The Independent Power Producers’ Association, Nepal (IPPAN) has blamed the Nepal Electricity Authority for the wastage of 500 megawatts of electricity generated from 30 hydropower projects.
During a discussion held at IPPAN’s office today, the participating promoters said they were struggling even to cover the bank interest while they are being compelled to operate the projects at half capacity.
Ganesh Karki, president of IPPAN, emphasised that while a slight drop in the profit of the electricity authority may not be significant, the failure of a single power project can have a cascading effect in numerous locations The IPPAN president expressed concern that banks may hesitate to provide funds for new projects due to the current situation where electricity is being wasted.
Karki informed that despite the NEA signing power purchase agreements (PPAs) with the provision of ‘Take or Pay’, several projects were compelled to halt their operations. He noted that despite the project closures, the authority is still obligated to fulfil its financial commitments as per the agreements.
Senior Vice-Chairman of IPPAN, Mohan Kumar Dangi, highlighted that the authority has not taken seriously the significant investment of four million rupees by general investors and all banks in this sector.
“How can a company with a capital of Rs 40 million sustain itself after incurring a loss of Rs 22 million in the electricity sector?” he questioned. “At present, the NEA is letting 500 megawatts of electricity generated from 30 projects go to waste.”
Guru Prasad Neupane, an energy entrepreneur and adviser at IPPAN, strongly criticised the NEA for its negligent and inefficient management of the transmission lines. He opined that while it used to publish load-shedding schedules, the authority now needs to release a schedule for project closures.
Neupane claimed that if the authority releases a schedule for closures, they should be prepared to compensate for the halted projects for up to six months, and the authority must provide the necessary funds for that period.
He further pointed out that the authority’s negligence is the main reason for the wastage of electricity. Despite having a transmission line with the capacity to transmit 360 megawatts of electricity in the Dordi corridor, the authority is only purchasing half the electricity produced by the projects with total installed capacity of 2,776 megawatts.
Uttam Bholon Lama, vice-chairman of IPPAN, revealed that the authority has unlawfully obtained signatures on an agreement to reduce the load without informing the banks that have invested 70 per cent of the funds.
During the discussions, Sujan Paudel, a participating promoter, disclosed that the authority has allowed some of the projects to operate at only 15 per cent of capacity, but it could be increased to 20 to 22 per cent throughout the year.
Uttam Amatya, the representative of Butwal Power Company, highlighted that due to issues with project implementation last year, the company was unable to produce any electricity for six months.
Meanwhile, a nine-member committee has been formed under the leadership of IPPAN Vice-President Lama to compile data on projects that have been forced to reduce load and produce a report.