IPPAN urges reopening of PPAs for stalled hydel projects

Kathmandu, September 5 — Independent Power Producers Association, Nepal (IPPAN) has called for the reopening of Power Purchase Agreements (PPAs) for hydropower projects that have been stalled for four years.

IPPAN Chairman Ganesh Karki made this request during a meeting at the Ministry of Energy, urging the government to resume discussions on the PPA for the 13,000 MW hydropower project.

Karki emphasized the need to address several issues, including the elimination of hydrology penalties for all projects, resolving problems related to forest and land reforms, and advancing the roadmap for 28,500 MW capacity in light of increasing hydrology challenges due to climate change.

 He also highlighted that the government should address concerns raised by the private sector before proceeding with the electricity bill.

Additionally, Karki requested the continuation of customs exemptions previously granted to hydropower projects for maintenance. He noted that the Ministry of Finance recently removed this benefit, adversely affecting many projects.

Karki pointed out that the cost of projects has increased by 28 percent due to additional expenses on spare parts, which has particularly impacted flood-affected projects. He criticized the inability to complete projects within the stipulated time due to natural calamities, explosives shortages, and forest and land issues. Despite repeated attempts to extend the Required Commercial Operation Date (RCOD) period by two years, these efforts have been unsuccessful.

Karki warned that if RCOD is not extended and if electricity cannot be produced by the fiscal year 2027/28 deadline, the Nepal Electricity Authority may purchase electricity from projects under a take-or-pay system. This could lead banks to withdraw their investments, potentially wasting the funds already invested and driving project promoters into bankruptcy. Karki has urged that this provision be canceled and RCOD be extended accordingly.