The budget mentioned that the PPA would be done on a 'take and pay' basis. However, after widespread criticism, then government committed to review the provision before implementation. However, it has not been carried out yet.
It has hit hard on general energy entrepreneurs. Nepal Electricity Authority (NEA) also expressed its confusion regarding the matter, due to which it has not signed PPA with any hydropower project.
Earlier, the NEA had submitted a proposal for permission from the related Ministry regarding the provision. It sought permission from the Ministry of Finance and the Ministry of Energy whether to implement 'Take and Pay' or 'Take or Pay'.
Hitendra Dev Shakya, Executive Director of the NEA said that the NEA has not received any reply from the Ministries. According to him, the new government will decide on the PPA model and the NEA will support its effective implementation. Private sector energy entrepreneurs are pressuring on restoration of electricity supply which has been stalled for a long time.
Delay in decision making regarding PPA mode has kept hydropower projects in limbo. According to the Independent Power Producers Association (IPPAN) Nepal, about 12,000 MW of hydropower projects are currently awaiting PPA.
Meanwhile, the private sector is displeased with the government over the suspension of the hydropower PPAs. Ganesh Karki, President of the Independent Power Producers Association of Nepal (IPPAN), says that the prolonged suspension of the PPAs has put investment in hydropower projects at risk.
He said that the fact that the suspension of PPA has become a major problem for the private sector. He said that investment worth billions for 12,000 MW projects from private sector are at risk due to the suspension of the PPA.
The PPA suspension is also causing delays in project construction. According to sources in NEA, Shakya is also against opening a PPA immediately as it is an interim government and decisions that have long-term implications cannot be made. Shakya is waiting decision from the new government regarding PPA.
