Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Lawmakers and energy experts have labeled the government’s budget provision for a “Take and Pay” Power Purchase Agreement (PPA) model for run-of-the-river hydropower projects as “unfortunate” and detrimental. At a program organized by the Nepal Infrastructure Journalists Society on Monday, they urged immediate amendments to protect the energy sector, which supports over 6 million public shareholders and domestic investors.
Deepak Bahadur Singh, chair of the Infrastructure Development Committee, criticized the budget as biased and pledged to advocate for equitable decisions to safeguard the sector. MP Urmila Majhi called the lack of awareness about the policy among budget drafters “shameful,” while MP Bina Lama promised to summon stakeholders for discussions. MPs Nisha Dangi and Dinesh Kumar Yadav warned of the policy’s potential failure, with Yadav actively raising the issue in Parliament. MPs Mahesh Basnet, Sushila Shrestha, and Shiv Nepali also committed to pushing for corrections.
Govindaraj Pokharel, former National Planning Commission vice-chair, accused the government of targeting a job-creating sector, highlighting its insensitivity amid policy and infrastructure gaps. Ganesh Karki, president of the Independent Power Producers’ Association, Nepal (IPPAN), warned that without revision, the policy could halt hydropower projects, risking NPR 109 billion in existing investments and NPR 3.31 trillion in future investments. Government revenues of NPR 3.27 trillion during construction and NPR 3.1 trillion post-completion are also at stake.
IPPAN’s Deputy Secretary-General Prakash Dulal stated that the policy threatens PPAs for 17,117 MW of projects, deterring bank investments and disrupting the secure investment climate. With one MW creating 100 jobs during construction and 10 long-term jobs, the policy could exacerbate unemployment. Related industries like cement and steel would also suffer, undermining Nepal’s 28,500 MW production goal and 10,000 MW export target to India.
Chartered Accountant Narayan Paudel suggested shifting to a “Take or Pay” model, questioning the policy’s intent. The consensus was clear: without urgent changes, Nepal’s hydropower sector faces a severe crisis.
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