NEA proposes hiking electricity tariff by 20 pc

The board of directors of the Nepal Electricity Authority (NEA) has decided to forward a proposal to increase the retail electricity tariff by 20 percent to the Electricity Tariff Fixation Commission ( ETFC) on Sunday.
"The NEA board meeting held on Sunday has formally made a decision to ask the ETFC to increase the retail electricity tariff by 20 percent," Rameshwar Yadav, managing director of the NEA, told Republica.
ETFC has also indicated that it will endorse the recommendation of the NEA board. The issue of revising the electricity tariff has fallen in limbo for the last 11 years. It has also been a matter of dispute in the hydropower sector.
Meanwhile, ETFC is also working to develop a system of automatic hike of electricity tariff by 5 percent each year, according to Gyanendra Lal Pradhan, a hydropower expert.
Currently, the power tariff is Rs 7 per unit. "The hike will help NEA to cut losses which hover around Rs 7 billion annually," experts say. "The hike in tariff should not be taken as a measure to relieve the NEA of losses, rather it should also be seen a measure to encourage the private sector to make fresh investment in the hydropower sector," Pradhan said.
Most of the countries slap competitive prices of power in order to keep the power sector functional. "We also have to increase the tariff but that shouldn´t be an extra burden on the consumers," Pradhan argued. "Rather it should be helping them to get enough power all the time so that the moribund industrial sector of the county gets a remedy to come out from the current situation."
The power prices should be in sync with the inflationary pressure in the market. "The 11-year long issue of increasing electricity tariff should be resolved as soon as possible," Pradhan said.

Govt extends RFP submission deadline

The government has extended the deadline for submission of request of proposal (RFP) document for the Kathmandu-Tarai Fast Track project from the selected Indian infrastructure developers by a month till 21 June.
“We decided to give one more month to the selected infrastructure developers to submit RFP document,” Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure and Transport (MoPIT), told Republica.
The government has shortlisted three Indian infrastructure developers -- namely Reliance Infrastructure, Larsen & Tourbo (L&T) and Infrastructure Leasing & Financial Services (IL&FC) to develop the project.
Earlier, the government had asked the three firms to submit RFP document within three months. It decided to extend the deadline after all the firms requested for more time.
The firms were selected on the basis of their previous experience working under the built-own-operate-transfer (BOOT) and other capabilities such as capital and their past history of completing work on time. The government shortlisted these firms from nine aspirant companies that had registered expression of interest to develop the project.
The government has decided to develop the project under the BOOT Act.
"We will conduct detailed study on their RFPs once they submit the required documents,” added Sitaula.
The MoPIT, which is overseeing the implementation of the project, has said the track opening works of the mega project have already been completed. The 76-km expressway links Kathmandu with Nijgadh of Bara.
According to the cost estimation of the Asian Development Bank (ADB) in 2008, Rs 67 billion would be required to develop the project.

NEA chief involved in irregularities worth millions

It has been found that senior officials of Nepal Electricity Authority (NEA), including Managing Director Rameshwar Yadav, were involved in unauthorized supply of electricity to more than a dozen industries, causing losses worth millions of rupees to the government, a latest report says.
The report submitted by the high-level probe committee formed by the government has named officials involved in irregularities at the five different load distribution centers of NEA along the Itahari-Biratnagar industrial corridor. The officials were involved in such unlawful activities since August 2006, the report says.
According to the report, Yadav had permitted round-the-clock electricity supply to Pashupati Simpack, Shivam Plastic and Kamala Rolling Mills when he was the general manager of NEA in February 2011. Yadav, however, couldn"t be contacted for comments.
According to an official involved in the investigation, irregularities in five different load distribution centers have caused loss of around one million per day to NEA.
Some of the officials involved in such activities have already retired from NEA. The report says former general managers Shyam Bahadur Shrestha, Deepak Upadhaya and Yugal Kishore Shah, who have already retired from NEA were also involved in the irregularities.
According to the report, Shrestha had permitted round-the-clock power supply to Reliance Spinning Mills in 2006 and Upadhya to Arihanta Multi Fibers, Raghupati Jute Mills and Nigale Cement, Dhankuta. Similarly, Shah had permitted round-the-clock power supply to Hulas Wire Industries.
Sudhir Prasad Singh, regional director of NEA has also been found involved in illegal supply of electricity to industries along the corridor.
The government had formed the probe committee after it was revealed that NEA"s load distribution centers in Itahari, Duhabi, Dhankuta and Siraha illegally supplied electricity to 14 firms along the Itahari-Biratnagar industrial corridor even during load-shedding hours.
The probe committee was led by Deputy Director General of the Department of Electricity Development Sundar Shyam Shrestha.
The probe committee submitted the report to energy secretary Hari Ram Koirala a week ago. “However, the ministry has returned the report to NEA asking it to carry out a detailed investigation,” a source at the ministry told Republica.

