Nepal | September 21, 2020

IPPs demand revision of power purchase rates

Himalayan News Service
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Kathmandu, September 18

Stating that the independent power producers (IPPs) are continuously losing their revenue due to rivers drying up and disparity in power purchase rates set for
the projects initiated by the IPPs, foreign investors and the government, the private hydropower developers have demanded the government to revise the existing rates.

Organising a programme titled ‘Hydropower Development and Investment-Friendly Environment’ here today, the developers said that the prevailing rates are unfair to the IPPs and should be revised without delay.

Kumar Pandey, vice-president of Independent Power Producers’ Association, Nepal (IPPAN), said, “Though the government has fixed the power purchase rate for IPPs at Rs 4.80 per unit in the wet season, the Nepal Electricity Authority (NEA) has been paying us between Rs 1.74 and Rs 3.20 citing various penalties.”

Stating that the developers should not be held responsible for drying up of the rivers, which in turn reduces the electricity generated from hydropower projects, he said, “The government should be considerate of this situation, which is the result of climate change.”

He further criticised differential treatment for domestic and foreign investors in the energy sector. “For instance, NEA’s PPA rate for foreign investment projects like Khimti, Bhotekoshi and Marsyan-gdi has been fixed at Rs 10.95, Rs 11.16 and Rs 7.35 per unit, which is not fair to us,” he explained.

NEA is liable to pay 55 per cent of the bill in US dollars and 45 per cent in Nepali rupees in the aforementioned three projects.

In 2017, the government had fixed power purchase rates at Rs 4.80 to Rs 12.40 for hydropower projects based on their type — reservoirs, run-of-the-river (RoR) and peaking run-of-the-river (PRoR).

The PPA rate for reservoir projects had been set at Rs 12.40 per unit from December 1 to May 28 and Rs 7.10 from May 29 to November 30. Similarly, the PPA rate for hydroelectricity generated through the RoR had been fixed at Rs 4.40 per unit for wet season and Rs 8.40 per unit for dry season. For PRoR, the PPA rate had been fixed at Rs 4.40 to Rs 10.55 per unit.

The PPA rate is high during dry season that lasts for six months beginning December 1 to May 28 and comparatively low during rainy season from May 29 to November 30.

Speaking at the programme, former prime minister Madhav Kumar Nepal said the government needs to provide more facility to the private developers to encourage them. Commenting that the hydropower sector in the country is highly corrupt, he opined that the private developers need to expose the corruption plaguing the sector for its betterment.

Similarly, former finance minister Ram Saran Mahat said that the government should promote private sector. “In the present scenario, the government should allow the private sector to fully handle the development of hydropower sector.” Mahat also said that the politicians and the government should play a supportive role for the country to progress.

A version of this article appears in print on September 19, 2019 of The Himalayan Times.

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