With the Ministry of Energy (MoE) not being able to expedite power
development agreements (PDAs) of large hydropower projects, Prime
Minister Baburam Bhattarai has directed the ministry to hand over the
job to the Investment Board.
Prime Minister Bhattarai last week directed the board to take over the job of resuming PDA negotiations and concluding the West Seti deal with China Three Gorges International (CTGI), according to sources at the Prime Minister’s Office (PMO). “As there has been delay over the PDA signing for over three years, Prime Minister directed the MoE to handover the task to the Investment Board,” said source at PMO.
The parliamentary Natural Resource and Means Committee (NRMC) had also directed the government to bring the West Seti Project under the Investment Board’s purview. However, as ministry is yet to follow the Prime Minister’s direction, the PMO will write a formal letter to the board, asking it to take over the project, according to PMO sources.
After NRMC decision, the PMO had also asked the ministry to communicate with Three Gorges about the NRMC decision for amending the Memorandum of Understanding and holding further negotiations. “The ministry has not communicated with the Chinese company so far,” one of the sources said.
As per the Investment Board Act, hydropower plants with a capacity 500 MW and above come under the board’s purview. The board has been formed to provide a one-window solution to potential investors in mega projects.
The delay over PDA has been the major concern of hydropower developers. A total of seven projects are awaiting PDA since last three years. The delay has prevented them from entering into the construction phase.
According to the Energy Ministry, it has prepared the draft PDA and sent it to the Finance Ministry and Law Ministry for their inputs. The draft is yet to be forwarded to the Cabinet for final endorsement.
It has been four years since the government signed MoUs with two Indian companies—GMR Energy and Sutlaj Jalvidyut Nigam—to develop Upper Karnali (900 MW) and Arun 3 (900 MW), respectively. The Energy Ministry had committed to wrap up PDA within 18 months, while granting them survey licences. Same is the case with SN Power that is developing Tamakoshi 3 (880 MW).
The 38-month dillydallying over PDA has put developers on quandary. If PDA is initiated, these projects—with a combined capacity of around 4,000 MW—would enter construction phase. Also, a total of Rs 480 billion would come as foreign direct investment in the country.
GMR, while signing the MoU for the Upper Karnali, had agreed to provide 27 percent free equity and 12 percent free energy to the government. Likewise, Sutluj had agreed to give 21.9 percent of free energy from Arun 3.
Investors seek a government assurance through PDA that helps avert any possible social, economic or policy-level uncertainties during construction. Generally, issues related to taxes, licence period, free energy, royalty, repatriation right and parties’ obligations are included in PDA. After PDA is approved, the Department of Electricity Development (DoED) will issue generation licences to these projects.
The PDA signing process with these seven hydro projects were initially postponed in September 2010 after the UCPN (Maoist) asked the government to shelve projects being developed by Indian developers. The power tussle between the then energy minister Prakash Sharan Mahat and energy secretary Shankar Koirala further delayed the process.
Source: Kantipur
Prime Minister Bhattarai last week directed the board to take over the job of resuming PDA negotiations and concluding the West Seti deal with China Three Gorges International (CTGI), according to sources at the Prime Minister’s Office (PMO). “As there has been delay over the PDA signing for over three years, Prime Minister directed the MoE to handover the task to the Investment Board,” said source at PMO.
The parliamentary Natural Resource and Means Committee (NRMC) had also directed the government to bring the West Seti Project under the Investment Board’s purview. However, as ministry is yet to follow the Prime Minister’s direction, the PMO will write a formal letter to the board, asking it to take over the project, according to PMO sources.
After NRMC decision, the PMO had also asked the ministry to communicate with Three Gorges about the NRMC decision for amending the Memorandum of Understanding and holding further negotiations. “The ministry has not communicated with the Chinese company so far,” one of the sources said.
As per the Investment Board Act, hydropower plants with a capacity 500 MW and above come under the board’s purview. The board has been formed to provide a one-window solution to potential investors in mega projects.
The delay over PDA has been the major concern of hydropower developers. A total of seven projects are awaiting PDA since last three years. The delay has prevented them from entering into the construction phase.
According to the Energy Ministry, it has prepared the draft PDA and sent it to the Finance Ministry and Law Ministry for their inputs. The draft is yet to be forwarded to the Cabinet for final endorsement.
It has been four years since the government signed MoUs with two Indian companies—GMR Energy and Sutlaj Jalvidyut Nigam—to develop Upper Karnali (900 MW) and Arun 3 (900 MW), respectively. The Energy Ministry had committed to wrap up PDA within 18 months, while granting them survey licences. Same is the case with SN Power that is developing Tamakoshi 3 (880 MW).
The 38-month dillydallying over PDA has put developers on quandary. If PDA is initiated, these projects—with a combined capacity of around 4,000 MW—would enter construction phase. Also, a total of Rs 480 billion would come as foreign direct investment in the country.
GMR, while signing the MoU for the Upper Karnali, had agreed to provide 27 percent free equity and 12 percent free energy to the government. Likewise, Sutluj had agreed to give 21.9 percent of free energy from Arun 3.
Investors seek a government assurance through PDA that helps avert any possible social, economic or policy-level uncertainties during construction. Generally, issues related to taxes, licence period, free energy, royalty, repatriation right and parties’ obligations are included in PDA. After PDA is approved, the Department of Electricity Development (DoED) will issue generation licences to these projects.
The PDA signing process with these seven hydro projects were initially postponed in September 2010 after the UCPN (Maoist) asked the government to shelve projects being developed by Indian developers. The power tussle between the then energy minister Prakash Sharan Mahat and energy secretary Shankar Koirala further delayed the process.
Source: Kantipur
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