. The project with the installed capacity of 216 MW is located in Rasuwa and is closer to the load center for the Kathamandu Valley.
Source : Republica