Indecision of parliamentary panel on electricity pricing affects hydropower projects

    KATHMANDU, Feb 8: Purchasing energy in US dollar has remained a controversial issue for long. The controversy has affected many hydropower projects.

    The Public Accounts Committee (PAC) of parliament had, 18 months ago, formed a sub-committee to study the pros and cons of signing Power Purchase Agreement (PPA) in US dollar and give clear policy direction to the government. The sub-committee is led by Top Bahadur Rayamajhi who is now the Minister for Energy.

    But the sub-committee has remained largely inactive. Members of the sub-committee were divided on the issue. Though the sub-committee didn’t take any formal decision, members had tentatively agreed that PPA in US dollar should not be given to projects below 100 MW, according to Mina Pun – a member of the sub-committee.

    But Rayamajhi has a different opinion on the issue now. He wants to buy energy from hydropower projects in foreign currency.

    “I have repeatedly raised this issue in the meeting of PAC. But I don’t know why this sub-committee has remained idle,” added Pun.

    Sharma couldn’t be reached for comment over telephone.

    PAC hasn’t even chosen a new coordinator for the sub-committee.

    Former energy minister Radha Gyawali had repeatedly drawn the attention of PAC on the issue, saying that its indecisiveness has affected many hydropower projects. But her pleas went unheard.

    Speaking at an interaction on ‘Three Problems in Hydroelectricity Projects’ organized in Kathmandu on Sunday, Rayamajhi said he was never against signing PPA in US dollar. “We should give priority to domestic investors as well as create investment-friendly environment for foreign investors,” Rayamajhi said at the program.

    Government officials say Rayamajhi has changed his opinion after assuming office at the Ministry of Energy. A member of PAC said this is not the first time that lawmakers have changed their opinions after joining the government.

    PAC’s indecision has affected project development agreement with Upper Trishuli I (210 MW) which is being developed by a Korean investor. Similarly, it has affected Tila 1 (440 MW) and Tila 2 (420 MW) projects which are being developed by Indian investors. Indecision on the issue can hinder foreign investment in hydropower sector.

    Speaking at the program, Energy Secretary Suman Sharma said preventing PPA in foreign currency suggests that the country wants to be dependent on India for energy too. “We desperately need foreign investment particularly in storage projects,” Sharma said, adding that the country should find an amicable solution for sharing risks.

    In its plan for declaring energy emergency, Ministry of Energy has prepared a plan to offer pricing in foreign currency until loan payback period, or for initial ten years of the project operation, as part of sharing currency fluctuation risks. MoE has said that the decision would at least help in forwarding undergoing projects which have applied for PPA for foreign currency.

    Nepal Electricity Authority (NEA) is suffering huge loss while paying developers of Khimti Hydropwer Project and Upper Bhotekoshi Hydropower Project in US dollar terms. The two projects were developed in late 1990s.

    Gagan Thapa, chairman of parliamentary Agriculture and Water Resources Committee, said the idea of purchasing energy in foreign currency only for loan payment period seems reasonable.

    Source : Republica