Independent power producers slow to acquire construction licence


    Independent power producers (IPPs) have the lion’s share of the total survey licences issued, but only a few have applied for the construction licence.

    IPPs have held survey licences for 11,645MW electricity, but have filed construction licence applications for only 684MW (5.87 percent), the Department of Electricity Department’s statistics show.

    The department has issued construction licences for 1,808MW as of July, 2012. In the total construction licences issued, IPPs have 38 percent share, Nepal Electricity Authority (NEA) 33 percent and NEA’s subsidiary companies have 29 percent.

    “Though IPPs have the largest share of the survey licences issued so far, they have added just 160MW power to the national grid,” said Dilli Bahadur Singh, director general at the department. NEA subsidiaries have 22MW contribution. In the total survey licence issued, IPPs (the private sector) have 91 percent share followed by NEA and NEA’s subsidiaries.

    The poor track record of IPPs in terms of acquiring construction licence, according to government officials, is due to their ‘vested interests’. “A majority of IPPs has not come with the genuine interest of developing the projects,” said senior officials at the Ministry of Energy.

    NEA officials say IPPs have failed to live up to the expectation when it comes to hydropower generation. “IPPs have not been able to contribute more to electricity generation,whereas public sector (NEA) has been relatively successful,” said Ram Chandra Pandey, general manager at NEA’s Generation Construction Division.

    IPPs say financing has been their major constraints. Domestic financial institutions’ are increasingly being involved in hydropower projects, but they still do not have adequate resources to finance medium- and large-scale projects, they claim. Nepali commercial banks have the collective capacity to finance projects with about 150MW capacity only. The absence of project financing and long term loans has also hit IPPs.

    Subarna Das Shrestha, president of the Independent Power Producers of Nepal said of the total survey licence holders, only feasible projects go for the generation licence. “Survey licence holders do not go for construction until the project is technically, economically and environmentally viable,” added Shrestha.

    According to Shrestha, NEA has full government support when it comes to financing, but IPPs have to manage themselves.

    Source : EKantipur