Independent Power Producers' Association of Nepal Submits 53-Point Budget Suggestions to Government

Kathmandu. The Independent Power Producers' Association of Nepal (IPPAN) has submitted 53-point suggestions to the government for the upcoming fiscal year 2083/84 budget and program. IPPAN has strongly demanded the immediate opening of the electricity purchase agreement (PPA), which has been stalled for a long time. 

During a meeting with Finance Minister Dr. Swarnim Wagle, IPPAN Chairman Ganesh Karki stated that if the PPA is not opened, the government's goal of generating 30,000 megawatts of electricity in 10 years will be impossible to achieve. IPPAN believes that the lack of purchase agreements since 2018 has created significant uncertainty in the energy sector. 

IPPAN has urged the government to implement the goal of reaching 30,000 megawatts of installed capacity within 10 years by declaring the 'Nepal Energy Development and Consumption Enhancement Decade'. In addition, suggestions have been given that the Nepal Electricity Authority should continue PPAs on a 'take or pay' basis and withdraw the decision to convert 20 percent of electricity to 'take and pay'.

IPPAN has demanded that the private sector be involved in domestic and cross-border electricity trade. It has also been suggested to end the current single-buyer system, involve the private sector in the construction of transmission lines and substations of 220 kV or above, and provide up to 75 percent subsidy for it. It has also been demanded to extend the RCOD period of projects affected by natural disasters by 3 to 5 years and to remove the 'hydrology penalty' due to reduced production caused by climate change.

The budget suggestions also include the issue of increasing the license period for hydropower projects from 35 years to 50 years. Similarly, it has been demanded to immediately grant permission for IPO and rights shares issuance, which is being delayed by the Securities Board, affecting project construction and government revenue. IPPAN has suggested providing VAT and customs exemption on hydropower equipment and materials and reinstating the old provision of only 1 percent customs duty on machines imported for maintenance.

IPPAN has also made clear demands regarding environmental issues. It has been requested to set a time limit of two months for BES, three months for IEE, and five months for EIA approval by simplifying the process of forest area use and tree cutting. It has been suggested to change the impractical provision of planting 10 trees for every one tree cut to a ratio of 'one to two'. Furthermore, it has been demanded to form a separate armed police security force according to the corridor to prevent vandalism and strikes at project sites.

Understanding IPPAN's suggestions, Finance Minister Dr. Wagle stated that he wants to develop the energy sector as a major pillar of the economy. He acknowledged the growing contribution of the energy sector and assured that reasonable demands would be addressed through the budget.