PPA with BPC stalled due to Khimti

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    KATHMANDU, June 23

    Butwal Power Company (BPC)Power purchase agreement (PPA) between the Nepal Electricity Authority (NEA) and Butwal Power Company Limited (BPC) has been stalled due to the controversial agreement with Khimti hydropower project.

    PPA with BPC has been stalled after NEA in March decided to ban the promoters of Bhotekoshi (45 MW) and Khimti (60 MW) hydropower projects from investing on other projects if they do not agree to review the PPA done in dollar and bear the royalty to be paid to the government. BPC has 17 percent share investment in Khimti. PPA between BPC and NEA has expired last July and the company has not received payment from NEA in lack of PPA. BPC has demanded that it be paid at the posted rate in practice. PPA for 12.5 MW Jhimruk and Andhikhola as well as 37.5 MW Kaveli A and 30 MW Nyadi projects to be constructed by BPC also will not be signed due to the issue of Khimti. Khimti’s promoter Himal Power Limited has refused to review PPA and pay royalty despite request by NEA.

    “The main reasons for lack of PPA with BPC are PPA done in dollar for Khimti and royalty. Nobody has been able to revoke the decision of NEA board and PPA with BPC cannot be signed until that is done,” an NEA official stated. BPC has been supplying electricity from Jhimruk even without PPA while Andhikhola has been closed for expanding capacity. NEA has been paying some amount to BPC for office operation. Profit of BPC will fall in the current fiscal year due in lack of PPA for Jhimruk and closure of Andhikhola. NEA had signed PPA with Himal and Bhotekoshi in dollar and was also bearing the two percent loyalty. The electricity produced by these companies cost almost Rs 10 per unit. NEA had signed PPA with these projects in dollar on take or pay basis. NEA has to procure even the surplus electricity if the two projects generate extra energy during the wet season, as per the agreenment. NEA has been spending over 45 percent of its income in payment for electricity purchased from Khimti and Bhotekoshi projects. The liability of NEA has further increased due to rise in the exchange rate of dollar in recent times.

    BPC has demanded Rs 5.40 per unit that NEA is currently paying to other promoters. NEA and BPC had signed PPA on July 13, 2001. The average PPA rate for Jhimruk is Rs 6.20 per unit and that for Andhikhola is Rs 4.48. BPC sells 5.50 million units from Jhimruk and three million units from 5.1 MW Andhikhola to NEA every year. Both of these projects are run of the river projects. BPC has been distributing electricity to 39,621 households of Pyuthan, Arghakhanchi, Rolpa, Syangja and Palpa districts directly through its transmission line and has been selling the remaining electricity to NEA. It has also proposed to the Electricity Tariff Fixation Commission to raise tariff.

    The government had sold BPC to Shangrila Energy for Rs 870 million. Shangrila has 68.95 percent stake in BPC, commoners 10 percent, government 9.9, Intercast Nepal 6, United Mission to Nepal 2.79, staffers 2 and NEA 1.

    Source : Karobar Daily