Kathmandu. The Nepal Electricity Authority (NEA) is preparing to sign Power Purchase Agreement (PPA) for hydropower projects with less than 10 MW capacity.

During a meeting with the Independent Power Producers’ Association, Nepal (IPPAN), Acting Managing Director of Nepal Electricity Authority (NEA) Dirgha Kumar Shrestha informed that the process for PPA for projects below 10 MW has started.

During the meeting with the IPPAN delegation, Shrestha said that the NEA has forwarded the process to extend the date for the commercial commencement of commercial production (RCOD). According to him, work has already been started by forming ‘A’ and ‘B’ groups according to the nature of the project and the problem related to the addition of RCOD.

Shrestha also said that they were ready to move ahead by forming a joint mechanism between Nepal Electricity Authority and IPPAN to resolve the problems facing the private sector. According to him, an institutional mechanism was necessary for regular dialogue with the energy producers of the private sector, identifying and resolving the problems.

Shrestha also said that NEA was ready to facilitate the participation of the private sector in electricity trade and broadcasting sector. Stating that the private sector has huge contribution in power production, he said that the government would facilitate to expand the participation of the private sector in electricity trade and broadcasting in the coming days.

During the meeting, IPPAN Chairman Mohan Kumar Dangi urged the NEA to seriously address the problems plaguing the private sector for a long time and to immediately open PPA worth 16,000 MW that has already applied for PPA. “To solve the problems of projects that have not been able to have PPA for a long time, we need to open the limit of 16,000 MW and initiate the PPA process for all eligible projects,” he said. “The suspension of PPA has affected investment, financial management and overall project development of projects that are in the study and construction phase,” he said. ’

Chairman Dangi said that the NEA should pay special attention to not spoil the investment climate due to policy-level and implementation level problems as the private sector has already invested a lot in power generation and was preparing to invest a lot in the coming days as well.

Chair Dangi demanded to move ahead in collaboration with the private sector by scrapping the directive, saying the Electricity Power and Energy Schedule Determination Procedure-2083 BS for the power purchase agreement of hydropower projects issued by the NEA has created more confusion among the private power producers. The problems faced by the private sector should be resolved not as an administrative issue, but as an issue related to the long-term development of energy sector.

Dangi said that the target of optimum utilization of electricity, expansion of internal consumption and export of electricity could be achieved only by strengthening collaboration between the private sector and NEA. He also stressed the need to continue problem-solve-oriented dialogue between the NRA and the private sector in the days ahead.

The demands submitted by IPPAN to NEA include providing compensation to the promoters for the financial loss caused due to delay in the construction of the NEA’s transmission line, ending the practice of ‘contingency’ and ‘take and pay’ PPA until the transmission line is available and ensuring the purchase of electricity produced after the completion of the project. Likewise, the private sector should be involved in the construction of transmission lines, the grid access should be made investment-friendly and the wheeling charge should be determined on a scientific, transparent and just basis.

Likewise, IPPAN has demanded that the PPA rate be reviewed taking into account the cost escalation, inflation and financial situation and for renewal of PPA for the remaining period of the projects having PPA for less period than the production license.

Among the demands put forth by the EPPAN include preparation and implementation of bankable PPAs that are eligible for bank investment as per the international practice, making the grid connection process of private sector projects simple, quick and transparent, and formation of a permanent joint mechanism for regular dialogue between NEA and private power producers, resolving problems and coordinating at policy-level.