Hydel firms not allowed more than 17 per cent profit

The government has restricted the hydropower developers from taking more than 17 per cent profit but the small power developers no longer need to pay additional fines to the NEA, if the power generation drops due to change in hydrology, according to new bylaws.
According to the bylaw ‘Conditions for People with Licence for Power Purchases and Sales-2019’ issued today by Nepal Electricity Regulatory Commission (NERC), hydropower developers are barred from taking more than 17 per cent return on equity but it has also exempted the hydropower projects – of less than 10 MW – of additional fines in case of generation drop.
“If the profit made by any hydropower project is higher than 17 per cent, it will be managed by reducing the rate agreed upon in the power purchase agreement (PPA),” confirmed chairman of the commission Dilli Bahadur Singh.
The commission will assess the tentative investment, source of money and its interest rate, clearance of loans and interests, ratio of equity and loan, recurrent expenditure, operational expenditure, maintenance costs, revenue and taxes and other service charges, additional capital that will be required, among others, to calculate the return and income before issuing approval to the developers to sign PPA with Nepal Electricity Authority (NEA), the bylaw reads, adding that the developer will need to submit technical and financial aspects of their power project and tentative rates for the final approval of PPA from the regulatory commission. “Before submitting the documents, they will have to hold discussions with NEA for the tentative rates.”
After the commission approves the final power purchase rate, the developer and NEA will sign the final agreement, it adds. “The commission will finalise the PPA rates within 90 days by assessing the projects’ technical and financial aspects but the financial assessment is not required for projects with installed capacity of up to 100 megawatts (MW).”
More than 40 hydropower projects have been waiting to sign the PPA were waiting for the bylaw as the PPA with NEA has been stalled since the last six months due to delay in issuing the bylaws. “The hydel projects will now be able to sign the PPA with NEA,” Singh said, adding that the power developers will, however, have to get a go-ahead from the commission – according to the bylaws – beforehand. “Earlier, the NEA could independently negotiate and determine the power purchase rates with developers.”
Though, not fixed, the NEA had been signing PPA with power developers earlier at around 17 per cent of return on equity. Singh, however, said that the new PPAs will be based on old tariff till the commission comes up with a new tariff rate.
Likewise, small hydropower plants with an installed capacity of less than 10 MW will not be penalised for falling short of production forecasts, the Electricity Regulatory Commission said. “The developers no longer need to pay additional fines to the NEA, if the power generation drops due to change in hydrology,” the bylaws read, adding that they were penalised up to 80 per cent of the deficit electricity, earlier. “Hence, the developers had been expressing strong reservations against the earlier rule and demanding that it be scrapped.”
Last month, the operators of 20 hydel projects with a combined capacity of 69.8 MW urged the government to acquire their projects citing heavy financial stress, besides calling for the removal of the availability declaration system for plants below 10 MW. “The projects are witnessing a 55 per cent fall in the power projections stated in the PPA, and their income has declined in line with the fall in output,” according to the troubled developers.
According to the bylaws, the provisions requiring developers to produce electricity up to a maximum of 70 per cent of the total annual energy output in the dry season will not be implemented for 10-MW schemes. Likewise, the NEA must pay compensation for undelivered energy to small hydel schemes by calculating the amount using a uniform formula for transmission lines, the bylaws reads.
Independent power producers welcomed the move by the Electricity Regulatory Commission.

German vice minister visiting Nepal

German vice minister for Economic Cooperation and Development Norbert Barthle is arriving in Kathmandu tomorrow on a three-day visit to Nepal.
The visit underlines Germany’s wish to continue its long-standing partnership with Nepal by adding a new dimension to it, according to a press note issued by German Embassy in Kathmandu.
During his stay in Nepal, the vice minister will call on Prime Minister KP Sharma Oli and discuss political and economic matters. He is also scheduled to hold meeting with other government officials and attend Germany National Day celebration as a guest of honour tomorrow, the press note reads, adding that he will attend the inauguration of the German Technical School in Dhunebesi Municipality in Dhading district on Friday. “He is also scheduled to inaugurate the National Load Dispatch Center (NLDC), which is financially supported through the German Development Cooperation with a grant of 7 million euros.”
The NLDC is technically-improved and will be the heart of the Nepali power grid. “Strong development cooperation will continue as in the past six decades,” the press note further reads, adding that it will be showcased by the inauguration of the Load Dispatch Center. “Energy, especially renewal energy, is one of the three pillars of German-Nepali cooperation, the other two being health and sustainable economic development.”
According to the press note, Germany will also continue to make significant contributions through the European Union (EU) as well as multilateral institutions, namely the development banks and the UN System. “However, as Nepal is opening a new political and economic chapter of its life as a nation, its partnership with Germany will also change,” German envoy to Nepal Roland Schäfer is quoted in the press note. “Private industries from Germany are starting to explore opportunities in Nepal.”
Ambassador Schäfer said – according to the press note – that vice minister Barthle will also meet with the participants of the first business-to-business forum. “The visiting minister’s support to the German Technical School in Dhading shows that professional training will be key to developing future industrial relationship with Germany and the whole of Europe.”

