NEA will buy energy only if required from IPPs

Suicidal decisions: Private sector

NEA_BuldingThe Nepal Electricity Authority (NEA) will sign power purchase agreement (PPA) with hydropower projects with a condition that it will procure electricity only when needed. Stating that hundreds of MW will be wasted during the rainy season after 2017, the NEA has started to sign dispatchable PPA with condition of procuring only on the basis of necessity.

The NEA says the decision has been taken on the basis of Grid Impact Study (GIS) that has showed almost 800 MW will be wasted during the night in rainy season after 2017. The NEA, that had earlier been signing PPA on take or pay basis, has signed dispatchable PPA with half a dozen projects until now. PPA will, however, be signed in take or pay basis with projects with whom connection agreement was signed before the GIS was implemented.

Director of the Power Trade Department of NEA Anil Rajbhandari says PPA is being signed on the basis of necessity by changing the policy of take or pay PPA as there will be surplus energy during the rainy season even when there will be load-shedding during the dry season. “The NEA will now procure electricity from projects only if demand rises and there is need for it,” he states.

He says the new provision has been brought as the majority of current projects are designed in exceedance flow (Q40) and generate more energy during the four rainy months while generation falls in the dry season when demand is high. The NEA states that it cannot sell surplus electricity during the rainy season due to problems in transmission lines.

Capacity of the under-construction 400 KV Nepal-India Transnational Transmission Line has already been booked. The transmission line, that will transmit 1,200 MW of energy, will be completed within coming July. The NEA projects loss of billions of rupees due to surplus energy as another big transnational transmission line like that faces uncertainty.

The private sector has condemned the NEA decision stating it has been made with an intention of sinking promoters. Chairman of the Hydropower Committee of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Gyanendra Lal Pradhan has called dispatchable PPA a suicidal decision. “It is wrong to put a condition of procuring only a certain amount at a time of energy crisis. Attraction toward projects will reduce due to such decision while banks may also hesitate to invest in projects,” he adds.

He stresses that PPA should be signed on take or pay basis. He has also put the blame on promoters who are making rounds of the NEA to sign dispatchable PPA. “The NEA has taken this decision on the basis of projection that there will be surplus energy after 2017. The situation will continue until there is a single buyer. A company, therefore, must be formed immediately for power trade,” he reasons and adds that the private sector is ready for formation of a power trading company.

The NEA has signed PPA with 155 projects for 2,100 MW until now. Dozens of projects are still waiting for PPA. It has been signing PPA with projects of installed capacity up to 100 MW at a single flat rate. The NEA has been signing PPA with private promoters for 25 years. The flat rate earlier being given to projects with capacity of up to 25 MW is now being offered up to 100 MW.

The NEA has been signing PPA at Rs 4.80 per unit for eight months including rainy season and Rs 8.80 per unit for the rest four months during dry season. PPA for the bigger projects will be signed through mutual agreement of the NEA and promoters concerned.

Source : Karobar Daily