New criteria set for hydropower PPAs, power purchase deals to be tightened

The Nepal Electricity Authority has prepared new criteria for opening power purchase agreements, or PPAs.

A subcommittee formed by the authority's board of directors has submitted a report containing the criteria to the Minister for Energy, Water Resources and Irrigation.

At a board meeting held on Bhadra 5 under the minister's chairmanship, a subcommittee was formed under the coordination of board member Anshu Kiran Shahi.

The subcommittee has made project construction readiness, access up to the transmission line, and assurance of financial management the main basis for PPA priority.

The criteria will come into effect once approved by the authority's board. Private hydropower developers have been demanding that PPAs be reopened, since they have been stalled for a long time.

Energy Minister Birajbhakta Shrestha said PPAs will be tightened because signing them without ensuring consumption infrastructure and market certainty poses financial risk to the state.

He said that if the electricity produced is not consumed, the burden falls not only on private developers but also on the state and the general public.

Noting that ordinary citizens have also invested in hydropower, Minister Shrestha pointed out that their savings could be put at risk if projects run into trouble.

According to him, PPAs will now be signed only on the basis of a scientific system that takes national needs into account. He said a decision on the date for starting commercial production is likely to come next week.

The government is also preparing to increase private sector participation in transmission lines and electricity trading.