PDA Committee awaits MoF comments

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     Submission of report on PDA draft to take few more days

    Power development agreementsKATHMANDU: A committee formed to point out pros and cons of draft Project Development Agreement (PDA) on 900MW

    Upper Karnali hydroelectric project is likely to take few more days to submit a report to Prime Minister Sushil Koirala, as it is awaiting comments from the Ministry of Finance (MoF).

    Written comment from the MoF is considered crucial, as, many say, it will officially demonstrate the ministry’s stance on proposal to extend cash incentive of Rs five million for every megawatt of electricity generated by export-oriented hydroelectric projects, like Upper Karnali.

    Earlier, the committee, formed under National Planning Commission Vice Chairman Govind Raj Pokharel, had sought written comments from other ministries as well.

    “For instance, the Ministry of Irrigation was asked to give comments on impact the Upper Karnali project would have on irrigation projects. Other ministries were also asked to provide remarks on the project’s impact on forests and environment, among others,” said a member of the committee, adding, “So far, all ministries, except the MoF, have submitted their comments. We are now awaiting the response from the MoF.”

    A high-ranking MoF official said the ministry was still working on the document. “We will express our views, in writing, in a few days,” the official added.

    “This, however, should not mean the ministry is trying to delay the issue.”

    In fact, the MoF has been positive about the proposal on incentive from the beginning. That’s why the ministry, through the latest fiscal policy, had agreed to extend a grant of Rs five million for every megawatt of electricity generated and evacuated to the national grid.

    Also, Finance Minister Ram Sharan Mahat, who steers the MoF, is one of the vocal supporters of the proposal to offer the financial incentive, as he believes this is one of the ways to attract investors to Nepal.

    “We have wasted enough time and should not be bogged down by trivial issues,” the minister told The Himalayan Times today, implying the cash incentive should be given to export-oriented hydroelectric project developers. “Besides, the fiscal policy, which is a law in itself, has clearly spoken about the incentive. And if law of the land is to be followed, the incentive should be given to every hydroelectric project developer.”

    The minister’s comments come at a time when very senior bureaucrats are said to have objected to the cash incentive plan.

    Critics of the incentive proposal say export-oriented hydroelectric projects like Upper Karnali, which is planning to sell 88 per cent of the electricity produced here to India, should not be provided the incentive. “Such incentive should only be provided to developers who produce electricity for domestic consumption,” they opine.

    However, others say the government should also be considerate of income of Rs 5.51 billion that it will make through royalties from Upper Karnali project, Rs 3.10 billion through income taxes and Rs two million through other taxes per year.

    As the dispute goes on, the committee is expected to recommend the government to provide the incentive as per the provisions in the ‘law of the land’.

    The committee was formed after some of the political parties voiced objection to signing of the PDA with GMR Group of India, the developer of the Upper Karnali hydroelectric project, during Indian Premier Narendra Modi’s visit to Nepal.

    The committee, which comprises chief secretary, Nepal Rastra Bank governor, secretaries of home, finance, energy, irrigation, forest, environment and land development ministries and CEO of Investment Board Nepal, was given a deadline of yesterday to submit the report.

    Source : The Himalayan Times