Kathmandu. The National Policy Concern and Research, an independent policy research body, submitted a memorandum to the government for the greater development of the energy sector, including the review of PPA before and after 2070 to the extension of RCOD deadline.

The memorandum submitted to the Prime Minister and the Energy Minister with the signatures of 41 people including the chairperson of the organization, Advocate Nanda Bhandari, shows that many of the issues raised by the private sector are justified.

The memorandum submitted by the organization has suggested that the power purchase agreement (PPA) should be reviewed to meet the targets of power generation set by the government, the PPAs signed before 2070 BS should be adjusted as per the current price, all the projects should be given price hike eight times and the commercial power generation date (RCOD) of the projects delayed due to government agencies should be extended.

Likewise, the government has suggested that the duration of the power generation license should be minimum 40 years as per the provisions of the Electricity Act, the solar project should be given a fixed PPA rate, if there is any competition, the technical proposal should be sought along with the financial one, the operation period of the solar project should be 30 years and the transmission line and substation should be constructed in the vacant land instead of allowing solar power only in the areas where the transmission line and substation are available ।

The letter calls for policy reforms in the energy sector, creating investment-friendly environment, making the power production system effective and ensuring energy security.

Lack of coordination among government agencies, lack of consultation with stakeholders in policy-making and unclear legal provisions have affected domestic and foreign investment in the energy sector. It is claimed that such problems have had a negative impact especially on hydropower and solar energy.

Bring parity in PPA before and after 2070 of hydropower

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In the memorandum submitted by the organization, it has been stated that PPAs signed before 2070 BS and PPAs signed after that have been done injustice to the promoters. The PPA signed before 2070 BS has a provision to increase the price only 5 times. Whereas, there is a provision to increase the price of PPA up to 8 times. In the beginning, the hydropower projects were not able to estimate the cost. Stating that the hydropower projects they built while they were learning were sick due to uneven PPA, they were told that they would be able to survive only if they were given the same PPA rate and price hike as they are now.

Pointing out some policy weaknesses in the past, the memorandum states that the quality test of machinery and equipment used in hydropower projects has not been effective, which has affected power generation. Stating that many projects with low power purchase agreement before 2070 are facing financial crisis, the committee has also demanded the government to extend the license period for such projects and review the PPA.

Give the license duration at least 40 years, add RCOD

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The memorandum also complained that the legal provision that allows the private sector to maintain power generation license for at least 40 years has not been implemented effectively. Bikram Shrestha, a member of the National Policy Concern and Research, said that the project developers have been taking around 10 years out of the 35-year production permit to be issued for 35 years due to delay in the construction period, delay in the construction of the transmission line and settlement of local disputes.

He said that the government has also suggested the government to add RCOD to many hydropower projects as they have not been able to get approval from the Ministry of Forest and Environment and other bodies.

Similar arrangements should be made for hydropower and solar energy

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The memorandum also demanded the implementation of similar provisions for solar energy along with hydropower. He also suggested determining the PPA rate as fixed for solar power as in hydropower and reviewing the PPA rate in every 2 years and issuing the license on the basis of “first come, first first service”. It has also been suggested that the Nepal Electricity Authority (NEA) has given permission to generate solar power only around the transmission line and substation as there is a risk of erosion of arable land.

The meeting urged the government to create an investment-friendly environment for the construction and operation of solar power projects of around 3000 MW as per the country’s need.

The memorandum states that the reform in energy sector would make significant contribution to economic development, creation of employment and energy security of the country, urging the government to make policy reforms immediately.

A long-term strategy is needed to increase the production of alternative energy such as solar energy, wind energy and biomass along with hydropower. The corporation has also demanded the government to strictly enforce the quality standards saying the expected power generation has not been possible due to the installation of sub-standard solar panels in the solar energy.