Butwal
Power Company (BPC), the developer of the 37.6 MW Kabeli-A Hydropower
Project, has refused to revise the power purchase agreement (PPA) for
the project’s increased capacity of 7.6 MW.
The Ministry of
Energy (MoE), acting upon instructions from the Cabinet, had asked BPC
to consider decreasing the PPA rate for its added capacity two weeks
ago. The PPA defines the price at which BPC will sell power to the
government after the project comes online.
The Cabinet had asked
the MoE to renegotiate with BPC for a reduction in the PPA rate after
the project was upgraded to 37.6 MW from 30 MW.
Although the MoE
and BPC had settled all the issues including the PPA rate while
increasing the project’s capacity, the Council of Ministers had told the
ministry to arrange a fresh deal. Responding to the ministry’s letter a
week ago, BPC said it could not agree on decreasing the PPA rate as all
the topics had already been settled.
“The project’s financial
health will be affected if the PPA is revised,” BPC wrote to the
ministry. “It will make the project unfeasible.” BPC vice-president
Prateek Pradhan confirmed that his company had refused to reduce the PPA
rate.
A high-level BPC official criticized the MoE for not being
able to convince the Cabinet that the deal had been settled and could
not be changed. A ministry official admitted the weaknesses of the MoE
in not being able to communicate properly with the Cabinet.
A
committee led by Dilli Bahadur Singh, joint secretary at the Water and
Energy Commission Secretariat, had conducted the negotiations and
settled the financial matters including the PPA rate. After the
discussions, the PPA rate had been fixed at 6.21 cent per unit.
The
Nepal Electricity Authority will pay 60 percent of the bill in US
dollars and 40 percent in Nepali rupees as per the accord. The payment
in local currency will be calculated on the basis of the exchange rate
of the US dollar at the time the contract for the project was awarded.
The
government approved the project on Oct 7, 2009 and awarded BPC the
contract to build it under the build own operates and transfer (BOOT)
model with a 35-year concession period. The government signed the
project development agreement with BPC on Jan 31, 2010.
BPC has
formed Kabeli Energy Limited, a special purpose vehicle, to build the
project. The company has paid Rs 12 million in taxes to the government
for project development.
src: resconbiz |
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