Thursday, December 9, 2010

"Fall back" PPA

NEA has signed “fall back” PPAs for Balephi project, 50 MW and Upper Marsyangdi II, 600 MW in Kartik 2067. Kantipur reported about the signing of PPA with former on 19th Marga and it was reported that the tariff is Rs 4.27 per unit. But the media is yet to report about the signing of fall back PPA for the latter.

The “fall back PPA” for Balephi project was signed between NEA and Bhilwara group of India (fronted by Tribeni group owned by Sanghais of Nepal) and for Upper Marsyangdi II with GMR. These agreements are to stay in force till Dhalkebar-Mujaffpur 400 kV Transmission Line (T/L) becomes operational. This evidences the following:
• These agreements were signed to befuddle/fool people clamoring for parliamentary ratification of the agreement signed by GoN with the proponents of these projects under Article 156 as these are export oriented projects.

• In other words, although these projects are export-oriented projects, with the signing of these PPAs, people could now be led to believe that the electricity generated by these projects are for domestic consumption.

• It now becomes obvious, contrary to the claims being made by MoE officials including the minister, that 400 kV Dhalkebar-Mujaffpur T/L is not being built to import power from India to mitigate load shedding problem in Nepal. One needs to remember that the proponents of Arun III, Tamakoshi III, Likhu projects too are planning to use this very T/L to export power.

• Besides, Bihar itself is suffering from power deficit problem and people there cannot be expected to be fools like us who would plan to export power when we ourselves are looking at serious power deficit problem for “decades” to come.

• Further, if Bihar had power to spare, they wouldn’t be planning to import from Nepal.

• Moreover, it is foolhardy on our part to have these projects export power at less than Rs 3 while we are importing at the rate between Rs 7.88 and Rs 10.72. It proves the Indians right who say that people in Nepal are nice, but dumb!

• However, this also proves that people in India are smart as they are planning to import power at less than Rs 3 while exporting at the rate between Rs 7.88 and Rs 10.72 to Nepal. Very neatly creative financing! They will be exporting, literally, our own power at a margin between Rs 4.88 to Rs 7.72. And it is surprising (actually not surprising at all, knowing the people that are involved) that we in Nepal are falling for such a deal.

• In this backdrop another foolhardy thing that we are doing is borrowing from multilateral financial institutions to build this T/L which will mitigate load shedding problem in India, rather than Nepal.

• Furthermore, even if we in Nepal want to foolishly import at a rate between Rs 7.88 and Rs 10.72 from India in the name of mitigating load shedding problem, while exporting at around Rs 3, we should have invested to build T/L to an area which is power surplus (not power deficit), like Silguri.

• Dr Jivendra Jha, executive director of NEA is right in expressing his inability to sign new PPA for lack of transmission infrastructure. Nepal should “beg, borrow or steal” to build necessary T/L. (I am sure people won’t run around to steal upon my exhorting as such. I am just repeating an oft repeated quote to stress Dr Jha’s point with which I too agree with).

I pray Lord God to help this country!

With best regards,

Ratna Sansar Shrestha, FCA

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