Saving Hydro, Not Delays

The Nepal Electricity Authority (NEA) has extended construction deadlines for 27 hydropower projects totaling 540.47 MW, which is an appropriate step given the challenges these projects have faced. The extension affects the Required Commercial Operation Date, or RCOD, for projects that have previously signed power purchase agreements but did not complete construction on time. Instead of putting all delayed projects in one basket, the NEA has considered physical progress, funding, licensing, contractual responsibilities, and whether its own incomplete transmission lines or substations contributed to the delay. When you look at the numbers, that strategy makes sense. Nepal presently has 320 hydroelectric projects under construction, totaling 8,292 megawatts. Group A has 150 projects with a total capacity of 4,491 MW, whilst Group B contains 68 projects with a capacity of 1,420 MW. Projects in both groups can be extended if they produce evidence that they have been working. Thirty projects, totaling over 1,292 MW, have already applied. Essentially, the NEA is attempting to distinguish between developers who have actual challenges and promoters who obtained deals and then hardly progressed. That difference is especially important in the aftermath of the Bhotekoshi flood. The flood caused significant damage to hydropower projects and other infrastructure. Rebuilding damaged infrastructure is difficult since it requires time, extra capital investment, technical effort, and equipment. When a flood has ruined a project, asking a developer to keep to the original deadline is impossible. A power plant cannot begin supplying energy unless the transmission infrastructure is complete.

The financial aspect is also an important aspect, as hydropower projects require significant investment, which is often financed through bank loans. Delays result in higher interest, increased building expenses, and delayed revenue. If a nearly completed project fails financially due to a lack of acceptable extra time, everyone concerned loses, including the developer, financiers, the NEA, and, eventually, Nepal's power industry. As a result, extending deadlines helps safeguard previous investment in building. It can also save partially finished projects from becoming stranded assets. Nepal requires more energy generation, and 540 MW is not a little sum that can be shrugged off. Nepal already has a dismal track record of infrastructure projects falling behind schedule. One extension leads to another, prices continue to rise, and nobody seems to be in charge at any point. Hydropower cannot follow the same model. A power purchase agreement is more than simply papers ensuring that the NEA will buy electricity. It results in reciprocal obligations. The developer receives a guaranteed market, but he or she must also demonstrate financial and technical competence and finish the project within the term agreed upon. Otherwise, timelines lose their regulatory significance. This is why the NEA's categorization into four groups is important. A project that is delayed because a flood has devastated infrastructure should surely not be viewed the same as one whose promoter failed to get finance or only recently began development.

However, the categorization will only be effective if the NEA enforces it. Physical progress must be validated in the field. Extensions should include quantifiable goals, monitoring, and punishments if developers fail again for no valid cause. The NEA must also take responsibility for its role in the crisis. Developers cannot be held responsible when transmission lines and substations remain incomplete and completed plants have no place to put their power. Extending deadlines in the aftermath of a tragedy like the Bhotekoshi flood is not a sign of weakness. It is common economic sense. Making extensions regular, on the other hand, would gradually erode the significance of project deadlines. Nepal requires megawatts of power, and developers impacted by actual calamities deserve time to rebuild. However, accountability is lost when extension becomes a regular act. The NEA should allow important projects to recover but should not award the developers who cause delays in completion of projects deliberately. Unforeseen events like natural disasters require flexibility on the part of the NEA, whereas poor performance does not.