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KATHMANDU, June 24: The government has amended a clause in the budget following controversy over the ‘take and pay’ provision in hydropower.
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel on Tuesday proposed a revision to Clause No. 227 of the budget during a session of the House of Representatives, clarifying the government's position on the issue.
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As per his revised proposal, the clause now states that power purchase agreements (PPAs) can be signed for hydropower projects that are confirmed to have domestic consumption or export potential and for which the Nepal Electricity Authority (NEA) can ensure payment obligations based on financial risk assessment.
Previously, Clause 227 stated:
"Substations and transmission lines will be constructed in accordance with the schedule of hydropower project completion. A policy will be adopted to maintain balance between electricity production and consumption while signing PPAs. It will be signed for run-of-river projects under the 'take and pay' model."
The clause had sparked intense debate between the ruling CPN-UML and the Nepali Congress, ultimately leading to an agreement to revise the wording.
