Govt relaxes PDA provisions for hydel projects

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    KATHMANDU, Nov 8:

    Power development agreementsThe Ministry of Energy has relaxed certain provisions of the Project Development Agreement in a bid to encourage hydropower promoters.

    The amendment to the Hydropower PDA Guidelines 2069 was endorsed two weeks ago by MoE. As per the amended guideline, promoters need to produce only 25 percent of equity, which could be a collective investment by a group of promoters.

    Previously a promoter company was required to produce 50 percent equity. Hydropower companies will now be required to have 20 percent equity investment, while the remaining amount can be collected through domestic and foreign banks, financial institutions and investor companies.

    Likewise, the guideline also has also envisioned share allocation to the public. Earlier, the guideline was silent on the issue of share allocation to the public. PDA is a must as it not only ensures investment security to promoters but also timely completion of projects.

    Likewise, developers can produce Letter of Intent (LoI) of banks and financial institutions for investment in projects without conducting detailed study on the project. Previously, interested investors had to produce feasibility report of the project along with LoI for acquiring project license.

    Talking to Republica, Keshav Dhwaj Adhikari, spokesperson for MoE, said relaxation of the provisions was aimed at facilitating domestic investors. “We realized that the issue of equity investment should not deter investment in hydropower projects,” said Adhikari.

    Since the guideline was introduced in January 2013, some eight developers have applied for PDA at the Department of Electricity Development. But only one company has so far applied for PDA with the required fee of US $ 1,500 per megawatt.

    DoED officials say the amendment is likely to increase the number of applicants for PDA. “Through revision in the PDA fee we aim to encourage promoters,” said an official at DoED.

    Source : Republica