Nepal | May 30, 2020

Govt tells NEA to pay for power generated by IPPs

‘Take or pay’ provision to supersede ‘take and pay’ clause in power purchase pact

Himalayan News Service
Share Now:

Kathmandu, January 9

Putting to rest concerns about execution of ‘take or pay’ provision in power purchase agreement, Minister for Energy Janardan Sharma today instructed the Nepal Electricity Authority board to endorse the provision while signing PPA with developers.

Implementation of the provision, which was envisioned by ‘Energy Crisis Prevention and Electricity Development Decade’ a 10-year vision document of Ministry of Energy and already endorsed by the Cabinet had been in limbo for long since the NEA board led by the energy secretary had not okayed it.

This provision will supersede the existing ‘take and pay’ provision in PPA, under which NEA would have to pay only for the quantum of electricity it would purchase from independent power producers. The new provision, on the other hand, entails the country’s sole power off-taker to pay for the electricity generated by the IPPs, whether or not it buys power from them.

Moreover, the new provision will be implemented retrospectively with all the agreements signed since the endorsement of vision document from Cabinet on February 18, 2016.

“Henceforth, ‘take or pay’ will be applicable for all the projects up to 10,000 megawatts as envisioned by the vision document of the MoE,” said Sharma.

He added that this provision would be retrospective for all agreements signed after February 18. Reportedly, NEA has signed PPA with IPPs for around 1,100 MW projects since that date.

NEA had introduced the ‘take and pay’ provision some two years back, much to the dismay of developers, who said the move was ‘regressive’ in attracting investment in hydro-power sector.

In its defence, NEA has said the provision was introduced in view of generation of surplus energy after completion of Upper Tamakoshi Hydroelectric Project in the beginning of 2018 and as the projects that have signed PPA at present will commission power only after couple of years.

However, introduction of the vision document, which projects the country’s energy needs will surge to 10,000 MW in the next decade, contradicted NEA’s suppressed demand forecast, which had prompted it to introduce the ‘take and pay’ provision earlier.

The ‘take or pay’ provision is expected to attract investment in the hydro-power sector as it ensures guarantee of return and help projects achieve financial closure.


A version of this article appears in print on January 10, 2017 of The Himalayan Times.


Follow The Himalayan Times on Twitter and Facebook

Recommended Stories:

More from The Himalayan Times:

Are we doing enough for the mental health of healthcare workers?

The number of coronavirus patients has been increasing over the past few days in Nepal. In the current scenario, it seems like the numbers would further increase in the coming days. Given that healthcare workers and frontline staff are the first responders to manage the ongoing pandemic with limited Read More...

MoHP briefing: Nepal witnesses exponential increase in COVID-19 cases

KATHMANDU: The Ministry of Health and Population (MoHP), in its regular press briefing, shared the latest updates from across the country on government’s response to COVID-19 crisis. As of today, 64,154 tests through Polymerase Chain Reaction (PCR) method and 105,478 Rapid Diagnostic Tests Read More...

Ministry of Home Affairs

Chaurjahari Incident: Govt-formed probe committee begins investigation

JAJARKOT: A five-member high level investigation committee formed by Home Ministry to probe the Chaurjahari incident has begun its investigation from today. The incident occurred when Navaraj BK along with his 18 friends reached Sothi in West Rukum district from Bheri Municipality in Jajarkot Read More...

19 COVID-19 diagnosed individuals discharged, 206 recoveries so far

KATHMANDU: As many as 19 persons earlier diagnosed with COVID-19, admitted at different health facilities across the country, have been discharged, following recovery, confirmed MoHP. Two patients receiving treatment at the Teku-based Sukraraj Tropical and Infectious Disease Hospital, have been d Read More...

What’s behind latest India-China border tension

NEW DELHI: Tensions along the China-India border high in the Himalayas have flared again in recent weeks. Indian officials say the latest row began in early May, when Chinese soldiers entered the Indian-controlled territory of Ladakh at three different points, erecting tents and guard posts. They Read More...

Monkeys steal coronavirus blood samples in India

LUCKNOW: A troop of monkeys in India attacked a medical official and snatched away blood samples of patients who had tested positive for the novel coronavirus, authorities said on Friday. The attack occurred this week when a laboratory technician was walking in the campus of a state-run medical Read More...

Little fear, lots of love as Madrid medics do home rounds amid pandemic

MADRID: With air kisses and palms clasped, elderly patients in Madrid greet medics who come to check them at home during the coronavirus pandemic despite the risks involved. "I don't know if it's right to say it but I've had little fear," primary care nurse Ana Arenal told Reuters after she Read More...

Cilic and Coric to join Djokovic's Balkan tour

BELGRADE: Croatians Marin Cilic and Borna Coric will join world number one Novak Djokovic's tennis tournament to be played across the Balkans June 13-July 5, the Serb said on Tuesday. Their inclusion will complete a formidable field also featuring Alexander Zverev, Dominic Thiem and Grigor Dimi Read More...