Nepal | July 14, 2020

IPPs threaten to halt power generation

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The Independent Power Producers’ Association, Nepal (IPPAN) has warned the government that it will stop generating electricity if the latter does not address the genuine concerns raised by the private developers.

Issuing a statement today, IPPAN has said that the government has insulted the private energy and hydropower developers through the budget of fiscal year 2020-21. This announcement was made by the association after handing over a memorandum to Minister for Energy, Water Resources and Irrigation Barshaman Pun on Monday.

As per IPPAN, the first phase of the protest includes submitting memorandums to the prime minister, minister for Energy, Water Resources and Irrigation, finance minister and director general of Department of Electricity Development.

The next step will include symbolically halting power generation at hydropower plants brought into operation by the private sector across the country. This means, IPPs will halt power generation for a short while with permission from the Nepal Electricity Authority.

The association has mentioned that if their demands are still not met, they will gradually increase the shutdown time of power generation which could lead to instances of load-shedding across the country.

IPPAN has also accused the government, which opened the door to the private sector in hydropower development 85 years ago, of trying to discourage and drive out private players in the sector through the new Electricity Act passed by the Council of Ministers and the budget of the fiscal year 2020-21.

More than two dozen promoters led by IPPAN had gone to hand over the memorandum to the concerned authority. The statement further adds that the private sector will not remain silent if their genuine demands are not met. The private developers have also alleged that the government intends to shut down the private power plants, which have investments of billions of rupees.

The energy ministry has also turned a deaf ear to the requests made to rescue about four dozen hydropower projects that have started facing problems recently, statement adds. IPPAN has stated that nothing was mentioned in the budget regarding rescue measures even when dozens of projects which are in operation or are under-construction have faced problems due to the effects of the coronavirus pandemic.

Shailendra Guragain, president of IPPAN, said that the energy ministry had set up a committee to study the projects and it (the committee) had submitted its report, adding, “But even when the Nepal Electricity Regulatory Commission and Nepal Rastra Bank are positive about such projects, the concerned ministry has not done anything to resolve the problem.”

The previous fiscal bill had provided customs exemption on materials such as penstock pipes and steel sheets used in hydropower construction. However, the budget for next fiscal year has imposed five per cent customs duty and 13 per cent VAT on the said items, which the private promoters have objected to.

“We will not only shut down small projects, but Khimti and Bhotekoshi too,”

Guragain said, adding, if the situation worsens, the IPPs will hand over the keys of their hydropower projects to the government.

At present, there are a total of 580 private hydropower projects that are in operation or under-construction or in the study phase with total capacity to generate 21,000 megawatts of power. The private sector claims that more than Rs 600 billion has been invested in these projects.

A version of this article appears in e-paper on June 3, 2020, of The Himalayan Times.

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