Mar 30, 2016- Uncertainty looms large over the development of the 750MW West Seti Hydropower Project, as the Nepal Electricity Authority (NEA) has failed to assure China Three Gorges Corporation (CTGC) about the market once the project starts generating power, a sub-committee under the Parliamentary Agriculture and Water Resource Committee (AWRC) has said.

    A recent field study by a team of lawmakers under CPN-UML leader Nirmal Prakash Subedi said that the CTGC has sought to ensure the market size for the power to be produced by the national pride project.

    “Neither NEA has signed power purchase agreement (PPA) nor there is guarantee of power export to India,” reads the report. “This has left the project’s development in uncertainty.”

    A senior NEA official admitted that the finding of the parliamentary sub-committee report is “close to reality” and the authority is working to address those issues. “We are not clear about the actual electricity demand in the country,” said NEA Managing Director Mukesh Raj Kafle. As the sole power purchaser in the country, the NEA is wary about possible losses due to surplus electricity.

    However, the government sources say that the 750 MW project is being developed taking into account the domestic power demand. “The unavailability of market for the energy wouldn’t be an issue as domestic demand is increasing by the year,” a source said. Last month, the government had declared energy emergency, unveiling plans to boost electricity generation to 10,000MW in the next 10 years.

    “The government has forecast domestic energy demand will reach about 6,000MW by 2030,” said Radhes Pant, chief executive of the Investment Board Nepal (IBN). “So, the suggestions that the country lacks market for more power are baseless.”

    On the PPA, Pant said that it is ‘too early’ to discuss on it. “First of all, a joint venture (JV) agreement between NEA and CTGC needs to be signed. That agreement will be followed by a financial closure and a project development agreement (PDA),” he continued. “Only on the basis of financial closure and PDA can we estimate the project’s cost more accurately, which will pave the way for the PPA.”

    But the NEA said it is having difficulty in taking a decision on PPA of the West Seti as it does not have guidelines to sign a PPA for a storage-type hydel project. Almost all of Nepal’s hydropower projects are run-of-the-river type.However, Kafle said that working on to finalize a PPA template for storage project very soon.

    “In general cost of storage type project is higher than run-of-the-river type but once the template for storage project comes out it will help us to sign PPA,” he said.

    Source : The Kathmandu Post