Independent power producers to hand over keys of their project

Putting forth 12-point charter of demands, Independent Power Producers’ Association Nepal (IPPAN) has announced second phase of protest programme against the government.
Organising a press conference in Kathmandu today, the private power producers also warned that they will hand over keys of all sick hydropower projects to the government, if their demands are not met even after the second-stage of their protest. “We will hand over the key of sick projects to the Minister for Energy, Water Resources and Irrigation on October 18, if our demands are not fulfilled by then,” the IPPAN said, adding that some 25 hydropower projects developed by them are ‘sick’ as they have either failed to service their debts or reeling under financial crisis.
“The demands that we have put forth to the government are for implementation of facilities and pledges that the government and the Nepal Electricity Authority have made,” the coordinator of the sick project coordination committee of IPPAN Surya Prasad Adhikari said, adding that they have not got even those facilities and incentives that the government has provided to the foreign investors.
Independent power producers have launched their agitation in mid-August. In the first stage, they put forth their demands with concerned government agencies and held interaction with authorities to press them for fulfilling their demands. Some of their demands include immediate reimbursement of the subsidy announced for hydropower projects, which have already started commercial production as announced in the budget speech for fiscal year 2014-15, lowering of bank lending rates for hydropower projects to single-digit and 5 per cent for mini hydropower projects, which are in operation, and providing posted rate (Rs 4.8 per unit in wet season and Rs 8.4 per unit in dry season) even for small hydropower projects having capacity below 25 MW.
The IPPAN has also demanded increment in compensation resulting from outage losses due to fault of transmission lines of the Nepal Electricity Authority (NEA). “The NEA provides us a maximum of 5 per cent of outage losses in line with the power purchase agreement,” the IPPAN informed, adding that many small hydropower projects, however, are facing 17 per cent to 21 per cent outage losses out of total generation due to problem in transmission lines of the NEA.
“There cannot be construction of projects until there is transmission line,” according to the executive director of Aarati Power Company Ltd – the developer of Upper Irkhuwa Hydropower Project (14.5MW) – Prakash Dulal. “But, the NEA penalises power producers, if they do not supply energy in line with the agreement.”
Likewise, chief executive of Khanikhola Hydropower Company Bijay Man Sherchan said that power producers are facing losses due to lack of transmission lines. “We are supplying electricity from 11 kV transmission lines as the NEA has not provided 33 kV transmission line,” he said, adding that they have to pay compensation to the NEA, if they fail to supply required amount of energy.

