KATHMANDU, Feb 27: Nepal Electricity Authority (NEA) has announced power purchase agreements (PPAs) for hydropower projects up to the capacity of 10 MW.

The NEA has opened PPAs for run-of-river and semi-reservoir hydropower projects up to 10 MW. The Authority issued a notification for PPA on Tuesday.

The 96th meeting of the Board of Directors of the NEA on February 7 decided to remove the quota system for hydropower projects up to 10 megawatts. Now PPAs will be done on the ‘take or pay’ basis.

Officials of the NEA have said that even when the capacity is increased by up to 25 percent, the PPA will not be subject to the PPA limit. During the dry season (December 2 to May 29) and rainy season (May 30 to December 1), the existing rates will be reduced to Rs 8.40 and Rs 4.80 per unit, respectively.

In order to maximize the use of local natural resources and to encourage domestic investors in the hydropower sector, the limit of PPAs set on the basis of a production mix of up to 10 megawatts is not applicable.

According to the NEA, 89 projects up to 10 MW have applied for PPAs. The cumulative production capacity of these projects is 251 MW. Out of that, 44 projects of 195 MW have already had grid connection agreements.