Private Sector Incurring Losses Over Billion Due to NEA’s Reluctance to Buy Electricity 

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Private Sector Incurring Losses Over Billion Due to NEA’s Reluctance to Buy Electricity 

December:  Private hydropower companies incurred losses of more than Rs 1 billion due to the reluctance of Nepal Electricity Authority (NEA) to procure the electricity produced by the private power producers last year. 


According to Independent Power Producers’ Association Nepal (IPPAN), twenty-seven power producer companies faced losses of more than Rs 1 billion after Nepal Electricity Authority (NEA) did not purchase their power last year.  


IPPAN says that NEA was reluctant to buy the power due to overload in transmission line following excessive production of the energy. IPPAN said that it had met with Energy Secretary Dinesh Ghimire and drew attention to  the problem facing them. 


The work to collect losses incurred by the private hydro power companies is underway. “The work to collect losses of Chepe Khola, Lower Modi, Dordi Khola, Ghalemdi Khola, United Idi Mardi, Buddhabhumi, Upper Syange, among others, is underway”, said IPPAN.


Nepal Electricity Authority signs an agreement with power producing companies on the basis of take or pay and take and pay categories. As per the take or pay agreement, NEA has to procure all the power generated by hydro power company once the project is connected to the transmission line. But, private power producers ink take and pay agreement for short-term due to delay in construction of transmission lines.


As per the take and pay agreement, the NEA purchases the electricity if need be. It is free not to procure the power as well.  “Nepal Electricity Authority’s misuse of the take and pay provision has given trouble to power producers”, said IPPAN Chairman Mohan Kumar Dangi. He blamed the NEA for failing to explore market to sell power.


According to Dangi, delay in the construction of transmission lines by the NEA has incurred losses to the some hydro power projects as they have failed to evacuate power to the national grid.


On the other hand, consumers are facing problem in quality supply of electricity in winter season. IPPAN Vice-chair asked the NEA to construct transmission lines as early as possible and help private power producers to lower the losses. 


Nepal Electricity Authority (NEA), however, says problem has arisen as private power producers connect their energy to sub-station other than mentioned in Power Purchase Agreement (PPA).


NEA Spokesperson Suresh Bahadur Bhattarai said that NEA had not purchased power due to overload in the system during rainy season. NEA officials say that domestic electricity demand has to be increased for long term solution. 

When asked about the delay in the construction of transmission lines, NEA Spokesperson Bhattrai said, “NEA’s sole effort is not enough for transmission line construction adding “Land dispute, court cases, and social problem arise during the construction of transmission lines and it takes time to resolve them”.


NEA has been taking eight to nine years to construct a transmission line that is supposed to be completed in two to three years. 

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