Indecisiveness on foreign currency PPA affecting hydropower projects

RUDRA PANGENI  KATHMANDU, March 7 : Indecisiveness of Public Accounts Committee (PAC) of legislature-parliament on signing power purchase agreement (PPA) in foreign currency is affecting development of different hydropower projects across the country. PAC, after holding discussion in August last year, had formed a sub-committee under the leadership of lawmaker Top Bahadur Rayamajhi to study the issue and make policy direction to the government. The sub-committee hasn´t submitted its report yet. PAC meeting has not convened since the second week of January. The meeting has fallen into uncertainty as its Chairman Janardan Sharma, who is a UCPN (Maoist), is protesting against the government. UCPN (Maoist) lawmakers are not participating in parliamentary committee meetings. “Several hydropower projects developed with loan investments or foreign investments are waiting for the committee´s decision on the issue. But we can´t say when the committee will come up with a decision," Keshav Dhwaj Adhikari, spokesperson of Ministry of Energy, told Republica. After studying previous PPAs in US dollar signed by Nepal Electricity Authority (NEA) with the developers of Upper Bhotekoshi and Khimti hydropower projects and loss faced by NEA due to devaluation of Nepali currency vis-à-vis US dollar, PAC had directed the government not to sign PPA in foreign currency until it comes up with a final decision. Speaking at a discussion program organized jointly by Development Committee, and Good Governance and Monitoring Committee of the legislature-parliament on Sunday, Minister for Energy Radha Gyawali had blamed indecisiveness of PAC for delay in signing PPA with several hydropower projects. Upper Trishuli-1, Kabeli A, Tila-1 and Tila-2 hydropower projects have applied to NEA for signing PPA in US dollar. But NEA has not been able to start PPA negotiations with developers of those projects due to direction of PAC. PAC´s initiation to provide policy direction on signing of PPA was welcomed in all quarters. Now the parliamentary committee is drawing flak for its indecisiveness. Khadga Bahadur Bisht, president of Independent Power Producers´ Association Nepal (IPPAN), said PAC´s indecisiveness is affecting project being promoted by foreign investors. "NEA should sign PPA with developers after evaluating risks on its own. The indecisiveness should end immediately," added Bisht. Spokesperson Adhikari said the energy ministry has started internal homework on taking policy decision on signing PPA in foreign currency. He also said the ministry will table the draft policy in parliament for approval. Experts and officials are of the view that NEA and developers should devise a risk-sharing model which is beneficial for both the parties. Going for PPA in US dollar for loan repayment period, and PPA in Nepali currency for remaining period can be a good option, a hydropower expert said. Meanwhile, sub-committee coordinator Rayamajhi said they were giving finishing touches to the report. "We will submit the report to PAC Chairman very soon," he said, adding, "Our party is likely to sit for political talks. It will pave the way for PAC meetings." REPUBLICA