MCA-Nepal signs $154 million power line contracts

Following the successful completion of the foreign aid review, the Millennium Challenge Corporation (MCC) Nepal Compact resumed work with renewed momentum and shared commitment from both governments.
Today, the Millennium Challenge Account-Nepal (MCA-Nepal) signed two major contracts to advance the compact’s Electricity Transmission Project, jointly funded by the governments and the United States. The milestone signals both governments’ commitment to delivering on one of Nepal’s most transformative infrastructure partnerships, according to a press note issued by the MCA-Nepal.

After a competitive international bidding process, MCA-Nepal awarded, Lot 2 contract (Ratmate to New Damauli) to Angelique-Skipper JV and Lot 3 contract (New Damauli to New Butwal) to WAIBA-SALASAR JV, it adds. "Combined, these contracts are valued at approximately $154.5 million and will cover the design, installation, testing, and commissioning of 180 kilometers of high-voltage transmission lines." 

MCA-Nepal executive director Khadga Bahadur Bisht and company representatives signed the agreements in the presence of MCC’s Acting Deputy Vice President, representatives from the MCC Resident Country Mission, officials from the US Embassy, Finance Ministry and the Nepal Electricity Authority (NEA) 

“In signing these contracts, MCC reaffirms the United States’ investment in mutual priorities and Nepal’s development goals,” said Acting Deputy Vice President John Wingle. “We are honoured to work alongside our Nepali counterparts to improve the availability and reliability of electricity in Nepal and enhance regional power trade and integration.” 

Finance Secretary and chairperson of the MCA-Nepal Board of Directors Ghanashyam Upadhyaya appreciated the financial support from the US Government to materialise the Nepal's plan to construct transmission lines and substations, and expressed continued government support for this programme.

"This milestone is more than a construction contract; it’s a tangible symbol of the United States’ enduring commitment to Nepal’s growth and prosperity,” said US Embassy Nepal’s Chargé d’Affaires, Jason Meeks. “Through this partnership, we are not only creating power lines and economic infrastructure but also accelerating Nepal’s long-term growth," he said, adding that the MCC compact is a cornerstone of cooperation between Nepal and the US. "We’re proud to be moving forward together to benefit all citizens of Nepal.”

"We appreciate the US government’s unwavering support and final approval to move the compact forward," MCA-Nepal Executive Director Bisht added. "This milestone reflects the shared commitment of all stakeholders and the government to this National Pride Project. We remain focused on successful implementation through sustained collaboration.” 

The MCC Nepal Compact represents a landmark $697 million investment in Nepal’s long-term economic development, laying a foundation for increased private sector investment. Through its Electricity Transmission and Road Maintenance Projects, the compact is designed to boost connectivity and unlock economic growth by strengthening critical infrastructure, enhancing cross-border energy trade, and improving Nepal’s transportation network.

NEA resumes power supply to six industries for three months, will the dispute between NEA and industries end ?

After four days of the Prime Minister's order, the government power monopoly Nepal Electricity Authority (NEA) today late evening connected the power supply to six industries.

Earlier in the afternoon, the NEA board has decided to resume power supplies to them with condition. According to the condition, the industries must pay their dues within 3 months, otherwise, the supply will again be disrupted, a board member informed. "The NEA has resumed power supply to the six industries on the condition that they will clear their pending dues within three months."

A meeting of the board of directors of the power utility held today afternoon has decided to resume the power supply also as according to the direction of the Prime Minister and energy minister.

The board meeting was, however, not cordial as two of the board members, Bhakta Bahadur Pun and Kapil Acharya, wrote note of decent. Pun, near to the dethroned Nepal Communist Party (NCP) Maoist Centre, and Acharya near to NCP-S claimed that there is no guarantee of dues collection within 3 months also, even after resumption of power.

The NEA board has energy minister Dipak Khadka as the chair, and energy secretary Sarita Dawadi, revenue secretary Dr Ram Prasad Ghimire, NEA managing director (MD) Kulman Ghising, representative from Consumer Group Bhakta Bahadur Pun, power sector representatives Kapil Acharya, and Ratan Bahadur Ayre, and prominent member from private sector Bharat Raj Acharya.

