NEA may remove ‘take or pay’ provision in new PPAs

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    KATHMANDU, Feb 3:

    NEA_BuldingThe Nepal Electricity Authority (NEA) is mulling over removing the provision of ´take or pay´, from the new Power Purchase Agreements (PPAs), for power generated during wet seasons for five years starting 2016/17.

    NEA Spokesperson Sher Singh Bhat said such a move was necessary to prevent NEA from facing huge loss as the state-owned energy monopolist will enjoy power surplus during wet season after energy generated by Upper Tamakoshi comes into the national grid.

    “As per our demand projection, power generated during five months of wet season will go to waste due to low consumption and lack of infrastructures to export power to India,” added Bhat.

    A recent study of NEA shows that its load system will have surplus in wet season after the 456-megawatt Upper Tamakoshi Hydropower Project starts generation in 2016. Energy generated by Madhya Bhotekoshi (102 MW), Rasuwagadhi (111 MW) and Sanjen (42.5 MW) will be connected to the national grid soon after. Most of these projects are run-of-river projects and operate in full capacity during wet months. Still the nation will face power shortage during dry season.

    Power developers say investors will be discouraged if NEA decided not to buy all energy generated by hydro power projects throughout the year. President of Independent Power Producers Association (IPPAN) Khadga Bahadur Bisht said the decision will affect small and medium-scale projects that are currently under survey.

    NEA has so far PPA with projects having installed capacity of 2000 MW. Similarly, DoED has issued license to 200 projects with total installed capacity of 10,300 MW. A total of 58 projects with total installed capacity of 3,600 MW are currently under construction.

    Source : Republica