Kathmandu, June 29

Nepal Electricity Authority (NEA) — the state-owned power utility — has signed the power purchase agreement (PPA) with Tanahu Hydropower Project today.

The hydropower project with 140 megawatt installed capacity is the first ever reservoir hydropower project in the country and is located at Tahahun district.

Kul Man Ghising, managing director of NEA, and Pradip Kumar Thike, managing director of Tanahu Hydro, signed the PPA today.

Tanahu Hydropower is a wholly-owned subsidiary of NEA. It is required to commence commercial operation from April 12, 2024, as per the agreement.

As per the PPA, NEA will pay Rs 12.40 per unit during the dry season that is, between December and May and Rs 6.08 per unit during the wet season, which is in between June and November. The agreement has a provision allowing the company to hike per unit price by three per cent up to eight times in a year.

The agreement mentions that the hydropower project will have to supply 178.9 million units of electricity to NEA in the dry season and 323.6 million units in the wet season. The power generated by the plant will be evacuated to the national grid through the 220kV Damauli-Bharatpur transmission line.

Tanahu Hydro has already paid land compensation to the locals. The project has nearly completed constructing physical infrastructure like buildings and access road, while the process to procure hydro-mechanical and electro-mechanical equipment and construct the transmission lines is in the final stage. The company also said that the process to select the contractor for civil works will be finalised soon.

The total cost of the project is estimated at $506 million, of which Asian Development Bank will provide $150 million, Japan International Cooperation Agency will contribute $184 million, European Investment Bank will give $85 million and NEA will chip in $87 million.