Same PPA rate for up to 100 MW

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    KATHMANDU, Dec 9

    NEA_BuldingThe Nepal Electricity Authority (NEA) will do power purchase agreement (PPA) with projects of installed capacity up to 100 MW at a single flat rate bringing a new PPA policy.

    The policy will be prepared within this week after it could not be concluded on Tuesday as prepared. The policy will come into implementation after the NEA board approves it. The NEA has signed PPA with 150 projects with combined installed capacity of 2000 MW until now. The proposed policy will bring uniformity of PPA rate and also broaden its scope. The rate being given to projects with capacity of up to 25 MW will also be offered up to 100 MW. The average rate under this will be Rs 5.40 per unit. The NEA has been signing PPA at Rs 4.80 per unit for eight months including rainy season and Rs 8.80 per unit for the rest four months during dry season.

    The NEA is bringing the new policy to bring uniformity of PPA rate and also broaden its scope stating that signing of PPA with big projects is being delayed. It has been currently agreeing PPA rate with projects bigger than 25 MW through bilateral negotiation. The committee formed under NEA board member Manoj Kumar Mishra to study PPA with big projects and recommend a rate is submitting its report to Managing Director (MD) of NEA Mukesh Raj Kafle. The NEA can sign PPA with ease as there will be uniformity in PPA rate, annual hike and everything related to PPA.

    Kafle says the new policy will be valid only for the run-of-the-river projects and PPA will be done in Nepali currency. He reveals that decision has yet to be reached on the annual escalation rate and compensation even though PPA rate has been agreed. He clarifies that the new policy will not be valid for those projects with whom PPA has been signed in US dollar, reservoir-based projects and those made with foreign investment. “This policy will benefit both the NEA and promoters,” he adds.

    Discussions are being held at the Public Accounts Committee of the parliament to formulate policy for PPA done in US dollars. The Energy Ministry has formed a task force under Joint Secretary Keshav Dhwaj Adhikari for that. The NEA currently has stopped signing of PPA in US dollar. It has also not signed PPA with promoters of projects bigger than 25 MW.

    The NEA has also received suggestions from the Independent Power Producers’ Association, Nepal (IPPAN). Stating that price of construction materials and equipment has increased after appreciation of US dollar, it has advised to determine PPA rate on the basis of US$ 2,000 per KW. The NEA currently has agreed to compensate the promoters at the minimum rate of five percent to 8, 45 and 100 percent if electricity generated by the projects were to be wasted due to failure to construct transmission lines by the time the project starts generation.

    The then Water Resources Minister Shailaja Acharya had brought the policy of signing PPA at a single rate for projects of installed capacity up to 5 MW in 1999. The NEA had expanded the rate and scope to 25 MW in 2008.

    Source : Karobar Daily