KATHMANDU – The government, focusing on the long-term development of energy sector in the country, has paid attention to construction of reservoir-based hydro power projects and expansion of transmission lines.
Recommendation to construct reservoir-based hydro power project and extension of period of power purchase agreement (PPA) to 50 years among others has been put forward for energy security by the ‘Report on the policy arrangement regarding power purchase and sale -2080 BS’.
The report was prepared by a taskforce coordinated by Sanjeev Dev, Joint-Secretary at the Ministry of Energy, Water Resources and Irrigation. Joint-Secretary Dev shared that the report proposed that the PPA period be extended up to 50 years in consideration of investment and security of energy sector.
The private sector, however, has not invested in any of the semi-reservoir based and reservoir-based hydro power projects yet. A majority of the hydro power projects demanded for PPA are based on run-of-river hydropower project.
Such hydro power projects which operate in full capacity during monsoon are producing electricity in low capacity in winter. Hence, the incumbent government laid its attention on development of semi-reservoir and reservoir-based hydro power projects.
There’s a question on the side of government regarding how much time is to be given regarding PPA period. The electricity management authority needs to have certainty about how much electricity would be added in the national grid in which year.
The Monetary Policy unveiled by the Nepal Rastra Bank in the current fiscal year stated that the scope of investment in energy sector could not be expanded and thus the private sector demanded creating an easy and enabling environment for investment for big number of entrepreneurs being attracted towards construction of hydro power projects.
Independent Power Producers’ Association, Nepal (IPPAN) has demanded that deadline of the projects with the capacity up to 100-MW should be determined for three years after the date of the completion of PPA and four years to the projects between 100 MW-500 MW for the same.
Similarly, fiscal management period of the projects above 500-MW should be determined for five years, asked the IPPAN. At present, most of the projects invested by private sector in the country are of capacity of 100-MW.
The 10th review meeting of India-Nepal Line of Credit (LOC) held between Nepal and India on August 10 this year decided to accelerate the expansion of 400-KV Dhalkebar-Bhittamod transmission line as well as other electricity transmission infrastructures.
Similarly, the Indian government has agreed to invest around USD 679.8 million under LOC for the construction of Bheri Corridor, Nijgadh-Inaruwa, Gandak-Nepalgunj transmission lines and sub-station of these transmission lines.
The government of Nepal is making necessary preparation to construct different projects including Budhigandaki, Dudhkoshi, Upper Arun from the current fiscal year for energy security and to fulfill the demand of power of winter season. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ during the meeting with office bearers of Gandaki rural municipality on last Monday expressed commitment to lay the foundation stone for the Budhigandaki hydel project soon addressing the demands of locals.
The Nepal Electricity Authority (NEA) is preparing to implement the Dudhkoshi Hydropower Project while the financial resources are being searched for the Upper Arun. The World Bank has expressed its interest in investing in the Upper Arun. The Report has also advised the government to not apply a queue system for the projects up to 10 megawatts for the implementation. However, the document is yet to be endorsed by the NEA board of directors.
Though the private sector has welcomed most of the provisions in the report, Independent Power Producers’ Association, Nepal (IPPAN) has expressed it reservations over some matters in the report. The deadline for the fiscal management and the deadline for the completion of the construction since the signing of the Power Purchase Agreement (PPA) are one of major concerns in the development of hydropower project.
The government of Nepal has set a target of generating 15,000 megawatts of electricity by 2028. Nepal and India had, during Prime Minister Prachanda’s latest visit to India, agreed that India would purchase 10,000 megawatts of electricity from Nepal in the next ten years.
Minister for Energy, Water Resources and Irrigation Shakti Basnet said that efforts were underway as per the government’s plans to promote the domestic power consumption. The government through its policies and the budget has owned a policy of promoting the use of electric cooking stove and the electric vehicles.