The government is preparing for interim arrangements to take control of half ownership of the Khimti Hydropower Project as it has failed to draft necessary law in time.
The Ministry of Energy, Water Resources and Irrigation (MoEWRI) confirmed that the government is preparing to introduce interim arrangements to manage and operate the Khimti Hydropower Project. “The project will not be shut down,” the ministry said adding that the ministry will soon finalise all the details to take 50 per cent ownership of the project.
According to project development agreement (PDA) signed on January 15, 1996, Nepal Electricity Authority (NEA) has to take 50 per cent ownership of the project by July 11 (yesterday) but the government’s delay in drafting the necessary law has made the fate of the 60-megawatt (MW) project uncertain.
But NEA and the Energy Ministry both claimed that they have not been able to do enough homework to sign the agreement to take control of its stake, also due to the outbreak of the coronavirus pandemic.
According to the PDA, from today all procedures related to acquire 50 per cent ownership should have been completed by NEA. “And the project should have been operating through a joint venture,” it reads, adding that the JV will also determine and certify the valuation of the project site, undertake share distribution, and determine new power purchase rate.
Earlier, the ministry had formed a team led by a joint secretary with officials of NEA to facilitate the process but it has not made any progress in forming the joint venture company.
The ministry has however already sent a letter to the promoter, Himal Power Ltd, for an interim management. “Though the agreement has expired the ministry has forwarded a draft memorandum of understanding (MoU) to the promoter to make interim arrangements for the operation of the Khimti hydel plant,” the ministry sources said, adding that they have also asked Himal Power to bear the expenses of the operational cost for the time being, which the government will adjust later. “The ministry is though prepared for the final negotiations with Khimti’s promoters in the process of taking over Khimti, failure of arrival of the concerned officials of the promoter company due to spread of coronavirus worldwide has delayed it.”
Himal Power Ltd – which currently has 100 per cent ownership of the project – has been tasked with developing the project under a 50-year lease contract with the government. According to the Himal Power, Khimti hydel project is generating 350GWh of energy annually, for which NEA is paying around Rs 5 billion. The NEA has been incurring an annual loss of Rs 2 billion while buying power generated by Khimti because of US dollar power purchase agreement (PPA).
NEA had initially signed the PPA with Khimti at 5.2 cents per unit, which was later revised upwards to 5.9 cents. The state power utility is buying electricity at up to Rs 21 per unit from the project as the price of the US dollar has surged massively in the last one decade.
The Ministry of Energy, Water Resources and Irrigation (MoEWRI) confirmed that the government is preparing to introduce interim arrangements to manage and operate the Khimti Hydropower Project. “The project will not be shut down,” the ministry said adding that the ministry will soon finalise all the details to take 50 per cent ownership of the project.
According to project development agreement (PDA) signed on January 15, 1996, Nepal Electricity Authority (NEA) has to take 50 per cent ownership of the project by July 11 (yesterday) but the government’s delay in drafting the necessary law has made the fate of the 60-megawatt (MW) project uncertain.
But NEA and the Energy Ministry both claimed that they have not been able to do enough homework to sign the agreement to take control of its stake, also due to the outbreak of the coronavirus pandemic.
According to the PDA, from today all procedures related to acquire 50 per cent ownership should have been completed by NEA. “And the project should have been operating through a joint venture,” it reads, adding that the JV will also determine and certify the valuation of the project site, undertake share distribution, and determine new power purchase rate.
Earlier, the ministry had formed a team led by a joint secretary with officials of NEA to facilitate the process but it has not made any progress in forming the joint venture company.
The ministry has however already sent a letter to the promoter, Himal Power Ltd, for an interim management. “Though the agreement has expired the ministry has forwarded a draft memorandum of understanding (MoU) to the promoter to make interim arrangements for the operation of the Khimti hydel plant,” the ministry sources said, adding that they have also asked Himal Power to bear the expenses of the operational cost for the time being, which the government will adjust later. “The ministry is though prepared for the final negotiations with Khimti’s promoters in the process of taking over Khimti, failure of arrival of the concerned officials of the promoter company due to spread of coronavirus worldwide has delayed it.”
Himal Power Ltd – which currently has 100 per cent ownership of the project – has been tasked with developing the project under a 50-year lease contract with the government. According to the Himal Power, Khimti hydel project is generating 350GWh of energy annually, for which NEA is paying around Rs 5 billion. The NEA has been incurring an annual loss of Rs 2 billion while buying power generated by Khimti because of US dollar power purchase agreement (PPA).
NEA had initially signed the PPA with Khimti at 5.2 cents per unit, which was later revised upwards to 5.9 cents. The state power utility is buying electricity at up to Rs 21 per unit from the project as the price of the US dollar has surged massively in the last one decade.
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