Panel for signing PDA with GMR

A technical committee formed to review the document of the Power Development Agreement (PDA) between the Investment Board of Nepal (IBN) and India’s GMR-ITD Consortium to develop the 900MW Upper Karnali Hydropower Project has recommended signing the agreement with a few revisions in the document.

The committee, headed by National Planning Commission Vice-chairman Govinda Raj Pokharel, plans to submit the review report to Prime Minster Sushil Koirala on Monday. With differences among members over a few points in the documents, the scheduled plan to submit the report on Sunday was cancelled.

According to a member of the committee, the members are still divided over whether export-oriented projects like Upper Karnali should be provided Rs 5 million per megawatt in grant as announced in the budget. The 13th IBN board meeting had decided to provide the subsidy to GMR and it was included in the agreed PDA document between IBN and GMR. A source said two members of the committee have opposed providing the grant, arguing that the facility is only meant for projects producing power for domestic consumption. “Those dissatisfied with the provision are of the view that we have to try to convince GMR to seal a deal without the incentive,” said a committee member.

Another committee member, who is against the incentive, said he was not against the PDA signing, but the national interest should be considered. “In the name of promoting a project, we should not let go all the benefits that should have come to the nation.”

The budget for the current fiscal year talks about providing a lump sum of Rs 5 million per megawatt to producers that connect the generated electricity to the national grid. The budget has talked about providing an additional 10 percent of such a grant to producers that connect the generated electricity to the national grid within fiscal year 2017-18.

Another contentious topic is “force majeure”. A few committee members have sought reduced liability to the government. The committee has recommended the “force majeure” provision is applicable only to the company, but not to the contractors.

According to an IBN official, the incentive will be provided only after the completion of the project, which is why providing incentive isn’t against the national interest. “By the time GMR completes the project, it will be spending Rs 140 billion. Rs 5 million per megawatt means the government has to provide just Rs 4.5 billion,” the official said, adding since the Agriculture and Water Resource Committee (AWRC) of the Parliament and the technical committee has given a go ahead to the project, the PDA might be signed within a month.

On the project’s impact on downstream irrigation projects, the technical committee has recommended that within six months after the agreement, the generation company should undertake and conclude a study, under the direction and upon the acceptance of the Nepal government, to ascertain the impact on all existing projects downstream as well as river training works, river banks and settlements.

The downstream  projects include Rani-Jamara-Kulariya and associated hydropower scheme, Rajapur project, Suryapatuwa irrigation project and other scheduled projects.

The report has also recommended that based on the study report, the generation company should take measures, including a re-regulating dam to the extent feasible to ensure designed flows of water to the irrigation projects, including other planned projects, and ensure no negative impacts are incurred on river banks, settlement and existing river training works by consulting with Ministry of Irrigation.

The committee is preparing two reports—a review of the agreement document prepared by the IBN and a new PDA agreement document which incorporates the ideas of other stakeholder agencies of the government. With the current PDA talking about delivering 2MW riparian release power station meant for the local community, the committee has recommended GMR to explore possibilities of increasing the generation capacity of the power station without harming the environmental commitments.

While IBN’s PDA report had stated 12 percent of “free energy” will be made available to Nepal, the committee has recommended mentioning it as 12 percent of “free energy and power”.

Nepal yet to decide how to proceed with planned PTA

Two weeks after receiving an invitation for negotiations, Nepal has still not decided how to proceed with the planned power trade agreement (PTA) with India as it is unsure about the leeway granted by the cross-party committee.

A top Energy Ministry official said they were confused about “how much to give and take” during the talks since the cross-party committee led by Finance Minister Ram Sharan Mahat has asked the ministry to make the draft prepared by the committee the bottom line for negotiations.

Unable to decide what should be discussed during the negotiations, the ministry has written to the Indian side asking for feedback on the draft sent by Nepal.

“The cross-party committee has directed us to take the agreed document among the political parties as the bottom line and strike an agreement only,” said Energy Secretary Rajendra Kishore Kshatri at the meeting of the Agriculture and Water Resources Committee (AWRC). “As there is no ground for flexibility, we are in a dilemma on how to do ‘give and take’ during the negotiations.”

He added that they had sent a letter seeking comments on the draft PTA sent by Nepal to first test the waters before setting the date for negotiations. “The ministry will wait for a week for the Indian side to reply on the issue. It will then think about setting the date for the meeting,” Kshatri said.

The new draft says that the power tariff will be determined by the market while third parties will not be barred from making power deals in Nepal and India. 

According to the new draft PTA sent by Nepal, the PTA will be valid for 25 years and it can be extended through mutual consent. Even though the joint communiqué released by Nepal and India at the end of Indian Prime Minister Narendra Modi’s visit to Nepal has directed that power trade negotiations should be concluded within 45 days, the delay in fixing the country’s agenda has raised doubts whether the PTA will be signed within the stipulated time. According to Kshatri, the Energy Ministry is currently busy sketching the possibilities of how to deal with the Indian side and the possible questions they might have to defend to keep the planned agreement within the terms and conditions set by the political committee.

Asked about the details regarding the agreement, Kshatri said that they were trying to incorporate several aspects like the Investment Operative Guideline 2009 of the World Trade Organisation that states that the companies established in the two countries should get equal facilities. Likewise, the provision of Non-Discriminatory Access, which bars the Indian side from giving priority to Indian companies, is being considered.

Stressing the need for signing the PTA now, Kshatri said that many hydropower projects having a capacity more than 5,000 MW have been awarded to Indian companies, and not signing the PTA means these projects would return to Nepal’s basket without being developed.

The government has given construction licences to varied projects with a combined capacity of more than 13,000 MW.

 Source:- E-kantipur