Panel for signing PDA with GMR

    • Members are, however, divided over whether export-oriented projects should be provided Rs 5m per MW in grant

     Power development agreementsKATHMANDU, AUG 25 – A technical committee formed to review the document of the Power Development Agreement (PDA) between the Investment Board of Nepal (IBN) and India’s GMR-ITD Consortium to develop the 900MW Upper Karnali Hydropower Project has recommended signing the agreement with a few revisions in the document.

    The committee, headed by National Planning Commission Vice-chairman Govinda Raj Pokharel, plans to submit the review report to Prime Minster Sushil Koirala on Monday. With differences among members over a few points in the documents, the scheduled plan to submit the report on Sunday was cancelled.

    According to a member of the committee, the members are still divided over whether export-oriented projects like Upper Karnali should be provided Rs 5 million per megawatt in grant as announced in the budget. The 13th IBN board meeting had decided to provide the subsidy to GMR and it was included in the agreed PDA document between IBN and GMR. A source said two members of the committee have opposed providing the grant, arguing that the facility is only meant for projects producing power for domestic consumption. “Those dissatisfied with the provision are of the view that we have to try to convince GMR to seal a deal without the incentive,” said a committee member.

    Another committee member, who is against the incentive, said he was not against the PDA signing, but the national interest should be considered. “In the name of promoting a project, we should not let go all the benefits that should have come to the nation.”

    The budget for the current fiscal year talks about providing a lump sum of Rs 5 million per megawatt to producers that connect the generated electricity to the national grid. The budget has talked about providing an additional 10 percent of such a grant to producers that connect the generated electricity to the national grid within fiscal year 2017-18.

    Another contentious topic is “force majeure”. A few committee members have sought reduced liability to the government. The committee has recommended the “force majeure” provision is applicable only to the company, but not to the contractors.

    According to an IBN official, the incentive will be provided only after the completion of the project, which is why providing incentive isn’t against the national interest. “By the time GMR completes the project, it will be spending Rs 140 billion. Rs 5 million per megawatt means the government has to provide just Rs 4.5 billion,” the official said, adding since the Agriculture and Water Resource Committee (AWRC) of the Parliament and the technical committee has given a go ahead to the project, the PDA might be signed within a month.

    On the project’s impact on downstream irrigation projects, the technical committee has recommended that within six months after the agreement, the generation company should undertake and conclude a study, under the direction and upon the acceptance of the Nepal government, to ascertain the impact on all existing projects downstream as well as river training works, river banks and settlements.

    The downstream  projects include Rani-Jamara-Kulariya and associated hydropower scheme, Rajapur project, Suryapatuwa irrigation project and other scheduled projects.

    The report has also recommended that based on the study report, the generation company should take measures, including a re-regulating dam to the extent feasible to ensure designed flows of water to the irrigation projects, including other planned projects, and ensure no negative impacts are incurred on river banks, settlement and existing river training works by consulting with Ministry of Irrigation.

    The committee is preparing two reports—a review of the agreement document prepared by the IBN and a new PDA agreement document which incorporates the ideas of other stakeholder agencies of the government. With the current PDA talking about delivering 2MW riparian release power station meant for the local community, the committee has recommended GMR to explore possibilities of increasing the generation capacity of the power station without harming the environmental commitments.

    While IBN’s PDA report had stated 12 percent of “free energy” will be made available to Nepal, the committee has recommended mentioning it as 12 percent of “free energy and power”.

    Source : The Kathmandu Post