Promoters of 5 projects want PPA in US dollar

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    KATHMANDU, April 27

    Course dollar increasePromoters of five projects, that have submitted proposals to sell electricity to the Nepal Electricity Authority (NEA) only during the dry season, have demanded that the Power Purchase Agreement (PPA) be signed in US dollar.

    The promoters have demanded that PPA be done in dollar and price escalation at least until the payback period. NEA, however, is refusing to do so as the bid documents did not mention PPA in dollar. NEA had sought proposals from export-oriented hydroprojects to address the energy demand during the dry season six years from now. “The promoters have asked for PPA in dollar and also price escalation. We are not in favor of both as we did not mention so while inviting bids,” Director of the Power Trade Department of NEA Hitendra Shakya said. NEA management is not willing to sign PPA in dollar due to controversy of PPA with Khimti, Bhotekoshi and recently Marsyangdi A.

    Chairman of SC Power Harish Chandra Shah said PPA in dollar has been demanded as foreign investment has to be brought for constructing the project. “We have not demanded PPA in dollar for ever and only during the payback period,” he stated. He argued that domestic investment is not enough to construct big projects and foreign investment cannot be attracted unless PPA is done in dollar.  Shah, who is a former managing director of NEA, said the problem will be resolved only if the state, and not NEA, adopts the policy of doing PPA in dollar. He is preparing to bring foreign investment for construction of Tila I and II in partnership with KSK Energy of India.

    Only five export-oriented projects with combined installed capacity of 1724 MW had submitted proposals to sell electricity during the dry season.  Proposals have been 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 license of Brass Power, Brazil for Lower Arun is expiring on May 15 and the license will be automatically cancelled if it fails to make financial arrangements within the period. GMR Energy Limited, India that is constructing 900 MW Upper Karnali and 600 MW Upper Marsyangdi, Sutlej Hydro Power Corporation, India that is developing 900 MW Arun III, did not submit proposals. Statkraft International Hydro, Norway that is developing 650 MW Tamakoshi III had proposed for PPA two years ago.

    NEA has determined a base rate for the first time to procure electricity from export-oriented projects at up to Rs 10.60 per unit during five months of the dry season (December to April).

    Source : Karobar Daily