November 7: Nepal Electricity Authority (NEA) has changed some of the provisions in the power purchase agreement (PPA). NEA had been giving ‘take or pay’ facility to hydropower projects despite having provision of take and pay since August-September 2014. But now, NEA has curtailed the privilege it had been providing to the projects.

Two years ago, the government had announced an ambitious plan of producing 10,000 megawatts of electricity in the next ten years and had assured to provide take or pay facilities to the projects generating 30 percent of the proposed power on first-come-first-serve basis. The projects had been enjoying take or pay facility under this plan.

But the NEA’s decision on Monday, November 6, has stopped providing the take or pay facility, under which the state-owned power utility was obliged to buy the power generated by private companies irrespective of whether NEA needed it or not.

In contrast, the NEA pays to the projects only for the electricity it uses under the take and pay provision.

NEA announced that the take or pay facility had reached its limit as the PPA signed with different projects has already reached 3,500 megawatts.

NEA has so far signed PPA with 222 projects for the generation of electricity. However, the last six projects have been deprived of the take or pay facility as the government has already signed agreements to produce 3,500 megawatts of electricity, for which it had announced the take or pay facility.