Govt’s failure to hike PPA rate irks developers

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    KATHMANDU, APR 21 –

    Ministry of EnergyDevelopers of a number of hydropower projects, which began during the Maoist insurgency, are upset with the government’s failure to abide by its decision to increase the power purchase agreement (PPA) rate.

    The Ministry of Energy (MoE) had promised to increase the rate earlier, but the Economic Infrastructure Committee in the Cabinet turned down its proposal a few days ago.

    Projects including the Sunkoshi Khola (2.6 MW), Baramchi Khola (4.2 MW), Thoppal Khola (1.6 MW), Ridhi Khola (2.4 MW) and Hewa Khola (4.5 MW) were assured of a PPA hike.

    The MoE had forwarded a proposal to increase the rate to Rs 4. 80 per unit in the summer and Rs 8.40 per unit in the winter in line with the PPA hike for new projects in June 2012. They are now getting a PPA rate of Rs 3.90 per unit during the wet season and Rs 5.52 during the dry.

    “We failed to provide the promised facility for these projects after the Economic Infrastructure Committee of the Cabinet refused to accept it, while the same was also forwarded to the previous government,” said Energy Secretary Hari Ram Koirala.

    “The Cabinet committee has, however, said it will not decide on any proposal tabled by the previous government until the proposal is once again forwarded by the ministry concerned,” Koirala said.

    He said that the ministry will soon hold talks with the power developers and then, as per their recommendations, forward the proposal to the committee at the earliest.

    The Baburam Bhattarai government had decided to increase the PPA rate of the projects and make it on a par with new projects. The new rates will be valid for seven years of the beginning of the projects’ commercial operations.

    In June last year, the MoE had hiked the PPA rate for new projects below 25-MW capacity by 20 percent.

    The power developers were demanding a hike in the PPA rate for projects under construction and well as the completed ones.

    Though the Nepal Electricity Authority (NEA) has been signing the PPA in the revised rate with the under-construction projects, the government power utility has been denying the increased rate to the completed projects.

    Following a tussle with the NEA, the Nepal Micro Hydropower Development Association (NMHDA) had demanded an increment in the rate until the loan repayment period, exemption of the delay charge, value added tax waiver and refinancing facility. A total of 14 projects, with a joint capacity of 27 MW, have completed construction and are awaiting PPA increment.

    Source : The Kathmandu Post