"Of them, two board members wrote note of decent, but the majority of the members endorsed the decision facilitating the NEA to resume power," another member of the NEA board said.

NEA had cut power supplies to six industries – Reliance Spinning Mills (753.68 million), Ghorahi Cement, Arghakhanchi Cement (448.60 million), Jagadamba Synthetic (205 million), Hulas Steel (141.20 million), and Jagadamba Steel (1.60 billion) dues including 25 per cent delay fine – between July 9 and 11 for not clearing their dues of dedicated and trunk lines.

Prime Minister KP Sharma Oli on Friday directed NEA managing director Kul Man Ghising to resume power supply to all industries at the earliest as the private sector has been suffering due to slow-down in economy.

However, Ghising told the Prime Minister Oli that he would take the proposal to the board of directors.

Oli also objected to NEA’s decision -- addressing the meeting of the House of Representatives on Sunday -- of not supplying the power to the industries and discouraging the private sector during the time of economic slow down.

“As of now surplus energy is going to be wasted in the rainy season, and NEA has cut power supply to big consumers for not clearing electricity dues,” Oli said in parliament. 

According to the NEA, a total of 61 industries have to pay cumulative dues of Rs 6.60 billion. 

The debate started a decade ago, when the NEA proposed the industries to supply uninterrupted power for extra charge. Those days, the industries were suffering due to irregular power supply. THus they accepted the NEA proposal to pay premium charge for using dedicated feeder and trunk line, during the load-shedding period.

Thus, the state power monopoly, citing power outage issues in 2015, enforced the rule to charge premium on industries that consume 24 hour uninterrupted energy through the dedicated feeder and 20 hour of uninterrupted power supply through the trunk lines, during the period of load shedding.

The NEA had charged 65 per cent as premium charge for the users of dedicated feeders and trunk lines on top of the normal tariff. The industries have been regularly paying their normal tariff. But the dispute started after the NEA sent the bills to the industries with premium charges, that also four years later.

Under the dedicated feeder service, a factory that needed high voltage lines was permitted to receive direct electricity from a nearby substation, while those using trunk lines were provided with regular electricity directly through two substations. 

There has been dispute about the period, and 24-hour and 20-hour uninterrupted power usage, according to the agreement between the NEA and industries. The buyer, industries, and seller, NEA, both must follow the agreement, as it is legal binding to follow contract.

But the NEA has charged the industries with premium without providing the Time of the Day (ToD) Meter, which the industries have been asking for, if the NEA charges premium.

They have been blaming the NEA for slapping the premium charge of period even after the load shedding was declared officially over, and before the premium charge approved the Electricity Regulatory Commission, which has the only authority of fixing the power charges, not NEA.

Former FNCCI president Pashupati Muraraka, who is also one of the industries that has been asking the NEA to show ToD meter, said that they are ready to pay the premium charge, if the NEA produces ToD.

"During the load-shedding period, a decade ago, NEA supplied power to some industries through dedicated feeder and trunk line, but with condition fixed by the NEA itself, not the industries," he said, adding that the industries have been asking the NEA to follow the condition, fixed by itself.

"There are two dispute; first time period and second condition fixed by the NEA itself, not the industries," he added. "The dispute of the time period has been, more or less, solved by Lal commission formed by the erstwhile government led by Puspa Kamal Dahal, and now the remaining dispute about the condition will also be solved once the NEA produces the ToD Meter, and the industries will pay accordingly."

After a long dispute, the Dahal-led government had on January 9 formed a committee under the former Supreme Court Justice Girish Chandra Lal, with joint secretaries of the Ministry of Water Resources and Irrigation and the Ministry of Commerce and Supplies (MoICS) as members.

However, after a while, the members were replaced by the water and irrigation secretary and commerce secretary.

