The Nepal Electricity Authority (NEA) has started the process to extend the Required Commercial Operation Date (RCOD) for 218 hydropower projects, while also implementing a new four-group classification standard for them.
The Nepal Electricity Authority (NEA) has started the process to extend the Required Commercial Operation Date (RCOD) for 218 hydropower projects. These projects had signed Power Purchase Agreements (PPAs) but could not begin commercial production on time for various reasons.
To do this, the Authority has, for the first time, implemented a policy that categorizes projects into four groups based on clear standards.
A meeting of the NEA board of directors, held on Ashar 32, decided to classify these projects into four groups. This classification is based on the physical progress of the projects, their compliance with PPA obligations, and their current RCOD status.
Following this decision, the process for extending the RCOD has already been started for projects falling into Group ‘A’ and Group ‘B’.
Minister of Energy, Water Resources and Irrigation, Biraj Bhakta Shrestha, met with hydropower developers on Wednesday. He clarified that the government’s aim for RCOD extension is to help ongoing projects, not to create problems for the private sector. He also mentioned that his ministry is committed to developing a system where such decisions are made through an institutional process, not based on the wishes of any particular individual.
Minister Shrestha highlighted that the government is sensitive to the self-respect and investment security of the private sector. However, he also emphasized that developers must fulfill their own responsibilities on time. He believes that the energy sector will only achieve its expected growth when there is mutual accountability between the government and private sector.
According to NEA, there are currently 320 hydropower projects under construction, with a total capacity of 8,292 megawatts. Among these, Group ‘A’ includes 150 projects with a capacity of 4,491 megawatts. Group ‘B’ consists of 68 projects with a total capacity of 1,420 megawatts. The remaining projects are categorized into Group ‘C’ and Group ‘D’.
During the discussion, Mr. Uttam Blon, Senior Vice President of the Independent Power Producers’ Association, Nepal (IPPAN), suggested that all projects should receive a final RCOD extension based on the principle of natural justice, with specific conditions. He urged for equal opportunities for all projects, provided they commit to completing their PPA within one year and start construction within six months afterward.
Project Classification Standards
According to the standards set by NEA, Group ‘A’ projects include those whose RCOD period has not yet expired. These projects have either fulfilled their obligations listed in the PPA, such as production license, financial management, and land management, or they still have time remaining under the agreement to complete them.
Group ‘B’ consists of projects whose RCOD has ended but could not start operation due to delays in transmission line or substation construction on NEA’s part. This group also includes projects whose construction was affected by unforeseen circumstances (force majeure), have received RCOD extension approval with necessary evidence, or has achieved at least 25 percent physical progress by the time their RCOD period expired.
Group ‘C’ will include projects whose RCOD has not yet ended but have not completed basic obligations like production license, financial management, or land management. It also includes projects that have achieved less than 25 percent physical progress by the time their RCOD expires.
Group ‘D’ projects are those whose RCOD has already ended and they have not fulfilled essential obligations like production license, financial management, or land management. This group also includes projects whose survey or production license have been cancelled.
For measuring physical progress, NEA is using the procedure from 2071 B.S. As per this, physical progress means when construction of major structures like headworks, tunnels, pipelines, and powerhouses has begun and shown significant development.
For solar projects, indicators of progress will also include signing panel purchase agreements, opening LCs (Letters of Credit), completion of land management, and the start of mounting structure and foundation construction.
Projects in Group ‘B’ will be regularly monitored. NEA’s Electricity Trading Department will issue necessary instructions for timely completion of construction and will monitor whether these instructions are implemented. There is also a provision to reclassify projects within a maximum of six months if needed.
Similarly, projects in Group ‘C’ will receive a ‘Notice of Default’ as per the PPA. If there is no satisfactory improvement or response after that, NEA has stated that it will proceed with the process to cancel the agreement.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
