Uniform PDA for all hydro, mega projects

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    KATHMANDU, JAN 12 –

    The government will have a uniform power development agreement ( PDA ) template while negotiating with the foreign companies developing hydro power projects of all capacities.

    A week ago, Chief Secretary Lila Mani Poudel had asked the Ministry of Energy (MoE) to use the template developed by the Investment Board (IB) while negotiating with the foreign developers.

    “With the recent decision, the IB and the MoE are now planning to negotiate with foreign developers on the basis of one single PDA model,” said Radhes Pant, the IB chief executive officer (CEO). The IB had developed a PDA template for above 500 MW projects. Earlier, the IB and the MoE had developed two separate templates—one for projects below 500 MW and one for projects above that. Both the agencies had forwarded the templates to power developers.

    MoE sources said that the ministry will now negotiate with foreign developers of less than 500 MW capacity on the basis of the PDA template prepared by the IB.

    MoE Spokesperson Sri Ranjan Lokoul said a uniform PDA model will be used to prevent any confusion and prejudices while dealing with power developers. “If both the ministry and the IB are dealing with foreign hydro power developers, there is no need of two different models,” he said. “Though the PDA template will be the same, there might be some different provisions for different projects basing on their capacity, volume of investment and number of beneficiaries.”

    Lokoul said the ministry has formed a committee led by Sunil Bahadur Malla to synchronise the PDA templates and begin PDA negotiations with developers which meet the criteria.

    After the formation of the IB a year ago, the government entrusted it with developing large hydro power projects (above 500 MW), while hydropower projects less than 500 MW would be developed by the MoE. As per the IB Act, hydropower plants with a capacity of 500 MW and above come under the board’s purview.

    Four large hydro projects—Tamakoshi 3 (880 MW), Upper Karnali (900 MW), Upper Marsyangdi (600 MW) and Arun 3 (900 MW)—are awaiting to sign the PDA with the IB. The IB said it is incorporating comments received from these developers in its PDA draft so as to give it a final touch.

    Apart from these projects, the MoE will sign the PDA with five others, including Lower Arun (400 MW), Balefi (50 MW) and Likhu (120 MW), Upper Trishuli -1 (216 MW) and Upper Marshyangdi ‘A’ (50 MW).

    PDA is an important contract between the government and investors. In the agreement, the government assures the investors that it would avert any possible social, economic or policy-level uncertainties during the construction phase. Generally, issues related to taxes, licence period, free energy, royalty, repatriation rights and parties’ obligations are included in the PDA .

    The IB prepared PDA will be applicable while negotiating with investors of all other mega projects related to infrastructure, tourism, agriculture, mines and minerals and health and education. The IB Act says projects worth Rs 10 billion will be developed by the IB. Secretary at the Prime Minister’s Office Krishna Hari Baskota said the IB template would be a basic standard while dealing with investors of all other mega projects.

    Pant said that as the IB’s PDA will finally shape the understandings and agreement with all other upcoming projects, his office has been spending a longer time in preparing a perfect template.

    Source : The Kathmandu Post