The committee, after three months of long investigation, has suggested the power monopoly to take premium charges of electricity used during the period of February 2016 to April 2018, only, not before and after the date. Before February 2016, the tariff was not approved by the Electricity Regulation Commission, the power sector regulator, and after April 2018, the government and NEA declared no-load-shedding in the industries.

The Lal Commission has also recommended charging premium based on the consumption amount recorded by the Time of the Day (ToD) Meter.

But NEA managing director Ghising is adamant to collect the premium charges for the period not mention by the Lal Commission also. The Dahal-led cabinet has also directed the NEA to follow the Lal Commission report. But, Ghising and NEA are not ready to follow the Lal Commission report, as they fear of corruption charges.

The NEA has booked the dues and showed that as profit in the balance and distributed bonus as well, despite the acute shortage of cash flow. Now, if they collect less charge, following the Lal Commission report, they are in the soup.

Thus, the adamant NEA on June 23 issued a notice to the industries giving them a deadline of 15 days to clear their dues. However, the industrialists did not turn up to pay the dues within the stipulated timeline that ended last Monday. They instead asked for proof.

The NEA, refusing to implement the recommendation of Lal Commission, sent the excel sheet record of the electricity use to the industries. But the industries, again, asked for ToD Meter to pay premium dues.

In the meantime, the government has changed.

The NCP-Maoist Centre supremo Dahal-led NCP-Maoist Centre and CPN-UML coalition government has been replaced by CPN-UML chair KP Sharma Oli-led CPN-UML and Nepali Congress coalition government a week ago.

The incumbent Prime Minister Oli has been vocal on the NEA's treatment to the industries, which has put pressure on NEA, especially Ghising, who is near to CPN-Maoist Centre supremo Dahal.

After the pressure from the premier, energy minister, who is the NEA board chair, the NEA’s board meeting held yesterday has also decided to facilitate the industrialists to clear their dues on dedicated feeders in 28-month installments. But the industries did not give any ear to the NEA proposal.

According to the NEA, the flexibility it has adopted will relieve the industries to settle the dues at a time of business slowdown due to low demand in the market. But the industries claim that they want the proof, not the time period, to pay premium charge claimed by the NEA.

NEA stops exporting electricity to India

Nepal has stopped exporting electricity to India due to dry season.

Nepal Electricity Authority (NEA) has stopped export of electricity as it has stopped producing excess electricity due to the start of the dry season, confirmed NEA spokesperson Suresh Bahadur Bhattarai. 

“NEA is likely to stop exporting electricity until the 2023 monsoon” he said, adding that the NEA had been exporting electricity to India since May 15 through the Indian Energy Exchange Ltd. “NEA has sold electricity worth Rs 11 billion during this period.”

As the flow of water in the rivers is decreasing due to dry season, the production of electricity from hydropower stations – based on river flow – has also decreased forcing the state electricity monopoly to stop export. 

The NEA has, currently, received permission to export up to 409 megawatts (MW) of electricity produced by eight hydropower stations of Nepal to India.

Due to electricity exports to India Nepal has earned Rs 10.38 billion during the first five-and-a-half months. Nepal started exporting power to India this June. According to NEA, some 1.26 billion units of surplus electricity were exported to India, earning Rs 10.389 billion in revenue by mid-November. 

Nepal-India nears final modality on power trade

 Nepal and India today discussed development of suitable rules and guidelines for allowing access to Nepali power producers to Indian markets.

The eighth meeting – through video conferencing – of Joint Steering Committee (JSC) on Cooperation in Power sector today co-chaired by the power and energy secretaries of India and Nepal today discussed, inter alia, development of suitable rules and guidelines for allowing access to Nepali power producers to Indian markets, development of energy banking mechanism, development of cross border high voltage transmission lines as well as reviewing the progress of the SJVN Ltd- developed 900MW Arun-III Hydro Electric Project in Nepal and agreeing to further facilitate its expeditious implementation.

Both governments have been coordinating closely with each other in this sector, according to a press note issued by the Indian Embassy in Kathmandu.

