Preparations over for PPA talks: NEA


    May 16, 2017-

    The Nepal Electricity Authority (NEA) has readied to start negotiations with Nepal Water and Energy Development Company (NWEDC) to sign a power purchase agreement (PPA) for the Upper Trishuli-1 Hydroelectric Project.

    Korean joint venture NWEDC is the developer of the 216 MW hydroelectric project being built on the Trishuli River 70 km north of Kathmandu.

    State-owned power utility NEA has authorized a committee headed by its power trading department chief Prabal Adhikari to hold talks with NWEDC.

    According to Adhikari, the committee plans to begin formal negotiations by this weekend. “Our committee will be complete within a couple of days with the addition of a few experts, and then we will start negotiations immediately,” said Adhikari. “However, informal talks have already begun.” This will be the first PPA negotiations to be conducted after the government issued new guidelines on PPA in convertible currency.

    The guidelines allow the NEA to sign the PPA in convertible currency terms for the amount of foreign debt for 10 years or until time the foreign loan is repaid. The debt amount, however, should not exceed 80 percent of the total cost of the project, according to Adhikari.

    Also, the NEA does not have to negotiate the power purchase rate with the project developer as the PPA guidelines have specified the rates for different types of projects.

    The Upper Trishuli-1 is a run-of-the-river type, and for this type of project, the rate has been fixed at Rs8.40 per unit during the dry season that lasts from December to May. During the wet season that lasts from June to November, the rate is Rs4.80 per unit.

    “As the PPA negotiation will be carried out under the broad framework of the PPA guidelines, it won’t take much time to complete the deal,” said Adhikari. “However, I can’t say when the negotiations will be completed and we will sign an agreement with the project developer.”

    The Energy Ministry signed a project development agreement (PDA) with NWEDC in December 2016 for the construction of the hydroelectric project located at Dhunche in Rasuwa district. The PDA had given NWEDC six months to complete the PPA with the NEA, the sole buyer of electricity in Nepal; this means the two parties have one month to complete the negotiations and seal the deal.

    Likewise, the Korean developer has two years to complete the project’s financial closure and five years to complete the construction of the hydropower plant and start generating electricity.

    NWEDC is a joint venture company formed by three Korean companies, International Finance Corporation (IFC) and Nepali investor Bikesh Pradhanang.

    The three Korean companies are Korea South East Power Company, Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation.

    The Upper Trishuli-1 will generate 216 MW of energy through three turbines with a capacity of 72 MW each. The project is expected to generate 1,456.4 gigawatt hours of net electricity per year, of which 1,149.7 gigawatt hours will be generated in the wet season and 306.7 gigawatt hours in the dry season.

    Source: Kathmandu Post