PPA rate hike for under-construction, completed projects planned
KATHMANDU, MAY 06 -
The Ministry of Energy is preparing to increase the power purchase agreement (PPA) rate for under-construction hydropower projects and those whose construction has been completed.
Last June, the ministry had hiked the rate for new projects below 25-MW capacity by 20 percent — Rs 8.40 per unit during summer and Rs 4.80 per unit during rainy season.
“The ministry has initiated the process to revise the PPA rate by forming an internal committee,” said Anup Kumar Upadhyay, joint secretary at the ministry, adding that the panel will soon forward its report to the Energy Minister. “Once the Energy Minister approves the report, we will seek final approval from the Finance Minister and ask the Nepal Electricity Authority (NEA) to revise the rate.”
Following last June’s rate hike, the Nepal Micro Hydropower Development Association (NMHDA) had asked the government to raise the rate for under-construction and completed projects too.
Submitting a list of demands to the ministry, NMHDA had demanded an increment in the rate for ‘payback’ period, delay charge exemption, value added tax waiver and refinancing facility.
Some 15 projects, with a joint capacity of 27 MW, have completed construction, according to NMDHA officials. “PPA rate revision is the need of the hour, as high bank rates have hit promoters hard,” said NMHDA executive member Dev Raj Khadka.
The NMHDA officials lamented that the bank interest rate, which was at 7-8 percent interest when they took loan, has now reached 15-16 percent. “We want special care from the government for small projects, declaring them sick,” Khadka said. “Because of high interest rate and increased construction cost, projects are only being able to pay bank interests, leave alone profits.”
According to Khadka, projects are also facing hard times because of the false financial analysis done during construction. “We are unable to pay bank installments and banks’ are threatening blacklisting us,” he said.
Source: Kantipur