Nepal Telecom expands 4G across 32 districts, 50 cities

Nepal Telecom (NT) has rolled out 4G service in 50 cities of 32 districts across the country.
Prime Minister KP Sharma Oli launched – through video conference – Nepal Telecom's nationwide 4G/LTE network in Kathmandu today. Though 4G service has been available for NT users in the Kathmandu Valley and Pokhara, the government-owned telecom company has expanded the high-speed data service to 59 more cities of 36 districts of all seven provinces.
Under the 4G/LTE technology, users not only get high speed internet, but also high quality voice call service, according to the telecom service provider. “As the data speed of the 4G is faster compared to what the NT users are getting from current 3G services, they will be able to watch, download and listen audio/visual contents, play games and surf other Internet contents that require high bandwidth.”
“We have entered the age of 4G from first 2G and then 3G,” the premier said, launching the new service. “We have taken a giant stride to the new era,” he said, urging all to reap the benefit of the new technology provided by the state-owned telecommunication company.
Nepal Telecom had started 4G/LTE service – first in Nepal – in Kathmandu valley and Pokhara on January 1, 2017. However, it had been unable to expand the service outside Kathmandu Valley and Pokhara, as the Commission for the Investigation of Abuse of Authority (CIAA) launched a probe into the 4G equipment procurement process in February last year, suspecting financial irregularities, and other procedural and procurement hurdles. According to the telecom service provider, altogether 800,000 people are using the NT's 4G in the Kathmandu valley and Pokhara. However, Ncell has over three million 4G subscribers, though the company launched the service months later.
Issuing a pree note on the launch of the nationwide 4G/LTE service, the NT said mobile phones and SIM cards should support 4G/LTE. “There is no additional charge associated on activation of 4G/LTE service,” the note reads, adding that in mobile set, users can follow the direction after dialing #444#. “They can know whether they have to change their SIM card to get the new service or continue with the activation process.”
“Consumers, who avail data through NT 4G cellular technology have been offered 400 MB of data at Rs 25 for up to 24 hours upon subscription,” the press note reads.
On the occasion, minister for communications and information technology Gokul Prasad Baskota, said that NT’s 4G expansion is one of government’s biggest achievements.
Likewise, managing director of NT Dilli Adhikari said that the company was though comparatively late to expand the service, the 4G or Long Term Evolution (LTE) will cater to the high-speed internet demand of NT subscribers across 50 major cities.
Adhikari also informed that NT subscribers will have to switch to U-SIM to avail its 4G service and the company has already ensured the availability of U-SIM across places where the 4G service have been launched. “Subscribers of old SIM cards can exchange the new U-SIM free of cost.”
According to Nepal Telecom, over 6.5 million subscribers can benefit from the new 4G expansion.
Nepal Telecom had inked different pacts with China-based ZTE Corporation and China Communication Service International (CCSI) of Hong Kong to develop core network and radio network required for the 4G expansion in the country. ZTE has quoted a price of Rs 1.56 billion to install the core network. Under the plan, radio access networks will be installed in the central and mid-western regions in the first phase, whereas in the second phase, the core network will be installed in the eastern, western and far western regions, connecting all areas into the 4Gs system. “The first and second phases of the network are expected to cost Rs 8.75 billion and Rs 8.39 billion, respectively.”

Government intensifies market monitoring

The Department of Commerce, Supplies and Consumer Protection (DoCSP) has fined 140 stores – out of 298 – in course of market monitoring before the festivals.
According to the department, the stores were fined Rs 2.38 million for charging customers arbitrarily, failing to furnish required documents, and selling sub-standard products. The government has intensified market monitoring for the festive season as many traders are blamed to overly charge and sell substandard or adulterated products to the customers.
Though, the department is criticised for its monitoring only during the festive season, it has started market monitoring from August 18 with an aim to check unscrupulous practices in the market during the Dashain, Tihar, and Chhath festivals, the department said, adding that it carried out market monitoring between mid-August and the last week of September.
According to director general at the department Yogendra Gauchan, some traders even shut down their stores as soon as they see market monitoring team.
Though, half a dozen agencies are working under the Ministry of Industry, Commerce and Supplies to check the market distortion and to protect the interest of consumers, the consumer rights activists say that the market monitoring has not been able to curb malpractices and anomalies in the market.
The Department of Food Technology and Quality Control, Department of Livestock Department, DoCSP, and local governments among others work for consumer protection.
Following the implementation of the Consumer Protection Act 2019 in February, the market inspectors have got the authority to impose fine on the spot, if any producer, transporter, importer, seller or service provider is found to be violating rules. Earlier, the market inspectors did not have any authority to penalise those, who were flouting the rules.

