By amending the provisions of ”Take and Pay”, it was made that ”electricity purchase contracts can be entered into for projects whose energy consumption and export are confirmed based on financial risk assessment and where the electricity authority can pay its obligations.”
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It has been passed by the majority of the House of Representatives along with the budget amendment for the next financial year. The provision of 'take and pay' (take and pay) power purchase agreement (PPA) placed in the budget has been passed by amending it.
While parties including Congress and UML stood in favor of the budget, the main opposition Maoists remained in the unified socialist opposition. The fourth largest party in the parliament, RSVP, and the fifth party, RPP, were boycotted.
When presenting the budget on May 15, Deputy Prime Minister and Finance Minister Bishnu Paudel said in item number 227, 'Substations and transmission lines will be constructed in accordance with the schedule of completion of the hydroelectric project.
A policy will be taken to enter into power purchase agreements in such a way that the balance between power generation and consumption is maintained. The power purchase agreement will be done according to the 'take and pay' concept of the 'Run of River' project. The parliamentarians of the ruling and opposition parties objected to this provision.
After the chairman of the ruling Congress, Sher Bahadur Deuba, objected, on Monday Prime Minister KP Sharma Oli and he agreed to amend the provision without sending the message of the budget amendment. After the amendment, it has been made in the point that 'power purchase agreement can be entered into for projects where energy consumption and export are confirmed based on financial risk assessment and Nepal Electricity Authority is sure to be able to pay the obligations'.
Prime Minister Oli said that the policy was introduced with the intention of doing good in the electricity sector, but now it has been removed as it seems to do bad things. Tech and Pay was brought to do good. It was removed as it was going to do bad things," Prime Minister Oli said in Tuesday's House of Representatives meeting before the appropriation bill was passed.
In case of PPA in 'take and pay', the electricity authority buys the quantity it needs and pays only for it. In the case of PPA in 'Take or Pay', the authority has to take electricity according to the agreement made with the promoter, otherwise it has to pay the price to the promoter. If the power is not provided as per the agreement, the promoter has to pay a fine to the authority.
Authority has been doing PPA on 'Take or Pay'. In the case that the hydropower project can be built but the new transmission line is not completed or the capacity of the transmission line is reduced, the authority has set a time limit for the PPAs made on the basis of 'Take or Pay' and takes and pays electricity on the basis of 'Take and Pay'.
Deputy Prime Minister Paudel also told the Parliament that the provision of 'Take and Pay' was kept in the budget with good intentions. The purpose of that policy is to ensure that the produced electricity does not go to waste. It wants to emphasize on attracting private investment in profitable projects with guaranteed energy consumption, reducing the risk of investment in the private and banking sector, giving priority to investing in reservoir and semi-reservoir (storage and picking run of river) projects and meeting the existing energy shortage during the dry season, managing the potential liabilities of the Nepal government and creating electricity contracts that can only be financially sustained, he said.
Paudel said that the policy has been moved forward in view of the Energy Development Roadmap, 2081 issued by the government, but taking into account the issues raised in the Parliament, another arrangement had to be proposed. Congress MP and former finance minister Gyanendra Bahadur Karki said that the budget has been reformed and passed. "Usually, there is a practice of passing the appropriation bill as it is. Improvements have been made this time because they can be improved as per the need, said Karki.
