The Nepal Electricity Authority (NEA) is set to start dialogue for power purchase agreement (PPA) for the dry season with four export-oriented projects. These projects have proposed to sell electricity during the dry season.
The board meeting of NEA on Saturday formed a committee under board member Laxman Prasad Agrawal for dialogue. The committee has been authorized to sign memorandum of understanding (MOU) for trading of electricity through dialogue. The NEA had sought proposal from export-oriented projects for procurement of electricity to address demand during the dry season after 2020. The NEA has already taken a decision to procure electricity from these projects in five months of high energy demand from mid-November to mid-April at a base rate of Rs 10.60. These projects will export electricity to India for the remaining seven months of the year. The NEA says base rate for PPA has been determined to send a positive message to the investors.
The NEA is ready for dialogue nine months after the promoters submitted proposal in February to sell electricity during the dry season. Combined installed capacity of these four projects is 1324 MW. Feasibility study by the promoters of these projects has put annual generation at around 1.50 billion units. Only five projects with combined installed capacity of 1724 MW had submitted proposal to sell electricity by mid-February. Proposals were submitted by 440 MW Tila I and 420 MW of Tila II, developed jointly by KSK Energy of India and SC Power, Nepal, 282 MW Manang Marsyangdi, 182 MW Upper Marsyangdi and 400 MW Lower Arun. The promoters had demanded that PPA be done in dollar at least until the payback period. Generation license of Lower Arun in the name of Brass Company is in the process of revocation now. The Commission for Investigation of Abuse of Authority (CIAA) had directed for revocation of its license after it did not show intent to develop the project despite repeated extensions of deadline.
Promoters have said they are ready to sell electricity during the dry season in Nepal due to the problems faced in making financial arrangements for the projects before PPA is signed. The NEA board has already approved the policy about electricity procurement. The Energy Ministry has determined a rate of return of 18 percent for investors to expedite construction of reservoir based projects. While the rate of return was only determined for the run of the river projects earlier, the government has also guaranteed return for promoters of reservoir based projects as they also need to be constructed in recent times. The government has been providing a rate of return of up to 16 percent for run of the river projects.
Source: Karobar Daily
