KATHMANDU, Nov 1:
The board meeting of Nepal Electricity Authority (NEA) on Tuesday decided to purchase electricity produced by Lower Solu (82 MW) hydropower project in US dollar with exchange rate fixed at Rs 98.68 for the first 10 years of power generation.
However, NEA will pay only 55 percent of the amount in US dollar. Remaining 45 percent will be paid in local currency.
The project is among six power projects also known as ´super six projects´ which were facing uncertainty in the absence of Power Purchase Agreement (PPA) with NEA.
The decision taken on Tuesday has paved the way for development of all the projects. The board has decided to sign PPA with all the projects at Rs 4.80 per unit in wet months and Rs 8.40 per unit in dry months.
Along with Lower Solu, Singiti (16 MW), Khare (24.1 MW), Upper Solu (23.5 MW), and Mewa Khola (50 MW and Maya Khola (14.9 MW) had been waiting for PPA since two years.
The board decided to make partial payment in US dollar for power generated by Lower Solu taking into consideration foreign investment in the project. The NEA will make payment in US dollar only for the payback period. The project is estimated to cost Rs 10 billion. More than 90 percent of the project cost will be borne by foreign investors.
“We have agreed to make partial payment in US dollar. However, Lower Solu must provide 15 percent energy to NEA free of cost in the last five years of the project period,” managing director of NEA, told Republica.
A study team led by Laxman Agrawal, NEA´s board member, had suggested to the NEA to sign PPA with the projects in US dollar with exchange rate fixed at Rs 90. It had also suggested to the NEA to make payment in US dollar only for the first 10 years.
Essel-Clean Solu Hydropower, the developer of Lower Solu, had proposed to the NEA to sign PPA in US dollar saying that rise in the cost of project and fluctuations in exchange rate of local currency with US dollar were discouraging investors.
As per decision, NEA will have to pay fine of 45 percent if it failed to erect transmission lines for evacuation of project in time. Similarly, Lower Solu will have to pay fined of 45 percent if it failed to complete the project in time.
NEA has already started to build Solu Corridor Transmission line and Koshi Corridor Transmission line for power evacuation. For the purpose, it has taken soft loan of US$155 million from India´s Exim Bank.
NEA signed PPA in dollar with Bhotekoshi and Khimti two decades. But the decision has been inflicting huge loss on the state-owned power utility. Since then, it had stopped signing PPA in foreign currency.
Meanwhile, the NEA management on Friday signed PPA with Khare Hydropower Project and Lower Solu Hydropower project.
Source : Republica