Kathmandu. The government has decided to scrap the permits of 38 hydropower projects with a capacity of 1,388 megawatts that have been in zero progress for a long time through the Power Purchase Agreement (PPA).

A high-level committee formed by the Ministry of Energy, Water Resources and Irrigation to review the current status of the licenses issued by the Department of Electricity Development as per the government’s 100-point governance reform action plan has suggested to the Ministry to identify such projects and cancel the licenses.

The committee has prioritized 15 projects with a capacity of 220 MW with overall progress above 50 per cent during the five years of obtaining the license. Likewise, 131 projects with a capacity of 5,642 MW that have achieved close to 50 per cent progress in five years have been included in the list of encouragement to be encouraged.

Similarly, 38 projects with a capacity of 1,124 MW that are currently working but have not been able to meet the target due to various reasons have been included in the list of facilitators to complete the projects at the earliest. However, the government has recommended taking action against 75 projects with a capacity of 4,121 MW in the list of problematic projects in the same period.

The budget statement for the fiscal year 2083/84 states that the license of the projects that have PPA but have not started construction will be canceled. This paves the way for taking action against the projects that do not work for a long time after taking permission.

According to the report of the committee, the Department of Electricity Development has recommended scrapping 11 projects with a capacity of 169 MW that had taken power permit before 2076 BS but have not made any progress so far. The committee has recommended to initiate the scrapping process as per Clause 8 of the Electricity Act, 2049 BS as the projects have not complied with the conditions of obtaining the generation license and have not worked as per Rule 21 of the Electricity Regulations, 2050.

The committee has also recommended issuing survey license in a competitive manner on a priority basis to achieve the national goal by ending the license raj. The report has suggested various policy reforms to make the license distribution system more transparent, competitive and in line with national interest.

The committee has pointed out the need of maintaining uniformity through necessary legal amendments by reviewing the contradictory and ambiguous provisions in the Electricity Act-2049, Electricity Regulations-2050, Hydropower Development Policy-2058 BS and directives related to licensing.

Likewise, the committee has suggested removing duplication of jurisdiction between the Investment Board, Industry Ministry and Energy Ministry regarding the license and investment approval of electricity projects. The report states that important issues like amendment of license, management of project bank and sale and transfer of license should be incorporated in the regulation by incorporating them in the legal level above the directive.

Similarly, the committee has suggested that the government should make arrangements to change the share structure of the promoter company only after obtaining the production license during the five years of the survey license. This will encourage real investors. The committee has also suggested formulating a 5-year power development plan for the integrated development of energy sector and formulating plans for consumption, export, transmission, distribution and generation accordingly. The committee has also pointed out the need to make legal provisions in line with the national interest by removing ambiguities regarding the process of transfer of ownership of the project, operation management and revenue collection after the expiry of the production license.

Joint Secretary Mohan Shakya is the coordinator of the Ministry of Energy, Water Resources and Irrigation. The five-member high-level committee was formed with Diwas Bahadur Basnyat, Nikunj Bhandari, Shalikram Bhandari and Jeevan Rana Magar as members.

The committee had submitted its report to Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha. The committee has also identified 176 projects with less than 10 MW capacity that need immediate PPA. The total capacity of such projects is 1,164 MW.