MoE: PDA with hydropower projects below 500 MW soon

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    KATHMANDU, FEB 05 –

    Power development agreementsThe Ministry of Energy (MoE) has said it will sign Power Development Agreement (PDA) with hydropower projects below 500MW within the next few months. The move follows Cabinet’s endorsement of the working procedure of PDA last week.

    In the first phase, the agreement will be signed with projects that have submitted complete documents, ministry officials said.

    Over half dozen projects, including Lower Arun (400 MW), Balefi (450 MW), Likhu (120 MW), Upper Trishuli -1 (216 MW) and Upper Marshyangdi ‘A’ (50 MW), have applied for PDA. Some of them are waiting for the agreement for the last three years.

    PDA is an important contract between the government and investors.  In the agreement, the government assures the investors that it would avert any possible social, economic or policy-level uncertainties during the construction phase. Generally, issues related to taxes, licence period, free energy, royalty, repatriation rights and parties’ obligations are included in the PDA.

    MoE Spokesperson Sri Ranjan Lakoul said the Cabinet’s endorsement of the working procedure has paved the way PDA signing with the projects. Although the template was prepared six months ago, lack of working procedure was hindering PDA signing.

    In order to accelerate the PDA signing process, the ministry has formed a PDA negotiation committee under the coordination of joint secretary Sunil Bahadur Malla. The committee consists of representatives from the Finance Minis-try, Ministry of Law and Nepal Electricity Authority (NEA).

    The working procedure has put forth some preconditions for signing the PDA.

    They include technical and financial analysis, detailed engineering study, environmental impact assessment and documents related to power purchase agreement (PPA) and connection agreement signed with NEA.

    “Developers meting the set criteria will be eligible for signing the PDA,” said a ministry official. “In case of other developers who have applied for the PDA but do not meet the criteria, the ministry will sign the agreement with them in the second phase after they fulfill the criteria.”

    Ministry officials, however, said it will use its own PDA template while negotiating with the developers. Previously, the ministry had said it would use the template prepared by the Investment Board (IB).

    The IB and MoE have developed two separate templates — one for projects below 500MW and another for projects above the capacity. Both the agencies have forwarded the templates to power developers. After the formation of the IB a year ago, the government entrusted the board with the job of developing large hydro power projects (above 500MW), while projects below 500MW would be developed by the Energy Ministry.

    Chief Secretary Lila Mani Poudel had asked the MoE to use the PDA template prepared by the IB while negotiating with project developers so as to prevent any confusion. But Lakoul said: “As the template prepared by the IB is not at matured stage, we will use our own PDA draft.”

    Source : The Kathmandu Post