KATHMANDU, April 4: The government has formed a high-level committee to study the current situation of Power Purchase Agreement (PPA) with an aim to make the related work more result-oriented, transparent and accountable.
According to the Ministry of Energy, Water Resources and Irrigation (MoEWRI), a panel led by the MoEWRI’s Joint Secretary of Rajan Bhattarai has been mandated to study the current status of the PPA being conducted by the Nepal Electricity Authority (NEA).
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The panel has been designated to identify policy, technical, economic and legal bottlenecks in the PPA process. In addition, it has been given the responsibility of recommending necessary reform measures to make the PPA process more transparent, competitive and conducive to the national interest in the future.
Private sector power developers have long been complaining about the delay in PPA process by the related government authorities including the NEA. According to the Independent Power Producers’ Association, Nepal (IPPAN), PPAs for projects totaling about 13,000 MW—whose developers had already applied—have been put on hold. Most of the time, the controversies about “take or pay” and “take and pay” policies has been holding back issuance of PPA, creating disagreement between the policy makers and concerned power developers.
Last month, the government introduced differentiated PPA rates for reservoir-based hydropower models, aiming to facilitate the private power developers in the segment. Under the new arrangement, PPAs for projects up to 100 MW will be capped at a maximum of Rs 14.80 per unit in winter and Rs 8.45 per unit in the rainy season. For projects above 100 MW, the PPA rate will be determined based on the actual project costs.
Likewise, the MoEWRI has also formed a separate panel to investigate the status and progress of the permits issued by the Department of Electricity Development till the date. The five-member committee led by Joint-secretary of the MoEWRI Mohan Shakya has been mandated to identify slag in policy, technical, financial and legal framework in the process of issuance of power development permits.
