IPPAN demands govt to be lenient to domestic hydropower projects

Kathmandu: The Independent Power Producers’ Association, Nepal (IPPAN) has demanded the government not to fall harsh on the private sector energy developers that fail to finalize their financial closure on time.

A government panel in its recently submitted report has recommended canceling the power purchase agreement (PPA) of the hydropower projects above 100 MW that have failed to find financial resources for the past three years. In the case of projects with a capacity of less than 100 MW, the deadline has been fixed at a maximum of two years.

Along with the cancellation of the PPA, the government panel has also recommended to confiscate the bank guarantee maintained by such a project. Likewise, the hydropower developers' concern will also face cancellation of survey/production permits issued for such projects.

Organizing a press meet on Sunday, the umbrella organization of the private sector energy developers, has urged the government to extend the deadline of the financial closure by at least for the next one year. IPPAN President Ganesh Karki said the project developers failed to abide by the timeline due to the impacts of COVID-19 and the prolonged shortfall in liquidity seen in the banking sector last year.

According to the panel report, out of 7,757 MW hydropower projects that had signed the PPA, 33.94 percent have failed to finalize the financial closure. The committee has also recommended giving priority to the PPA of hydropower projects promoted by the Government of Nepal, subsidiaries of the NEA and companies owned by the government.

The IPPAN has expressed its dissatisfaction over giving priority to the government and NEA led projects while signing the PPA. According to the private energy producers, over 12,000 MW private sector companies have been waiting for their turn to sign the PPA with the state-owned power utility.

The association has also sought the government to allow a financial closure deadline of three years for a power project of up to 100 MW, a four year deadline for the energy project between 100-500 MW and a five year deadline for the projects of more than 500 MW.

The IPPAN has welcomed the recommendation that talks on opening the PPA for private developers which was put on hold for a long time period. Likewise, the association hailed proposals of maintaining a minimum two hours peaking reservoir and revision on the mandatory provision of a minimum 30 percent energy production during off season for the semi-reservoir projects.