Smart meters to be installed in 90,000 homes in Kathmandu

Nepal Electricity Authority (NEA) has planned to install smart electricity meters in 90,000 homes in Kathmandu by the end of 2020 with an aim to reduce electricity leakage in the distribution system and improve network visibility.
According to managing director of NEA Kul Man Ghising, the project will design, supply and install advanced metering infrastructure – smart meters and associated facilities – for the entire Valley and the industrial sector.
The smart meters are being installed in areas that fall under the Ratnapark and Maharajgunj distribution centres. Since fiscal year 2018-19, the Ministry of Energy, Water Resources and Irrigation had introduced a special programme in the budget to distribute smart meters in Kathmandu Valley. Financed by the Asian Development Bank (ADB), the project is under the first phase of the Power Transmission and Distribution Efficiency Enhancement Project. The $150-million project envisages modernising the electricity grid by installing advanced metering infrastructure to reduce power losses, improve collection efficiency, and manage electricity demand and outages faster, according to the state power utility.
Likewise, the consumer households with smart meters will also get a regular and accurate view of electricity consumption, besides high-quality electricity supply eliminating the need to use voltage stabilisers, and faster recovery from power outages, it said, adding that the smart meters will also enable automated billing system, and meter readers will not have to visit individual houses each month and give customers a bill. The entire system will be monitored from the NEA office like how they do at Nepal Telecom for their landline connections.
Though, the smart metering rollout programme is in its early stages, it will be deployed in various phases across the electricity distribution network across the country. “It is envisaged to conduct six smart metering pilot projects in six distribution centres by September 2020, deploy 450,000 smart meters by May 2021, some 3 million smart meters by May 2023, and 5 million smart meters in total by May 2025,” according to the ADB.
Chinese firm Pinggao-Wisdom has won the contract to install smart meters as the lowest bidder Huizhou Zhongcheng Electric Technology had submitted fake bid documents.
Pinggao-Wisdom has quoted a price of Rs 81.08 million to install 90,000 smart electricity meters.
According to the Kathmandu Valley Smart Metering Project coordinator Juju Ratna Shakya, the contractor has begun collecting meter data of the targeted households. “The contractor is expected to install and operate the automated metering system by December 2020,” he said, adding that automating the distribution network by fitting smart meters is consistent with the effort to reduce electricity distribution losses to 8.5 per cent within this fiscal year by strengthening the power delivery infrastructure.
Although the power utility has slashed transmission and distribution losses to 15.32 per cent, which has saved Rs 7 billion in the past three years, the NEA is still unable to bank in a substantial 1,156.85 gigawatt hours of energy owing to such losses.
The reduction of distribution losses is considered by energy officials to be a fundamental effort consistent with achieving Sustainable Development Goal 7 (Sustainable Energy for All) as well as Nepal’s Nationally Determined Contributions for the United Nations Framework Convention on Climate Change.
The ADB has provided $150 million as a 32-year term concessional loan at 1 per cent interest during the eight-year grace period and 1.5 per cent interest after the grace period under the distribution enhancement project.
According to the development partner, the power utility will require about $500 million to rollout 5 million smart meters across Nepal; and a major part of this amount will cover the purchase of smart meters – including communication modules – meter boxes and communication infrastructure like data concentrator units, gateways and routers.

Allow the NRNs to trade, share investors ask government

The investors have asked the government to allow the Non-Resident Nepalis (NRNs) to trade on the stock market. Submitting a memorandum to the Prime Minister, the stock investors asked the government to let the NRNs invest in the Nepal Stock Exchange (Nepse) that will help inject capital and increase demand of the stocks.
The Nepal Stock Exchange (Nepse) has lost more than 100 points in the last three months to 1,149.40 points from 1,280 points. Likewise, the daily turnover has sqeezed to Rs 150 million to Rs 200 million from Rs 300 million to Rs 350 million pulling the market capitalisation by around Rs 150 billion to Rs 1,435.32 billion.
The government has been talking about permitting investment by Non-Resident Nepalis in stocks for several years, but it has not happened yet due to lack of laws permitting them to repatriate profits from stock trading. As some NRNs may expect to take away profits from stock transactions in foreign currency, there is a need for a separate law to implement the provision.
Apart from Non-Resident Nepalis (NRNs) to trade on the stock market, they have also asked expanding remote work stations, resolving glitches in the online trading system and raise the margin loan ceiling.
They have asked to raise the ceiling to 80 per cent for margin loan, which will help propel the share market that has been witnessing a bearish trend in the recent months.
“We want the government to increase the loan-to-value ratio for margin loans to 80 per cent, which will help inject more money into the secondary market and boost demand for shares, reads a memorandum that the investors have submitted to the Prime Minister KP Sharma Oli today.
“Currently, investors can borrow up to 65 per cent of the value of the shares being used as collateral,” the memorandum further  reads, adding that the central bank – last December – hiked the ratio to 65 per cent from 50 per cent, acting on a 58-point recommendation submitted by a task force of the Finance Ministry. “The banks, currently, issue margin loans by calculating the value of the shares based on an 180-day average price or the prevailing market price, whichever is lower.”
The brokerage firms have also started issuing margin loan from today. The government has permitted 21 out of the 50 brokerage companies to provide margin loans. The investors can borrow from the brokerage firms to buy the stocks.
Thus, the increased cash flow will help boost stock prices, the investors said but the central bank claimed that raising the loan-to-value ratio for margin loans will make the banks unable to manage risk.