IFC concerned about NEA’s dilly-dallying over PPA

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    KATHMANDU, AUG 15 –

    International Finance CorporationInternational Finance Corporation ( IFC ), a member of the World Bank, on Wednesday expressed concern about the Nepal Electricity Authority’s (NEA) dilly-dallying over signing the power purchase agreement (PPA) with private sector hydropower projects.

    IFC Vice-president Karin Finkelston, during her meeting with Finance Minister Shankar Prasad Koirala on Wednesday, warned that the delay in signing the PPA would impact hydropower projects amid possible appreciation of the US dollar against the Nepali rupee, a Finance Ministry statement said.

    Finkelston’s grievances over the NEA’s reluctance to sign the PPA with independent power producers (IIPs) have come at a time when a number of developers have long been awaiting PPA signing. As many as 11 hydropower projects, with a joint capacity of 903 MW, are waiting the PPA signing. The promoters have planned to invest Rs 156 billion in the projects.

    NEA has been reluctant sign the PPA based on its assumption that the surplus electricity during monsoon would be wasted, resulting in possible losses of billions of rupees, after the projects start generation after some six years. The NEA has also said it will not sign the PPA with hydropower projects with capacities over 25 MW.

    The promoters complained that the NEA has been refusing to sign the PPA, citing the requirement of the Energy Ministry’s recommendation.

    Kali Gandaki Kovang (180 MW), Budi Gandaki A (90 MW) and Budi Gandaki B (207 MW), six projects under Super Six (210 MW) Projects, and Upper Trishuli 1 (216 MW) are among the projects have been hit hard by NEA’s reluctance to sign the PPA. The “super six” projects—Singiti (16 MW), Khare (24.1 MW), Upper Solu (23.5 MW), Lower Solu (82 MW), Maya Khola (14.9 MW) and Mewa (50 MW)—are all set to enter the construction phase, but the lack of PPA is preventing them from doing so.

    Lower Solu Project Director Ashish Garg said the MoE and NEA have been postponing the PPA signing date, citing the lack of budget for the construction of transmission lines. Issuing the licence to these projects, the government had pledged to construct the transmission lines.

    The projects have paid a combined Rs 450 million in licence fees and have provided bank guarantee worth Rs 101 million. NEA Managing Director Rameshwor Yadav also said the NEA has not been able sign the PPA due to the possibility of wastage of energy during monsoon after a few years.

    Source : The Kathmandu Post