Consequently, progress made in the last five years in this sector has been exemplary, it reads, adding that it includes completion of South Asia’s first cross border 400 KV transmission line at Muzaffarpur-Dhalkebar, agreement on funding modality for Gorakhpur-Butwal 400 KV line for which the construction will commence soon, and the brisk progress on the 900 MW Arun-III Hydro Electric Project. “Both sides are also close to finalising the regulatory modality for allowing Nepali power producers access to Indian power market which will provide an outlet for Nepal’s surplus power in the coming months.”

The meeting was led by energy secretary Dinesh Kumar Ghimire, who was assisted by representatives of various ministries and departments, while his counterpart Indian power secretary Sanjiv Nandan Sahai led the Indian team that included by ambassador of India to Nepal Vinay Mohan Kwatra and a 17-member delegation drawn from various ministries and public sector undertakings of Indian government including NHPC Ltd, NTPC Ltd and the Indian Embassy in Kathmandu.

The Joint Working Group (JWG) meeting at the level of joint secretaries was held yesterday in preparation of this meeting.

The JSC is the apex bilateral mechanism for enhancing and coordinating various government-to-government led initiatives in power sector. The meeting reviewed progress made on bilateral processes and initiatives in this sector. “Both sides reaffirmed their commitment to further strengthening the power sector cooperation between the two countries, including development of an integrated grid, building of more cross border transmission lines, as required, as well as investing in Nepal’s hydro and solar power projects,” the press note reads, adding that the positive and wide-ranging discussions are expected to further support the expansion in power sector cooperation between India and Nepal.

IPPAN plans agreements in Power Summit

Independent Power Producers’ Association-Nepal (IPPAN) is going to sign eight agreements with foreign firms and lender companies during the Power Summit scheduled to be held in Kathmandu on November 21-22.
According to the IPPAN, National Hydroelectric Power Corporation, India and Hydroelectricity Investment and Development Company Ltd, Nepal will ink a hydropower development agreement. Likewise, Nepal Power Exchange Ltd and Indian Power Exchange Ltd and Power Cell Bangladesh will also sign an agreement on the occasion.
“Women in Power Forum and International Finance Corporation (IFC), Nepal Bankers’ Association (NBA), IPPAN and Netherlands Development Finance Company (FMO), Investment Board Nepal and Power China will also sign a pact to construct Tamor Reservoir Project,” IPPAN press note reads, adding that the GMR Group of India and Bangladesh will also sign power trade agreement (PTA) of Upper Karnali Hydropower Project.
Some of the agreements are in negotiation phase and will be made public during the summit, according to president of IPPAN Shailendra Guragain, who thinks the summit is expected to create a platform for regional cooperation for power trade through various discussion sessions. The summit is also expected to explore new markets as well as expansion of power trade within and beyond the border.
According to the organiser IPPAN, experts from Nepal, China, India, Bangladesh, Bhutan, Japan, the Netherlands, United States, Canada, and Norway will participate during the two-day event. With the theme ‘Powering the Asian Century’, the summit – being organised under the patronage of Ministry of Energy, Water Resources and Irrigation – witnesses over 700 guests from various countries are expected to participate during the summit.
Guragain said that the experts are scheduled to deliver their deliberations on a number of topics including regional power trade, electricity market, regulation, and financing, sustainable development, execution and facilitation of the energy projects in the federal structure, foreign investment in hydropower and among others.

