Government Committee Recommends Cancellation of PPAs for Unmanaged Hydropower Projects

The government committee has recommended the cancellation of power purchase agreements (PPAs) for all types of hydropower projects above 100 MW that cannot be financially managed for three years.

Report 2080 on the policy arrangement regarding electricity purchase and sale agreements has put forward this recommendation. The committee, formed by the government under the coordination of Joint Secretary of the Ministry of Energy, Water Resources, and Irrigation, Sandeep Kumar Dev, has submitted its report.

The report proposes that the Nepal Electricity Authority may cancel the PPA if the financial management of all projects above 100 MW is not completed within three years after the PPA's finalization.

For projects with a capacity of less than 100 MW, the report suggests cancelling the PPA if financial management is not achievable within 2 years. In addition to PPA cancellation, the report also advises confiscating the project's bank guarantee.

Furthermore, the committee suggests revoking survey and production permits for such projects. It also recommends prioritizing the PPAs of hydropower projects promoted by the Government of Nepal, subsidiaries of the Nepal Electricity Authority, and companies owned by the Government of Nepal.

Currently, the authority has entered into purchase and sale agreements for hydropower projects totaling 7,775 megawatts. Among these, 2,023 megawatts of projects have commenced commercial production. Financial management has been successfully completed for projects with a capacity of 3,102 megawatts, while projects totaling 2,632 megawatts are still pending financial management.