May 21, 2024, Tuesday
Nepal 1:37:26 pm

NEA opens PPAs with private parties for 1500MW

The Nepal Weekly
February 21, 2023

Nepal Electricity Authority (NEA) has started working on power purchase agreements (PPA) with the private developers of run-of-the-river (RoR) hydropower projects to undertake or pay modality 1,500MW of electricity to be generated by various proposed hydropower projects. The decision was brought into action eight months after a Cabinet meeting ordered the power monopoly to do so.

A Cabinet meeting in last June had decided to open PPA signing for 1,500MW energy between the state-owned utility and privately operated power producing companies amid their constant pressure at all levels.

On the basis of the Cabinet decision, the NEA’s 930th board meeting chaired by Deputy Prime Minister and Minister for Energy, Water Resources and Irrigation Rajendra Lingden recently decided to sign PPAs with the private parties depending on the date of grid connectivity agreement.

NEA so far has signed connection agreements with 136 projects for a total capacity to generate 3,192MW of electricity. It is expected the private companies will develop to take the hydropower within 5 to 7 years after PPA.

The authority said that the developers would receive Rs8.40 per unit in the dry season and Rs4.80 in the wet season as per the existing policy. NEA has so far signed PPA with several projects with a combined capacity of 6,366MW.

To the same context, Independent Power Producers’ Association, Nepal (IPPAN) has welcomed the Nepal Electricity Authority (NEA)’s decision to open the power purchase agreements (PPAs) for upto 1,500 MW from run-of-the-river (RoR) hydropower projects on February 9. Following the NEA’s decision, the association has completed the necessary procedures and has applied for PPAs totalling 1,100 MW from 240 projects.

Organising a press meet recently in Kathmandu, the association has welcomed and expressed their gratitude towards the NEA’s decision to open PPAs for 1,500 MW from RoR projects.

Speaking at the press meet, Krishna Prasad Acharya, president of IPPAN, shared that development of the energy sector had been delayed and the investments were at high risk as the PPA for RoR projects were halted for the past four years pushing the entire energy sector to a critical state, and affecting investment environment of the country. “We welcome the NEA’s decision as the private sector had been waiting for this day since long,” he said.

“While the private sector has invested about Rs 12 trillion in the energy sector, the contribution of the private sector has reached over 1700 MW of the total 2,430 MW capacity of the country. Last year, we faced a loss of Rs two billion after NEA refused to purchase power when the country’s capacity was around 2,200 MW. Around 800 MW will be added to the national grid by the end of this year taking the country’s energy capacity to 3,000 MW,” he said.