PAC to grill promoters of Khimti and Upper Bhotekoshi over PPA

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    Both the project developers have been deferring repeated proposals of NEA as well as MoE to revise the dollar-based power purchase agreements.

    Course dollar increaseKATHMANDU, Sept 1: The parliamentary Public Accounts Committee (PAC) has decided to grill the promoters of Khimti and Upper Bhotekoshi hydropower projects, citing heavy loss incurred by the state-run Nepal Electricity Authority following the Power Purchase Agreements (PPA) signed with these projects. 

    A PAC sub-committee formed to study these PPAs signed in US dollars has summoned officials of Himal Power, the promoter of 60 MW Khimti, and Bhotekoshi Power Company, the promoter of 45 MW Upper Bhotekoshi, on September 11. 

    Coordinator of the PAC sub-committee Top Bahadur Rayamajhi said that the developers have been summoned following discussion with the officials of Ministry of Energy and NEA besides some independent experts. 

    The sub-committee members said that they will also ask other tough questions to the developers of these two projects such as why they are not sharing with the locals a portion of the massive profit they have been generating. 

    Both the project developers have been deferring repeated proposals of NEA as well as MoE to revise the PPA. 

    NEA had signed the PPA with Upper Bhotekoshi in 1997 at the rate of 6 cents per unit electricity, and the project had started generating power four years later. 

    The PPA with Khimti was inked at 5.2 cents per unit in 1996 and was later revised to 5.9 cents per unit. Khimti started generating electricity five years after the PPA.

    Bhotekoshi Power Company had allegedly presented false hydrology data and had signed additional PPA with the NEA to sell additional 9 MW at Rs 1.62 per unit in 2010. 

    Mohan Bahadur Basnet, a member of the PAC sub-committee, said that the public company has also not distributed shares to the locals though it has been earning impressive profit over the years. 

    Both the companies have been making hefty profit every year also due to appreciation of the US dollar against Nepali rupees. 

    The NEA pays about 30 percent or Rs 5 billion annually out of its total income to these two companies while the total electricity contribution to the national grid by these two projects stands at about 13 percent. 

    The PAC members are also likely to ask these project promoters why they did not respond to repeated requests by the Ministry of Energy and NEA for revising the PPA rates. 

    NEA has not been able to post profit since it started to purchase the electricity from these two companies. 

    The parliamentary panel, which is studying PPA that NEA has signed with various hydropower projects over two and a half months, will also make policy recommendations to the MoE and NEA on how to sign such agreement and on what terms, according to the PAC members.

    Source : Republica