Electricity from India to cost Rs 10 per unit

Nepal Electricity Authority (NEA) has fixed the new tariff for the electricity imported from India.
The meeting of Nepal-India Electricity Exchange Committee held today in New Delhi has fixed Rs 8.88 minimum to Rs 10.32 maximum per unit based on the capacity of the transmission lines. The new rate will be applicable immediately and until the next power exchange committee meeting which is scheduled for March 2018. The new tariff for the electricity to be imported from India will be fixed by another meeting of the committee agreed to hold within next March.
According to NEA spokesperson Prabal Adhikari, who also attended the meeting of the Committee at New Delhi, the new tariff has been determined at IRs Rs 5.55 minimum for the electricity imported through big transmission line and IRs 6.45 maximum per unit for the electricity imported through small transmission line.
He also explained that the electricity imported through transmission line of 11 kv will cost Rs 10.32 (IRs 6.54), Rs 9.60 (IRs 6) of 33 kv and Rs 8.88 (IRs 5.55) of Rs 132 Kv.
With the new decision, per unit price of electricity being imported from 12 various Indian border points for the next seven months via 132 kv, 33 kv and 11 kv cross-border transmission line will be cheaper by IRs 0.07, IRs 0.08 and IRs 0.09, respectively, he added.
After a Nepal Electricity Authority (NEA) delegation led by managing director Kulman Ghising today requested Central Electricity Authority (CEA) of India to slash the electricity price, they have agreed to reduce the price of electricity exported to Nepal. The Ghising-led delegation is currently in New Delhi in the second meeting of Nepal-India Power Exchange Committee. The committee is a bilateral platform to make decision on a number of issues including cross-border electricity trade like tariff rate, quantity and modality.
The first meeting of the Nepal-India Power Exchange Committee in 2011 had fixed the tariff at less than IRs 4 per unit. It agreed to review prices at subsequent meetings that would be held annually. As no meetings could be held since then, the tariff rate grew by 5.5 per cent every year for six consecutive years according to the decision of the first meeting.
Currently, Nepal is paying Rs 8.99 per unit for up to 50 MW and Rs 8.88 above 50 MW. Although committee meetings were supposed to be held annually, they didn’t happen because of India’s unwillingness to do so. The meeting which hadn’t become possible despite relentless efforts by Nepal took place today at the Indian initiative on the eve of Prime Minister Sher Bahadur Deuba’s India visit next week.
The meeting also decided constructions of the three transmission lines of 132 Kv and two of 22 Kv, Adhikari said, adding that the meeting also agreed to re-operate the long defunct 33 kv Dhangadi-Paliya transmission line within two months. Around 50 per cent of the total electricity import is done through the Dhalkebar-Muzaffarpur and Tanakpur-Mahendranagar power lines.
The meeting also decided that Nepal will import additional 100 MW through inter-country transmission line. It is expected to help Nepal prevent from power outage during the winter. Adhikari said that 50 MW each will be imported through the new 132 kv Kataiya-Kusaha and Raxaul-Parwanipur transmission lines under the ‘take and pay’ modality. Although, the construction of the Raxual-Parawanipur and Kushaha inter-country transmission line was completed some six months ago, no electricity had been imported through the line from India yet.
Currently, Nepal has been importing 380 MW of electricity from India. The NEA has been importing about 50 MW of electricity through 33 kv transmission lines at Raxaul, Siraha, Jaleshwar, Kataiya and Nanpara border points. Similarly, 830 KW of electricity is being imported through 11 kv transmission lines at Lali, Huti and Jaulijiwi border points. Likewise, NEA has been importing 130 MW and 30 MW of electricity through the Kataiya-Kusaha and Gandak-Ramnagar 132 kv transmission lines, respectively.

NEA proposes 20 per cent hike in electricity tariff

Nepal Electricity Authority (NEA) has proposed to hike the electricity tariff by 20 per cent for the industries. The government power utility has proposed to hike the tariff without affecting the tariff for household use, said a source at the NEA that has forwarded the proposal to increase the electricity tariff to the Electricity Tariff Fixation Commission (ETFC), which had increased the tariff by 20 per cent effective from mid-July last year.
The commission chair Jagat Bhushal admitted that the NEA has forwarded the proposal to hike the tariff. "We have received the NEA proposal," he said, adding that the commission has distributed the proposal to the members. "Now we hold discussions on the proposal and take a decision accordingly."
"We have proposed to hike the electricity tariff as it has been deemed necessary to keep the NEA in good financial health and ensure smooth supply of electricity, said the NEA spokesperson Prabal Adhikari.
According to NEA, if the commission approves the proposal, the tariff for industries will increase by 20 per cent, but tariff for household users won’t go up much.
The authority has also asked the commission to implement the provision to automatically hike the electricity tariff by 5 per cent every year.