Blunders : one after another

The tendency of our Nepali experts introducing new policies without analyzing the impact and crunching numbers is something I have never understood. I wonder if they ever do analysis beforehand (most probably, they don’t).

HIDCL’s right share proposal

Hydroelectricity Investment and Development Limited (HIDCL) has notified Nepal Stock Exchange (NEPSE) regarding the issuance of its 100% right share.

Upper Tamakoshi – a reality check for much hyped hydropower?

After long delays due to various reasons, Upper Tamakoshi is now all set to float its local shares. According to its invitation letter, the projected cost is estimated to be Rs. 66.08 billion. This makes per MW cost of Rs. 14.49 crore. Although the per MW seems to be at the lower side compared to recent market trend (above Rs. 20 crore), the project, however, will not able to keep up its hype due to its lower PPA rate which is at Rs. 4.06 per kWh (average) for the first year.

Compensation clause for 30% dry energy.

With new guidelines effective from this year, there is an option of 30% dry energy for RoR projects. In this option, hydropower projects will receive NRs. 8.40 per kWh for six months (Mangsir 16 – Jestha 15) and NRs. 4.80 for the remaining 6 months (Jestha-16 to Mangsir 15). However, the total dry energy should be more than 30% of the total energy supplied. Any projects suppling dry energy below 30% will be penalized. The formula for such compensation to NEA will be the following

Vicious Cycle and ways to overcome it

It is needless to say that we have not been able to harness 2% of the total hydro potential. With a stable government on the horizon, I think it is the right time to debate on how to exploit our resources.

Financing capacities of Nepali banks

The total loan and advance of Nepalese commercial banks stood at NRs. 1,801.567 billion at the end of Ashwin 2074 or mid October, 2017 (source: NRB). With 5% minimum lending requirement in hydropower sector as provisioned by Central Bank of Nepal, the total loan available is NRs. 90.078 billion. On the other hand, hydropower projects with install capacity of 2,043.6 MW have done the financial closure while 910.31 MW are in the process of securing debt (NEA’s Annual Report 2017). Assuming NRs. 180 million per MW as the construction cost, and 70:30 as Debt equity ratio, the total loan requirement is NRs. 372.19 billion. Even at the 10% as minimum lending requirement (assuming that Central bank will increase the provision), the total funds available will be around NRs. 180.157 billion.

West Seti Hydropower in limbo

It looks like another company is going to pack its bag. China Three Gorges International Corporation, the potential builder of West Seti Hydropower Project (750 MW), showed dissatisfaction over the Power Purchase Rate Policy proposed by Nepal Government. Storage project like West Seti is entitled to receive NRs. 12.40 per kWh and NRs. 7.10 per kWh during dry and wet season respectively.

Budhigandaki vs Upper Karnali vs Arun 3

In a country like Nepal where financial resource is scarce, we have no other option than use it wisely to get optimum benefits. However, things are not applied in Nepal as learned in economic class during our uni days.