Private sector Criticizes Electricity Bill for Sidelining Nepali Power Producers

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KATHMANDU, OCTOBER 9

Chairman of Independent Power Producers’ Association, Nepal (IPPAN) Ganesh Karki has said that the Nepali private sector will collapse if the Electricity Bill, 2023 is passed without making amendments.

Speaking at a discussion programme over the bill, Karki urged the government authorities not to undermine the contributions of the private sector, and that the country would still be facing an 18-hour load-shedding without them.

“About 3,000 megawatts of electricity is currently being produced in the country. Of that, 1,160 megawatts are produced with the participation of the Nepal Electricity Authority while the rest is by the private sector. Out of under-construction projects with installed capacity of 4,500 megawatts, 600 megawatts are being built by the NEA while the rest are being built by the private sector,” he said.

While the government of India has decided to procure 10,000 megawatts of energy from Nepal, instead of promoting an energy-friendly environment, the policies and regulations are creating new challenges, Karki said.

“We have been calling for an action plan to produce 30,000 megawatts over the next decade to consume 10,000 megawatts internally and export 10,000 megawatts each to India and Bangladesh. We have been requesting for the private sector to be allowed to enter the power trade. Also, the government is making a roadmap to generate 28,700 megawatts of energy by forming a committee and has planned to increase domestic consumption to 13,000 megawatts and export the rest. However, the private power producers don’t think that this plan of the government will be fulfilled with such an Electricity Bill,” Karki added.

He said that although the private sector has repeatedly called for amendments to the Electricity Bill, the current bill formulated by the committee has ‘completely eradicated the original spirit and meaning of the previous act as if the previous one did not even exist at all’.

“The private sector has an important stake in Nepal’s energy sector. Although we had suggested the committee hold consultations with the private sector, our requests fell on deaf ears. If this bill is passed, the private sector will go into a coma,” he said.

Karki shared that the government has cancelled the licence of projects having the capacity to generate 10,500 megawatts awaiting power purchase agreements (PPA) and has made arrangements in the bill that only companies with a 51 per cent government stake will be allowed to undertake energy projects.

“The government spent over Rs 100 billion in the construction of the Tamakoshi project when the initial cost was projected to be Rs 35 billion. Although the government has announced to construct projects, the private sector holds all the licences.

The government is saying that they will cancel the licence of the projects and build it themselves when they are to be blamed for unapproved PPAs, environment impact assessments (EIAs), and financial closures,” he added.

It is also said that the permits for project construction will be given based on the number of free shares, free electricity to be provided by the company, and agreements reached to pay advance in a lump sum, as well as to make payments in annual instalments and the rate of electricity tariffs to be fixed.

Arrangements have been made in the Electricity Bill to bring in foreign investment for projects larger than 100 megawatts. This means that Nepali producers are gradually being sidelined.

“The bill has not clarified what will happen to the investments made by the Nepali promoter. This is very different from the intent of the previous bill and we did not think that such a bill would even be tabled in the first place,” he said.

Karki said the Nepali private sector is capable of building large-scale projects as well, adding that the producers have the capacity and technology to build such projects. However, the government is trying to push large projects for foreign investments as if the private sector is not capable enough, as per Karki. He also shared that various other factors and arrangements in the new bill will also impact the energy growth prospects.

Source : The Himalayan Times