Policy stability is a key to hydropower development: WB

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    KATHMANDU, Jan 9: The World Bank has said policy stability is more important than political stability for hydropower development.

    “From a development perspective, political stability would of course be the ideal position. However, the critical electricity needs of the economy can not wait,” reads the Hydropower Development Strategy prepared by WB.

    The strategy paper that was developed by the World Bank in the request of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) clearly outlines that the challenge for development of hydropower is lack of policy consistency within the political framework.

    The strategy paper comes at a time when most of the major power developers have been urging the government to ensure policy consistency before signing project development agreement (PDA).

    The paper also dwells on issues related implementation of hydropower projects in the country. “Political parties, donors and private sector should take their respective responsibilities to address implementation issues,” the strategy paper obtained by Republica states.

    The World Bank has also pinpointed the weaknesses of Nepal Electricity Authority (NEA) – the state-owned regulator of hydropower in the country. “NEA has a conflict of interest,” the paper states, adding, “NEA is both a generator in the market, a developer and the manager of the market.”

    The strategy paper implicitly suggests the government to break this situation by establishing separate agencies for generation, transmission and distribution of hydropower in the country.

    The government´s plan of establishing a separate transmission company has not been materialized due to unresponsive bureaucracy and hurdles created by the NEA officials.

    Additionally, the strategy paper has suggested restructuring the process of doing power purchase agreements (PPAs) with developers. “Medium sized projects are dealt with on a first come first served basis and this can substantially delay the review of more attractive projects,” states the strategy paper.

    The strategy paper has also recommended reviewing NEA´s generation operations to assess opportunities for improvement in performance. The document, which also has outlined steps to take for short term power crisis management, argues that the government´s plan to develop thermal plants should not be given to NEA.

    “The emergency thermal support should be provided through the private sector on a competitive sourcing basis rather than letting NEA to acquire its own plant,” the paper highlights.

    Source : Republica