During Indian Prime Minister Narendra Modi’s visit to Nepal earlier this month, both the countries had agreed to conclude power trade agreement within 45 days. Based on this agreement, India has sent an invitation to Nepal to hold secretary-level talks. PTA is considered crucial for Nepal as it would allow the country to import electricity when generation here falls, while giving the leeway to export power when there is a surplus. However, Nepal’s decision to sign the pact had earlier landed in controversy after some claimed India was trying to dictate certain terms and conditions. Rupak D Sharma of The Himalayan Times caught up with Energy Minister Radha Kumari Gyawali to discuss the issue and other problems faced by the domestic power sector.
The draft of the power trade agreement (PTA) forwarded by the Indian side had created quite a stir, isn’t it?
India had sent the draft of the PTA earlier this year based on the document we had forwarded in 2010. As per the international practice, we had not disclosed the content of the draft agreement provided to us by India. But we were holding discussions in the ministry on the provisions incorporated by the Indian side. While these discussions were going on, some elements, who were against the signing of the PTA, levelled various charges against us by pitching one-sided views. However, we did not retaliate, as the government cannot be as inconsiderate as those who were totally against us. We wanted to seal the deal as it would benefit both the countries. Without this agreement we cannot provide the vast Indian and regional market the hydroelectricity that can be generated here. So we want to enter into this agreement with India.
India has now sent an invitation for secretary-level talks. Have you proposed a date for the meet?
India had sent the invitation for the talks when I was visiting Bangladesh. It had sent the invitation based on a minute signed by both the countries during Indian External Affairs Minister Sushma Swaraj’s visit to Nepal. We will soon send a team to India.
When are you planning to send the team?
We haven’t fixed a date yet. But we will do it soon.
Nepal had made some amendments to the PTA draft forwarded by India. How has India responded to the revised draft?
We haven’t heard anything from the Indian side. But I am meeting with the Indian ambassador to Nepal this week to discuss the issue.
What does the draft of the PTA forwarded by Nepali side include?
We haven’t disclosed the content of the draft agreement to any one so far. But it basically paves the way for cross-border trading of electricity and development of cross-border transmission lines. However, we do not want the agreement to deal with the issue of power generation as proposed by India. Once the deal is sealed, it will attract more foreign investment, including Indian, to the domestic power sector. We are also hopeful the agreement will encourage Nepali and Indian investors — private and public — to invest in the power sector of each other’s country on mutually agreed terms and on conditions that domestic laws approve of such investments.
The draft of the PTA forwarded by Nepal was prepared by political parties. Doesn’t the practice of engaging politicians while preparing draft agreements undermine the government’s role?
No, it has not undermined the government’s role because the draft of the PTA prepared by the three-member political panel (comprising leaders of Nepali Congress, CPN-UML and UCPN Maoist) was originally designed by the Ministry of Energy. The political panel had only endorsed what the ministry had prepared. The document prepared by the ministry had also excluded the part of power generation from the draft agreement.
It is said that new draft of PTA prepared by Nepal incorporates a provision on sub-regional grid connectivity, which, if approved, will allow the country to export power to Bangladesh and even Pakistan. There are rumours that India is not very happy with this clause. Is it true?
Actually, that provision was included in previous drafts as well. A SAARC level meeting held in Kathmandu had delved into the issue of harmonising policies, rules and regulations in South Asia for the development of the power sector. During this meet, issues of bilateral, sub-regional and regional power trade were also discussed. So, the issue of regional power trade is not new. However, I cannot confirm the rumours that you heard that India is not happy about the provision on sub-regional power trade, as I have not heard from the Indian side since we forwarded the draft. But the message relayed by two senior Indian leaders (Modi and Swaraj) suggests that India is willing to extend all support for Nepal’s economic development. So, we should not politicise the issue. Instead, we should try to further deepen our relationship with India for development of energy sector. Energy sector’s development is crucial for migration of the country from grouping of least development countries to that of developing nations.
One of the hotly-debated issues in the hydro sector currently is the use of US dollar as the principle currency while entering into power purchase agreements (PPA). Recently, you also said the government is against the practice of signing dollar-denominated PPAs.
Yes, I did make that remark. This is because of our past experience. We are currently purchasing electricity from Khimti and Bhotekoshi hydro projects in US dollars and selling it in Nepali rupees. (Since the time of signing those agreements, the value of Nepali rupee has nosedived.) Because of this, Nepal Electricity Authority (NEA) is incurring losses to the tune of billions of rupees every year. Even though these deals were creating financial burden, we agreed to purchase electricity in dollar terms with Super Six hydro projects (50MW Mewa, 15MW Maya, 24MW Solu, 82MW Lower Solu, 16MW Singiti and 24MW Khare). It is now time we develop a proper criteria for signing dollar-denominated PPAs so that we can be selective. In this regard, we have formed a committee which will lay recommendations on the pros and cons of purchasing power in dollars. Having said that, I do not want to offend investors as well, as most of them want to sign dollar-denominated PPAs. So, we are considering on signing dollar-denominated PPAs till the time investors pay back their loans and purchasing electricity in Nepali rupees after that period. But we have not decided on it yet.
You had also engaged in talks with developers of Khimti hydro project to review the PPA, isn’t it?
Yes, I held discussions on it soon after I took office. During that time, I also raised the issue of imposing 50 per cent extra on power they sell in excess of the quantity mentioned in the PPA. I have asked them to give me a proposal which could create a win-win situation for both parties. Recently, I also held discussions with the Norwegian ambassador on the matter. So, we will soon be reviewing the PPA with Khimti project.
One major problem seen in the power sector is delay in construction of transmission lines. How is the ministry planning to deal with the issue?
Yes, development of transmission lines is as crucial as power generation, as we won’t be able to reap any benefit from power generated by hydroelectric plants unless we are able to evacuate it. In this regard, we will soon be separating transmission division from NEA. Although there are plans to unbundle generation and distribution parts from power company, separation of transmission division will be given first priority. So, development of transmission lines is as important for us as power generation.
By when will you be disintegrating the transmission part from NEA?
We have already started the work. But I can’t give you an exact timetable. The new body will be under a separatemanagement, but it won’t be autonomous.
Source : The Himalayan Times