Nepal | August 10, 2020

House panel seeks Khimti Hydropower Project study report

Himalayan News Service
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KATHMANDU, JULY 27

As the government has been dilly-dallying in acquiring 50 per cent ownership of the 60-megawatt Khimti Hydropower Project, the Agriculture, Cooperatives and Natural Resources Committee under the Federal Parliament forwarded a letter on Sunday to the Ministry of Energy, Water Resources and Irrigation (MoEWRI) directing it to submit the project’s study report within three days.

The committee has also started a study on the transfer of ownership of the Khimti Hydropower Project. It decided to intervene after there was delay in the new power purchase agreement (PPA) and transfer of rights.

Earlier too on July 19, the committee had written a letter asking the energy ministry for documents related to the PPA and Project Development Agreement (PDA) of the project.

Meanwhile, Purna Kumari Subedi, chairperson of the committee, has formed a sub-committee to study all the documents related to Khimti project. “We have sought details on the management, operation and transfer of rights of Khimti in the study,” she informed.

According to the PPA and PDA of Khimti Hydropower Project signed with Himal Power Ltd — the project developer — 50 per cent ownership of the project needs to be acquired by Nepal Electricity Authority (NEA) after 20 years of operation. As per the same provision, the PPA was completed on July 10.

NEA had formed four sub-committees to study the new PPA, transfer of ownership and management of the project. The study report was submitted to the MoEWRI earlier.

The energy ministry had previously formed a team led by Joint Secretary Prabin Aryal, and comprising of officials of NEA to facilitate the ownership transfer process and form a joint venture company to operate the project.

However, there has been no tangible progress in forming the company yet.

Citing the difficulties created by the outbreak of the coronavirus pandemic, both NEA and MoEWRI have been delaying in inking the new agreement.

Meanwhile, NEA has yet to fulfil the set preconditions before taking 50 per cent ownership from Himal Power Ltd (HPL), which currently has 100 per cent ownership of the project. HPL has been tasked with developing the project under a 50-year lease contract with government.

As per the Project Development Agreement, a joint venture (JV) company needs to be formed. The JV company will then determine and certify the valuation of the project site, undertake share distribution, and determine new power purchase rate. Likewise, the company will also form a new board of directors, set up a management team and integrate employees, among others.

NEA had initially signed the PPA with Khimti at 5.2 US cents per unit, which was later revised to 5.9 cents. The authority is buying power at up to Rs 21 per unit of electricity generated from the project as the price of the dollar has surged massively.

A version of this article appears in e-paper on July 28, 2020, of The Himalayan Times.

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