NEA okays draft PPA for hydel projectThe board of directors of the Nepal Electricity Authority (NEA) has approved the draft power purchase agreement (PPA) initialed with Nepal Water and Energy Development Company (NWEDC) for the development of the 216 MW Upper Trishuli-1 Hydroelectric Project.
The board of directors of the Nepal Electricity Authority (NEA) has approved the draft power purchase agreement (PPA) initialed with Nepal Water and Energy Development Company (NWEDC) for the development of the 216 MW Upper Trishuli-1 Hydroelectric Project.
The state-owned power utility had signed the PPA with Korean joint venture NWEDC last November.
“A board meeting of the NEA on Wednesday approved the draft PPA,” said Kulman Ghising, managing director of the NEA. “We will sign an agreement with the developer after it deposits Rs210 million with us as performance guarantee.”
According to the NEA, the agreement has been drawn up in accordance with the PPA guideline issued by the Energy Ministry in April 2017.
This means the run-of-the-river type project located in Rasuwa will sell electricity to the NEA at Rs4.80 per unit during the wet season that lasts from June to November. The rate for the dry season, which lasts from May to December, has been fixed at Rs8.40 per unit.
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.
Payment will be made in US dollars only for the portion of the investment made with foreign loans, and it cannot exceed 80 percent of the total project cost. The exchange rate prevailing on the day when the PPA is signed will be applied to the payment.
Moreover, it is clearly mentioned in the PPA that the developer’s internal rate of return from the investment should not exceed 17 percent. If the internal rate of return goes over the limit, the power purchase rate should be revised down. This is the second dollar-denominated PPA that the NEA is signing since the introduction of the new PPA guideline which has paved the way for projects being built with foreign investment to sell electricity to the state-owned power utility in convertible currency.
Last November, the NEA signed a dollar-denominated PPA with Langtang Rasuwa Hydropower Limited, the developer of the 120 MW Rasuwa-Bhote Koshi Hydropower Project NWEDC is a joint venture company formed by three Korean companies (Korea South East Power Company, Daelim Industrial Corporation and Kyeryong Construction Industrial Corporation), International Finance Corporation (IFC) and Bikesh Pradhanang, a Nepali investor.
The Upper Trishuli-1 project will generate 216 MW of hydroelectricity from three turbines of 72 MW capacity each. The plant is expected to generate 1,456.4 gigawatt hours of net electricity per year, of which 1,149.7 gigawatt hours will be generated during the wet season and 306.7 gigawatt hours during the dry season. The project site is located near Dhunche, the headquarters of Rasuwa district lying north of Kathmandu.