India proposes separate mechanism for hydropower

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    KATHMANDU, March 29

    Nepal-IndiaIndia has proposed for formation of a permanent mechanism for power trade agreement (PTA) and resolution of bilateral problems related to it stating that the issues of inundation and others have overshadowed that of hydropower in bilateral meetings of Nepal-India Secretary Level Joint Committee on Water Resources (JCWR) and Joint Standing Technical Committee (JSTC).

    Indian Energy Secretary Pradeep Kumar Sinha made proposal of the permanent mechanism to his Nepali counterpart Bishwa Prakash Pandit on a recent visit of Nepal. Similarly, Indian Ambassador to Nepal Ranjit Rae also met Energy Minister Radha Kumari Gyawali and urged her to take initiative to form the mechanism. “India has proposed a secretary or joint secretary level mechanism to address the bilateral issues related to hydropower like PTA and others. We are ready to form the mechanism,” Spokesperson at the ministry Joint Secretary Keshav Dhwoj Adhikari stated. He claimed that the long-stalled PTA will be done after formation of the mechanism and revealed that secretary Sinha expressed commitment that the new government after the upcoming general election in India will sign PTA. “Formal work has not started for formation of the mechanism. The process to form it will only be started after discussions with India,” he said. He stated that such mechanism is necessary to address the legal and other problems arising in bilateral trade of energy.

    Meanwhile, a new draft for PTA will be prepared as the previous draft prepared three years ago and sent to the Indian Energy Ministry will not include all the issues. “We will also include advices given by the private sector and others,” he assured. “PTA is necessary for big export-oriented projects. It is necessary for a long-term market. The Indian officials are positive about it,” he claimed. Cross-border trade of power will be started after PTA is signed. He stated that the private sector and the Nepal Electricity Authority (NEA) will also be able to export surplus electricity. NEA has already projected that there will be surplus of 800 MW from 10 in the night to six in the morning during the rainy season from 2016.

    Director of SN Power Holdings Singapore Sandeep Sah states that PTA is necessary because banks and financial institutions invest only after PTA is signed at the government level by the two countries. SN is preparing to construct 650 MW Tamakoshi III Project. “The markets of both the countries will be opened after PTA. PTA is the main issue for us. No big project will be constructed without PTA. The banks will not invest on projects unless the Indian market is opened and there is no question of any project being constructed without investment,” he explains. He claims that PTA is necessary not just for the private sector but even for NEA. He, however, reminds that one should be clear about the issues like import tax on electricity in India, import license, and taking part in the bidding process with the regulatory body for power purchase agreement (PPA).

    Nepali producers need not compete in India

    Nepal need not compete for selling electricity exported to India until 2022. Joint Secretary Adhikari revealed that India has extended the deadline by five years from 2017. He revealed that the PPA rate for electricity generated from thermal plants like coal, diesel and others are determined by the state electricity board, and it is procured from the lowest bidder. Nepali projects will be able to do PPA without competition due to the facility that will be provided even for Indian hydropower promoters.

    The wholesale rate of electricity in India has fallen recently due to competition. “It had risen to up to IRs 6 per unit two years ago but has now fallen to up to IRs 3.50,” Sah said. India has removed electricity exported from Nepal from the list of banned items and will also not levy the tax of IRs 2 per unit.

    Source : Baburam Khadka / Karobar Daily