MoE approval paves way for new rates for PRoR, storage projects

Kathmandu, April 22

Developers of peaking run-of-the-river and reservoir projects will soon get new power purchase agreement rates from Nepal Electricity Authority as the Ministry of Energy has endorsed the recommendation of a sub-committee formed by the NEA board to study the financial impact on NEA while implementing the new tariff.

The MoE approval has paved the way for the NEA board to decide on new rates, after which generators of reservoir projects can sell per unit electricity at Rs 12.40 during dry season (from December to May) and at Rs 7.10 during wet season (from June to November).

For PRoR projects, the rates have been set at Rs 10.55 and Rs 4.80 per unit for dry and wet seasons respectively. Currently, NEA has been offering Rs 8.40 and Rs 4.80 per unit for the dry and wet seasons respectively to RoR projects.

In January this year, the MoE had proposed these aforementioned rates for PRoR and reservoir projects and also extended the dry season period from four to six months.

However, the sub-committee formed by the NEA board has floated a few recommendations on implementation of new rates. The NEA board has sought consent from the MoE before taking any decision on the subcommittee’s recommendations.

The sub-committee led by board member Chet Raj Joshi set a standard for PRoR projects to provide a level playing field so that all the projects could operate in full capacity even if it was only for an hour during peak load time. The sub-committee recommended the peaking rate for such projects by calculating the standard tariff fixed for PRoR projects of six hours worth Rs 10.55 per unit.

“This means projects operating in full capacity during peak hour in dry season will also get reasonable rates for the electricity they produce,” said Power Trade Department Chief of NEA Prabal Adhikari, who is also spokesperson for the NEA.

As the MoE has instructed NEA to expand the dry season from four to six months (from December to May), it has also sought 30 per cent of total energy production in the dry season. To meet this provision, power plants need to operate in full capacity for a longer period and developers have to lower the capacity of the project to meet the energy demand during dry season.

The sub-committee, however, has recommended that the earlier provision of a four-month dry season (mid-December to mid-April) and 15 per cent energy requirement during dry season should not be scrapped. It has also said both options should be provided to developers.

Most importantly, the sole power off-taker has sought timely revision of electricity tariff for consumers as it is hindering implementation of the new tariff structure for generators.