Hydro project held up as NEA dawdles over PPAConstruction of the Upper Trishuli 1 Hydropower Project has been delayed as the board of the Nepal Electricity Authority (NEA) has been taking its time approving the power purchase agreement (PPA) signed with its developer.
Construction of the Upper Trishuli 1 Hydropower Project has been delayed as the board of the Nepal Electricity Authority (NEA) has been taking its time approving the power purchase agreement (PPA) signed with its developer.
The state-owned power utility signed the PPA with the developer Nepal Water and Energy Development Company (NWEDC), a Korean joint venture, a month ago.
As per the PPA, the NEA will buy electricity from NWEDC and make payment in US dollars for a period of 10 years or until the project has repaid its foreign loans, if that happens earlier.
The 216 MW run-of-the-river type project is located in Rasuwa district north of Kathmandu.
The board of the Korean joint venture had immediately approved the PPA. It said that delays by the NEA had pushed back the project’s construction date.
NWEDC had planned to hold the ground breaking ceremony in October. “We have already missed that deadline, and we still don’t know when the PPA will be approved,” said a source close to the Korean joint venture.
The company acquired a generation licence from the Department of Electricity Development on November 9; but without the PPA, it cannot conclude the financial closure and start the project.
Meanwhile, the NEA said that the draft of the PPA signed with the Korean joint venture was currently at the office of the board of directors, and that the board would approve it soon.
“As we have sorted out contentious issues in the agreement with project developer, the board will not take much time to okay the deal,” said Prabal Adhikari, chief of the power trading department and spokesperson for the NEA.
“We are aware that the project developer has already acquired the generation licence from the department, and we shouldn’t take much time to conclude the pact.”
NWEDC is a joint venture company formed by three Korean companies, International Finance Corporation (IFC) and Nepali investor Bikesh Pradhanang. The three Korean companies are Korea South East Power Company, Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation.