It has been found that there has been a fraud in the 'take and pay' provision, which Prime Minister KP Sharma Oli himself said had been amended in the budget.

After reaching an agreement with the ruling Congress, Prime Minister Oli announced in Parliament that the provision for making power purchase agreements (PPA) based on ‘take and pay’ has been removed from the current fiscal year’s budget, but it has not been amended so far.

While presenting the budget on 15 Jestha, Deputy Prime Minister and Finance Minister Bishnu Poudel had said in point number 227, ‘Substations and transmission lines will be constructed in a manner consistent with the completion schedule of hydropower projects.’ A policy will be adopted to make power purchase agreements in a manner that maintains a balance between electricity production and consumption. Power purchase agreements will be made in accordance with the ‘take and pay’ concept of the ‘Run of River’ project.’ MPs from both the ruling and opposition parties had objected to this provision.

In April, the NEA had issued a notice to invite applications for PPA for hydropower projects with a capacity of more than 10 megawatts. 54 run-of-river and semi-reservoir hydropower promoters that had completed grid connection agreements by 12 Chaitra 2081 were invited for PPA. But the NEA has stated that the PPA has been stopped after the new provision of 'take and pay' for run-of-river projects was introduced in the budget. The PPA process of 4967 MW of various hydropower projects that the Nepal Electricity Authority had started ahead of the budget has been stopped due to the lack of amendment to the provision. The NEA has informed that it is waiting for a decision on whether the provision has been amended to proceed with the PPA process.

Ganesh Karki, Chairman of the Independent Power Producers Association of Nepal (IPPAN), says that the amendment should have been made since Prime Minister Oli and Finance Minister Bishnu Poudel had already spoken about this issue in Parliament. 'The amendment was made after they spoke before passing the budget in Parliament,' Karki said, 'There is a record in Parliament.' If you say no, then not only us have been deceived, but all the MPs have been deceived.’ Karki argues that if the NEA is seeking a written letter to implement it since it has already spoken in Parliament, then the Ministry of Energy should coordinate. ‘We will understand whether the ‘take and pay’ provision has been removed from the budget or not,’ he said, ‘We will put pressure on the Ministry of Energy.’

The amendment was made after the Prime Minister and Finance Minister spoke in Parliament, if you say no, then all the MPs have been deceived

–Ganesh Karki, Chairman, IPPAN

After the budget included a provision for conducting PPA in accordance with ‘take and pay’, energy promoters had put pressure on all sides. Even the ruling Congress MPs had objected to ‘take and pay’. After the threat of failing the budget, Prime Minister Oli had met with Congress President Sher Bahadur Deuba on 9 Ashad and held discussions. Prime Minister Oli and Deuba had reached an agreement to remove the provision without sending a message of budget amendment.

Based on the same agreement, the Prime Minister had clarified that the ‘take and pay’ provision had been removed from the budget statement on 10 Ashad. While answering questions raised on the budget, Prime Minister Oli had announced in the House of Representatives that the provision had been removed. ‘Take and pay was brought in to do good. It was removed because it was going to do bad,’ Oli had said.

In the same meeting, Finance Minister Poudel did not mention anything about the amendment of the ‘take and pay’ provision from the budget. ‘Based on the financial risk assessment, power purchase agreements (PPA) can be made for projects where energy consumption and export are certain and the Nepal Electricity Authority is assured of paying its obligations,’ he had said. He had emphasized that since the government alone cannot do electricity and energy development, the participation of the private sector is also necessary.

The Finance Minister has clarified further about point 227 of the budget related to 'take and pay' in the Parliament, but no amendment has been made - Shyam Prasad Bhandari, Spokesperson, Ministry of Finance

The private sector and stakeholders interpreted the address of Finance Minister Poudel and Prime Minister Oli as meaning that the budget has been revised and the provision for conducting PPA in accordance with 'take and pay' in river flows has been removed. Spokesperson of the Ministry of Finance Shyam Prasad Bhandari said that the Finance Minister has clarified further about point 227 of the budget related to 'take and pay' in the Parliament, but no amendment has been made. He said that if there is any difficulty in implementing the point, the Ministry of Energy should facilitate.