At a time when the construction of the transmission line and related substations has not been completed, the Department has initiated the process to end the contingency plan as per the agreement with IPP.TAG_OPEN_p_65

On July 2 TAG_OPEN_p_64 6, the Department had requested the Authority to implement the decision based on the agreement reached between the Department of Power Trade and IPP. Acting Executive Director Dirgha Kumar Shrestha then directed the System Operation Department to implement the system.

However, only one circuit of the Markichowk-Bharatpur 220 kV transmission line had come into operation at that time and the construction of Markichowk-Udipur transmission line and related substation had not been completed yet.TAG_OPEN_p_63 The technical staff of the NRA have expressed disagreement saying that the alternative arrangement has been terminated when such structures are incomplete.

Tharka Bahadur Thapa, director of the Department of Electricity Trade, said that 90 percent of electricity is being supplied from the Markichowk-Bharatpur section.TAG_OPEN_p_62 According to him, there is no problem in the supply of energy from the existing 220 KV line.

Earlier, NEA had been purchasing electricity from Marsyangdi, Dordi and Trishuli corridor hydropower projects through alternative arrangement under the contingency plan after the power generated from the hydropower projects could not be supplied in full capacity due to lack of transmission infrastructure.TAG_OPEN_p_61 In this arrangement, it was agreed to supply electricity as per the available capacity without causing compensation to both the parties.

} However, after the end of the alternative provision, the provisions related to ‘take or pay’ and compensation in the electricity purchase and sale agreement are going to be activated. In such a situation, even if the capacity of the transmission line cannot supply electricity, there is a risk that NEA will have to pay or compensate as per the agreement.

According to NEA, Super Dordi (TAG_OPEN_p_59 54 MW), Nyadi (30 MW), Dordi Khola (27 MW), Upper Dordi A (25 MW), Dordi Khola-1 (12 MW), Super Chepe (9.05 MW), Chepe Khola (8.62 MW), Hidi Khola (6.82 MW) and Sanjen Khola (78 MW) are in operation.

According to NEA sources, the NEA may have a compensation liability worth millions of rupees monthly even if the electricity generated from these projects is not fully supplied during the rainy season.TAG_OPEN_p_58 Overall, the potential liability is estimated to be more than one billion rupees.

Earlier TAG_OPEN_p_57, the NEA and IPP had agreed to end the alternative arrangement only after the completion of the Marki Chowk-Bharatpur transmission line and to complete the Udipur-Marki Chowk section within three months. However, questions have been raised that the decision was implemented when the double circuit line has not been completed and only a one-way circuit has come into operation and the construction of another section is still pending.

Chandan Ghosh, director of the System Operation Department, acknowledged that the Udipur-Markichok transmission line is still under construction.TAG_OPEN_p_56 According to him, only single circuit of Markichowk-Bharatpur section is operational at present.

Acting Executive Director Shrestha, however, claimed that there is no situation to pay additional compensation to the NEA as per the current agreement.TAG_OPEN_p_55

On the other hand, the technical staff of the NEA have said that it is a risky decision to end the alternative arrangement when the transmission structure is not fully ready, the ‘grid impact study’ has not been done and only one circuit is in operation.TAG_OPEN_p_54

The LDC had also sought clear information from the department about when the alternative provision of which project would end and when the ‘take or pay’ provision would come into effect.TAG_OPEN_p_53 Initially, the Department had said that the provision would come into effect only after the amendment of the power purchase agreement, but later after a meeting with IPP, it was of the view that it should be implemented immediately.

Voices are being raised within the NEA that the agreement reached between the department and IPP should be implemented only in the interest of the organization, the true capacity of the transmission system and the existing power purchase agreement.TAG_OPEN_p_52 According to the employees, if the NEA is not able to supply electricity if the transmission infrastructure is not fully prepared and the alternative arrangement is removed, it may have to pay as per the agreement, which may add a huge financial burden on the organization.

However, the actual liability to be borne by the NEA will be determined only on the basis of the power purchase agreement of the concerned project, the condition of electricity supply, the capacity of the transmission line and the date of expiry of the alternative arrangement.TAG_OPEN_p_51 g.