NEA's power purchase rate deters developers

KATHMANDU, Oct 10: At a time when the entire country is reeling under acute power shortage, the apathy of the Nepal Electricity Authority in inking deals with small power producers has left 117 hydro projects with total installation capacity of 1580 25 MW in a limbo.



Investors of these projects claim that NEA has not paid any heed to their demand of “slightly” increasing the rate of power purchase in the existing Power Purchase Agreement (PPA) structure. This is why the projects have been shelved for over two years, claim power developers.[break]



The existing standard rate fixed by NEA board of directors for hydro projects below installation capacity of 25 MW is Rs 4.00 per unit during wet season (mid-April to mid-August) and Rs 7.00 per unit during dry season.



However, developers say that power purchase rate fixed by the NEA is not feasible in the wake of increased lending rate of financial institutions.



“NEA rate of power purchase was somewhat appropriate when financial institutions provided loans at 9-10 percent interest,” said Bijaya Man Sherchan, promoter of Tungun Thosne (4.3 MW) and Khani Khola (2 MW) projects.  He argued that since financial institutions have made reviews in their lending rates NEA must also revise its standard power purchase rate.



“Current lending rates are at 15-16 percent. Therefore, entering on PPA on the basis of NEA"s existing purchase rate is not feasible,” said Sherchan, who is also a member of Water and Energy Commission.



He further added that the investors" requests to extend transmission line up to the grid have fallen on deaf ears.



According to the developers, if NEA works in tandem with them, the country would have an additional 1580 MW of electricity within three years.



At present, hydro projects under operation have the installation capacity of only about 630 MW. However, electricity generation is much lesser given water levels in the reservoirs frequently going down.



Asked to comment, Sher Singh Bhat, director of NEA"s Power Trade Department said the board of directors has fixed the power purchase rate and that it was not under his department"s jurisdiction to review it.



NEA´s Executive Director Jivendra Jha was not available for comments.NEA´s power purchase rate deters developers

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