Kathmandu — The Nepal Electricity Authority (NEA) has decided to extend the RCOD (Required Commercial Operation Date) of hydropower projects by up to a maximum of two years. The decision was made during a Board of Directors meeting held on Tuesday, based on applications submitted by project developers.
According to a board member, if delays are proven to have occurred due to “force majeure” provisions mentioned in the Power Purchase Agreement (PPA), the RCOD will be extended along with escalation benefits. However, projects delayed for reasons other than force majeure will not receive escalation for the extended period.
Hydropower projects are generally entitled to an annual tariff escalation of around 3 percent. Tariff adjustment (escalation) is determined based on eight criteria specified in the PPA. As per the new decision, no penalties will be imposed during the extended RCOD period.
RCOD refers to the fixed date by which a hydropower project must begin commercial electricity generation under its Power Purchase Agreement (PPA) with the NEA. If production does not begin within the stipulated time, penalties are applied. However, the date can be extended in cases of floods, landslides, or other unforeseen problems.
Hydropower developers have long been demanding an extension of RCOD. They have complained that delays in forest clearance, failure to obtain approvals from various government agencies, and natural disasters such as floods and landslides have made it difficult to complete projects on time. In particular, they say that projects often remain stalled for years due to the lack of forest approval.
The decision to extend RCOD was made based on a report prepared by a subcommittee. The subcommittee had been formed during the tenure of Energy Minister Deepak Khadka, who directed it to prepare the report. The Board has approved that report. Hydropower projects with a combined capacity of nearly 3,000 megawatts will benefit from the RCOD extension.
Meanwhile, the Board has also relaxed certain hydrology-related provisions. Previously, hydrology revisions were allowed only five years after the start of production. This period has now been reduced to three years. The decision was made in response to situations where developers had to pay penalties due to lower-than-expected electricity generation.
Similarly, the requirement to inform the authority about the expected volume of electricity generation one month in advance has been amended. Developers will now need to provide such information just one week in advance.
Nepalpurbadhar