NEA hikes PPA rate for 7 projects

KATHMANDU, JUN 26 -

The Nepal Electricity Authority (NEA) has revised the power purchase agreement (PPA) rate for seven hydropower projects to help them improve their ailing financial health. A meeting of the NEA board held on Sunday jacked up the PPA rate by 20 percent for these projects being built by the private sector.

The projects whose PPA rate has been revised are Lower Modi I (9.9 MW), Akhu Khola I (8.4 MW), Indrawati Khola (4.5 MW), Bijayapur I (4.4 MW), Jiri Khola (2.2 MW), Middle Chaku (1.8 MW) and Lower Chaku (1.7 MW).

NEA officials said that as per the proposals submitted by the promoters of these projects, the payback period has been fixed at seven years from the date of start of commercial operation.

Energy secretary Hari Ram Koirala, who also chairs the NEA board, said that the higher rate offered to the under-construction projects was part of the Load-Shedding Reduction Action Plan introduced in February 2012. “The government will bear the financial burden that will result from the increased PPA rate,” said Koirala. He added that though the incentive has been provided to seven projects at present, all the other projects scheduled to come online by 2014 will received them gradually.

Last June, the Ministry of Energy (MoE) had hiked the rate for new projects with a capacity of less than 25 MW by 20 percent to Rs 8.40 per unit during the summer and Rs 4.80 per unit during the rainy season. “The same rate will be applied for these seven projects,” added the member.

Following last June’s rate hike, the Nepal Micro Hydropower Development Association (NMHDA) had asked the government to raise the rate for under-construction and completed projects too. Submitting a list of demands to the MoE, the NMHDA had demanded an increment in the PPA rate for the “payback” period, exemption from delay charge, VAT waiver and refinancing facility.

Subsequently, the ministry formed an internal committee to study the relevance of the NMHDA’s demands. “After the committee’s green signal, the NEA has revised the PPA rate,” said Anup Kumar Upadhya, joint secretary at the ministry and a member of the committee.

The NEA has also exempted these seven projects from the delay charge. “As per the proposal of the promoters of these projects, the commercial operation date is within this year,” said Sher Singh Bhat, director of the NEA, “As they are currently under construction, the delay charge has been waived.”

NMHDA executive member Dev Raj Khadka said that the NEA’s decision to provide relief measures to the seven projects will help them boost their financial health and encourage smooth construction.

He also asked the government to introduce similar facilities for projects that have been completed.

According to the NMHDA’s data, construction of 15 projects with a combined capacity of 27 MW has been completed.

Source: http://www.ekantipur.com/2012/06/26/business/nea-hikes-ppa-rate-for-7-projects/356186/