Nepal has long been accepting the monopoly of Power Trading Corporation India Limited (PTC), a nodal agency designated by the Indian government to purchase and sell power with Nepal. [break]
After the endorsement of this deal by India, Independent Power Producers (IPPs) in Nepal will be able to sell power on their own by seeking a competitive market. IPPs will be able to trade power like any other commodity.
"Except PTC, there are about 37 companies in India that trade in power. IPPs will be free to choose any of the buyers that give them the best rates," said Ram Chandra Pandey, the director of Transmission and System Operation at Nepal Electricity Authority.
Given the acute power shortage in the country, Nepal imports about 100 MW of electricity from India. Nepal-India Power Exchange Treaty has the provision of importing only 50 MW of electricity from India at a subsided rate of Rs 6.40 per unit. Nepal has to knock the door of PTC for additional power purchase at a much higher rate of Rs 11 per unit. Worse still, the country has to pay more than Rs 90 million commissions to PTC for power arrangement.
Earlier, Nepal and India had reached an understanding on the power trade agreement in 1996. However, it could not be enforced as the country´s then parliament refused to endorse the deal.
"This time the deal does not warrant House endorsement," Rajendra Kishor Chhetri, under secretary at the Ministry of Energy (MoE), told Republica. He added that if the monopoly of the PTC is broken, the investment of private producers will be protected as they do not have to only rely on the former to sell power.
MoE officials are hopeful that the trade agreement will be endorsed by the Indian government as it has been finalized after a secretary-level meeting of both the governments.
Independent Power Producer´s Association Nepal (IPPAN) Executive Manager Pradeep Gangol said this is a welcoming move from the government. "If the monopoly prevails, IPPs have to sell power at a rate desired by the PTC," he said. "But after the endorsement of the agreement, our bargaining power will increase and we might get good rates."
Vipin Arora of Bhilwara Energy Limited - an Indian joint venture company developing Balefi (50 MW), Mugu Karnali-1 (194 MW) and Humla Karnali (274 MW) hydropower projects - told Republica that the agreement will help. He, however, said, "PTC should not be excluded from trading power if it agrees to carry out its role efficiently as the nodal agency of the Indian government."
Export-oriented joint-venture projects like Upper Karnali (900 MW), Tamakoshi 3 ´A´ (880MW), Upper Marshyangdi (600 MW), Arun III (402 MW), Lower Arun (400 MW), Balefi (50 MW) and Likhu (34 MW) are awaiting Power Development Agreements.
After PDA, these mega projects will enter construction phase. Several other projects have already obtained survey licenses from the Department of Electricity Development.
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