NEA delaying PPA with ‘super six’ projects

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    KATHMANDU, JAN 27 – At a time when the country is facing acute power shortage, the Nepal Electricity Authority ( NEA ) is dilly-dallying over the signing power purchase agreement (PPA) with the ‘super six’ projects.

    The 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.

    These projects are called ‘super six’ projects as they were the first to obtain the survey licence through open competition. Earlier, the licence used to be issued on the first-come, first-served basis.

    Promoters of these projects said they have been requesting the officials of the Ministry of Energy (MoE) and NEA for the PPA for the last one and half years, but to no avail. Director of Lower Solu Project Ashish Garg said the MoE and NEA have been postponing the PPA signing date, citing lack of budget for the construction of transmission lines for these projects.

    While issuing the licence to these projects, the government had pledged to construct the transmission lines. The projects had paid a combined Rs 450 million in licence fees and had provided bank guarantee worth Rs 101 million.

    “The projects prepared the detailed project report (DPR) about one and half years ago and are ready to go for construction,” said Garg, adding they have spent around Rs 2 billion for the DPR and land acquisition, among others.

    Four of the projects were scheduled to be completed by 2014 and the rest in 2015, generating a combined 210.5MW electricity by 2015. But due to the delay in the PPA, they have not even been able to start construction.

    “We have forwarded our problems to the MoE, NEA officials and Chief Secretary Lila Mani Poudel, who is also the NEA chairman,” said Garg. “But none of them are serious to solve this issue.”

    While issuing the licence, the government had asked the promoters to develop the projects at the earliest, assuring the construction of transmission lines. The government had even committed to compensate them in case of delay in the transmission line construction.

    Prabin Shrestha, director of Upper Solu Project, said the MoE and NEA were passing the buck among each other on the delay in the PPA. “Neither MoE nor NEA is serious to solve the existing power crisis,” he said.

    The developers said although India has committed soft loans worth $250 million for the transmission lines, the government agencies have been delaying PPA, citing lack of budget.

    During Prime Minister Baburam Bhattarai’s India visit last year, the Indian government had assured the soft loan through Indian Exim Bank after the Nepal government proposed developing four transmission line and 14 road projects.

    NEA spokesperson Sher Singh Bhat, however, said the authority has begun preparations for the signing of the PPA with these projects. He said the PPA draft has been forwarded to the NEA board for signing the agreement with four of the projects—Khare Solu, Lower Solu and Maya Khola.

    “Once the board approves the draft, the PPA will be signed,” he said, adding the authority would first sign the connection agreement with the remaining two projects before moving ahead with the PPA.

    Source : The Kathmandu Post