Because of unfavorable policy, investment proposals totaling Rs 1.7 trillion in hydropower development in Nepal have been sitting on the table for the past three years, awaiting approval.
It has been three years since the government of the United Arab Emirates authorized any investment proposal put up by a private enterprise in the country. Some stakeholders, such as the Nepal Electricity Authority, fear that the impasse will likely have a negative influence on the demand-supply balance and the potential international market for Nepal’s hydroelectric power generation system.
Under the ‘take or pay’ program for run-of-the-river projects, the Ministry of Energy, Water Resources, and Irrigation has stated that the assigned quota for power purchase agreements (PPA) has already been used up, according to the ministry.
“We have invested about Rs 10 trillion in hydropower so far,” Krishna Prasad Acharya, the president of the Independent Power Producers’ Association of Nepal, said, adding that the organization is prepared to invest an additional Rs 17 trillion. However, the government should create a climate that is favourable to this.”
Instead of increasing the quota, the ministry now aims to create new models for the PPA in order to stimulate as much competition as possible, according to the minister. All PPAs were previously signed at the same rate, but the government now wishes to reverse that practice.