The Nepal Electricity Authority’s plan to buy up to 100MW of power from the grid-connected solar plants has faced a setback after the High Court, Patan early this month stayed the procurement plan.
In a notice issued on November 28 last year, the power utility had invited bids from solar manufacturers for setting up solar farms in 16 proposed locations across the country. NEA had estimated that up to 230MW solar power could be generated in those locations.
The initial deadline of February 26 for submitting bids had been extended till March 13. But the High Court issued an interim order on March 5, barring the NEA from opening the bid documents submitted by various firms.
In response to a writ petition filed by the Solar Electric Manufacturers Association Nepal, the High Court issued such order by taking into account the claims made by the association that maximum price of Rs5.94 per unit offered by the NEA would not be profitable for investors who had already made huge investments in the expectation of getting Rs7.30 per unit, the rate fixed by the government earlier.
Although the NEA and the petitioner had already signed a grid connection agreement based on the Working Procedure on Grid-Connected Alternative Electric Energy Development-2017, which fixed the purchase price at Rs7.30 per unit, the NEA issued the Request for Proposal (RfP) on November 28 last year by capping the price at Rs5.94, the court points out. The court observes that it would be appropriate to put the RfP process on hold and seek a solution to the dispute.
In March, the power utility had decided to cap the maximum rate to be offered to solar power generators at Rs5.94 per unit. Solar manufacturers had voiced their displeasure saying the price was too low for the projects to be feasible. In January last year, the power utility had decided to procure solar energy only through competitive bidding, ending the fixed rate regime of the previous three years.
Even though a number of solar producers complained that the price cap was making the solar project infeasible, the NEA is happy with the number of bids it received.
“We have received 11 bids from solar companies,” said NEA Managing Director Kul Man Ghising. “Had the court not stayed the bidding process midway, my estimate is that an additional two dozen companies would have submitted their bids.”
Companies like Pashupati Renwables, Tarai Solar and Eco Gham each have submitted two separate bids, according to the NEA.
Ghising said that even those who had earlier opposed price caps participated in the tender. “Since the response of the solar firms was satisfactory, we don’t think there is any need to revise the provisions including the maximum price,” he added.
Many solar manufactures, however, did not participate in the bidding process saying it would be unfeasible to sell power at less than Rs5.94 per unit.
Topsun Energy was among the firms opposing the price offered by the NEA. Kiran Gautam, managing director of the company, said that his company stayed away from the tender process. “Rising prices of solar components, weakening Nepali currency and costlier loans make it infeasible to sell electricity to the NEA,” he said.
Prakash Bikram Basnet, president of the Electric Manufacturers Association Nepal, said that his firm also didn’t submit a bid.
The power utility had called bids from the private sector as part of its policy to buy solar energy in large volumes and increase the share of renewable sources to 10 percent of the total energy mix. Officials said diversification of energy sources is essential as relying on any single sources could be risky.
Currently, the contribution of solar power in the country’s energy mix is nominal. According to the Ministry of Energy, Water Resources and Irrigation, as much as 44.53 megawatts of solar power has been connected to the national grid as of mid-January this year. This is 1.83 percent to Nepal’s total installed capacity.
Nepal’s total power generation in mid-July stood at 2424 MW, according to the energy ministry.
Prithvi Man Shrestha was a political reporter for The Kathmandu Post, covering the governance-related issues including corruption and irregularities in the government machinery. Before joining The Kathmandu Post in 2009, he worked at nepalnews.com and Rising Nepal primarily covering the issues of political and economic affairs for three years.
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