Privet players seek sectoral reforms in energy

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    Completion of cross-border transmission line‚ unbundling of NEA urged

    FDI_FlyKATHMANDU: Though the government signed Power Trade Agreement (PTA) with India to ensure market for electricity generated in the country, sectoral reforms needed to accelerate energy sector development by attracting more foreign direct investment (FDI) have not been made.

    The private sector has said that the government has yet to start works relating to PTA like completion of cross-border transmission line, and unbundling of Nepal Electricity Authority (NEA) for generation, distribution and transmission purposes for efficient delivery.

    Speaking in a programme titled ‘FDI Potential on Hydropower’ organised by Independent Business News, today, Khadga Bahadur Bisht, president of Independent Power Producers’ Association Nepal (IPPAN) stressed on the need for sectoral reforms in the energy sector through required legislations and unbundling of NEA. The government had announced of bringing Electricity Regulation Commission Act and Electricity Act through fiscal budget 2014-15 but the private sector is largely unaware about the provisions incorporated in the Bills.

    Bisht appreciated government’s initiative of establishing Electricity Grid Company, but said that private sector players should be treated on a level playing field. He also said that the government’s policy regarding conditional Power Purchase Agreement (PPA) targeting the demand after 2017-18 is backward and that hinders flow of FDI in hydro sector.

    Gyanendra Lal Pradhan, chairperson of the energy committee of Federation of Nepalese Chambers of Commerce and Industry mentioned that back-loaded PPA is a major obstacle in attracting FDI in this sector. “Hydropower is a social business and locals should benefit from projects, but the political parties and their sister organisations have been creating difficulties in the name of locals which should be stopped,” said Pradhan, adding, “Until such political propaganda is stopped investors will not want to take a risk in making large investments.”

    Pradhan also urged the government to verify the prices of hydro mechanical and electromechanical equipment and service charges paid by NEA in Chameliya Hydropower Project and any other project developed by the private sector. It has been reported that though it costs only around Rs 150 million per megawatt, the cost of Chameliya project has reached Rs 500 million per megawatt due to cost escalation.

    Responding to the private sector representatives queries, Keshab Dhoj Adhikari, spokesperson of the Ministry of Energy has assured that both the energy related Bills will be submitted in the parliament by next month and the government will soon take the inputs of the private sector before submitting them.

    As per Adhikari, land acquisition and right of way acquisition are emerging as a big challenge in installing transmission lines. “There is adequate fund for transmission line but the challenge is land and right of way acquisition,” he said.

    Similarly, Radhesh Pant, chief executive of Investment Board Nepal informed they are preparing to sign project development agreement of 600 MW Upper Marsyangdi- II Hydropower project and 750 megawatt West Seti Hydropower project.

    Source : The Himalayan Times