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Stalled PDAs to be revived by Feb-end

Updated: 25-Oct-14

Power development agreements (PDAs) that have remained stalled could move ahead by February-end. Following Prime Minister Baburam Bhattarai’s instruction on Saturday, the Ministry of Energy (MoE) has said that PDA negotiations with two Indian hydropower d

KATHMANDU, JAN 09 -

Power development agreements (PDAs) that have remained stalled could move ahead by February-end. Following Prime Minister Baburam Bhattarai’s instruction on Saturday, the Ministry of Energy (MoE) has said that PDA negotiations with two Indian hydropower developers—GMR Infrastructure Limited and Satluj Jal Vidhyut Nigam—would move forward by the end of next month.

The ministry has formed a committee led by its joint secretary Rajendra Kishore Chhetri to accelerate the PDA process. According to MoE officials, the ministry has completed the draft of the PDA which will be forwarded to the cabinet for its approval. The ministry has formed a technical committee to carry out a technical assessment of the draft. “Once the technical assessment is done, it will be sent to the cabinet,” said Chhetri.

Seven PDA agreements have been delayed. No progress has been made regarding the Upper Karnali (900 MW), Tamakoshi 3A (880 MW), Upper Marsyangdi (600 MW), Arun III (402 MW), Lower Arun (400 MW), Balefi (50 MW) and Likhu (34 MW) for around two years.

The Upper Karnali is being built by an international consortium led by India’s GMR Infrastructure, the Arun III by Satluj Jal Vidhyut Nigam and the Tamakoshi 3A by Norwegian SN Power. After the PDA is approved, the Department of Electricity Development (DoED) will issue generation licences to these projects.

Investors seek a government assurance through the PDA that it will help avert any possible social, economical or policy level uncertainties during the construction phase of the projects. Generally, issues on tax, licence period, free energy, royalty, repatriation right and parties’ obligations are included in the PDA. After the PDA, these projects will enter the construction phase.

MoE officials said they would first invite GMR and Satluj for PDA negotiations. “The necessary preparations have been made. We will call GMR and Satluj in the first stage for a PDA by the end of February,” said Chettri. The ministry will sign PDAs with the five other hydropower developers after signing pacts with the two Indian companies.”

According to Chhetri, delays in readying the draft has held up signing agreements with the hydropower developers. “As the PDA will remain effective for 30 years once its is signed, it needs thorough preparations.” He added that the ministry had studied the documents from these two companies including the financial model they have proposed.

The PDAs of seven hydro projects were initially postponed after the UCPN (Maoist) asked the government to shelve projects being developed by Indian developers in September 2010 and then by a power tussle between the then energy minister Prakash Sharan Mahat and energy secretary Shankar Koirala. DoED had also started PDA negotiations with India’s GMR, developer of the Upper Karnali, while it was planning talks with SN Power, developers of the Tamakoshi 3.
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