No headway in minimum pay hike talks

The tripartite negotiation among government, employers and employees on minimum salary of workers is not making any headway as both employees and employers continue to stick to their stance.
´Employees are not ready to compromise on their demand for minimum monthly wage of Rs 12,400, while employers are for increasing pay based on inflation and consumer market price,” a government official involved in the negotiation told Republica.
Pashupati Murarka, vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said employers were not in a position to double the existing minimum monthly pay of Rs 6,200. ´We are ready to increase the minimum wage by around 18 percent which would be a genuine increment based on calculation of inflation over the past two years,´ Murarka told Republica on Friday evening.
Representatives of employers" organization and trade unions are holding series of negotiation meetings in the presence of government officials since one month.
Eleven trade unions affiliated to different political parties have been pushing for doubling the existing minimum wage.
“The trade union representatives are showing no sign of compromise,” the official said.
The negotiation meeting held on Friday concluded without any progress as both the parties - employers and employees - denied to budge from their stance.
´We are ready to increase minimum wage as per the market situation,´ Murarka said. ´The trade union leaders should understand the existing gloom in the industrial sector.”
Meanwhile, representatives of both the employers and employees have raised the issue of social security for workers. ´But both the employers and employees have their own demands on it as well,” Kewal Prasad Bhandari, executive director of the Social Security Fund (SSF), said.
Highlighting the importance of social security schemes for decent labor market, Bhandari said both the employers and employees should understand each other. “Doubling of minimum wage might have negative effects in the economy as only around 300,000 workers will be benefited from the pay hike,´ Bhandari said. ´This increment will pull the inflation up and other people working in the informal sector will suffer.´
The industrial sector of the country is already reeling under power shortage. Bhandari said minimum wage should be raised based on level of productivity of industrial enterprises.
´The ongoing negotiation should conclude with an understanding to establish a more scientific system of increasing minimum wage every two years,´ added Bhandari
Two years ago, employers, trade unions and government officials had agreed to fix minimum monthly remuneration of worker at Rs 6200, including allowance of Rs 2,650, and daily wage at Rs 231.

HIDCL may invest in Upper Dordi 'A' hydro project

Hydroelectricity Investment and Development Company Limited (HIDCL), a public enterprise that was formed to address energy crisis in the country by injecting investment in the hydropower sector, is mulling over investing in Upper Dordi ´A´ hydropower project.
The project, which is estimated to cost Rs 4 billion, is being developed by Liberty Energy Hydropower Company Limited (LEHCL). The HIDCL has formed a risk assessment cell (RAC) to conduct a study on whether to invest in the project.
According to a source at the Ministry of Energy (MoE), the four-member RAC has already completed field study of the Lamjung-based project.
Keshav Dhwaj Adhikari, joint secretary at the MoE, leads the RAC. The other members of the RAC are Sagar Raj Gautam, senior divisional engineer at the Department of Electricity Development (DoED); Churna Bahadur Oli from DoED; and Sanjeev Baral, senior divisional engineer at the MoE.
Kush Kumar Joshi, chairman of LEHCL, said the HIDCL has agreed in principle to invest in the project. “Similarly, Nepal Investment Bank Limited (NIBL) is leading a consortium of banks to invest in the project. State-owned Nepal Bank Limited has also agreed to invest,” Joshi said. He further added that NIDC Development Bank, Global Bank and Grameen Bikas Bank are also in the consortium.
However, the HIDCL, which has already invested Rs 1billion in Myagdi-based Mistri Khola (42 MW) hydropower project, has not taken any official decision about investing in the Upper Dordi ´A´ project.
"The HIDCL will decide on the issue only after the RAC gives its suggestion," the source said. "The HIDCL does not have its own Act regarding investment."
Nepal Rastra Bank (NRB), the central monetary authority, has allowed it to make investment through commercial banks until it develop its investment regulation.
The project has already signed power purchase agreement (PPA) with Nepal Electricity Authority (NEA). As per the agreement, NEA will purchase power generated by it at Rs 4.8 per unit in the wet season and Rs 8.4 per unit in the dry season.
"We hope to get power generation license from the DoED soon," Joshi said.
The electricity generated from the proposed run-of-the river type project will be connected to the national power grid through the proposed Udipur Hub near Middle Marsyangdi Hydropower Project.
According to the company, it would need to build about 12 km long transmission line to connect energy generated from the project to the national grid.
"The project has payback period of be five years and seven months," according to information posted on LEHCL´s web portal.
The project will start generation within three years of the start of construction works.

Consortium to invest Rs 6 billion in Mistri Khola project

A consortium of seven banking institutions and a group of 80 businessmen have teamed up to invest Rs 6 billion in Mistri Khola (42 MW) hydropower project.
Robust Energy is developing the project located in Myagdi district. “Finally, we have arranged financial resources for the development of the project," Subrat Dhital, chairman of Robust Energy, said.
According to a company source, Nabil Bank, Nepal Investment Bank Limited (NIBL), Nepal Bank Limited (NBL), Laxmi Bank, Siddhartha Bank, Ace Development Bank and Hydroelectricity Investment and Development Company Limited (HIDCL) are investing in the project.
“The consortium of banking institutions is investing Rs 4.24 billion in the project,” the source said, adding, Nabil, NIBL and HIDCL are investing Rs 1 billion each in the project. “NBL is investing Rs 500 million, Laxmi and Siddhartha are spending Rs 400 million each, and Ace is investing Rs 240 million.”
Businessmen investing in the project include Min Bahadur Gurung, Chandra Dhakal, Pradeep Jung Pandey, Subrat Dhital and Suriddha Raj Ghimire.
Confirming the development, Gokarna Raj Pantha, senior divisional engineer at the Department of Electricity Development (DoED) said that the project has become successful in demonstrating financial sources.
Nepal Electricity Authority (NEA), the state-owned hydropower regulator, and the company had signed power purchase agreement (PPA) in February, 2011.
"The government granted power generation license to the company one year after the signing of PPA," Pantha said.
As per the PPA, NEA will purchase electricity generated by Robust Energy at Rs 5.4 per unit.
The project, which is expected to start power generation by May, 2016, is the first hydropower project in the country entirely funded by local banks and business persons.
Officials of Robust Energy said a 48-km transmission line needs to be built to connect power generated by the project to the national grid.
Mistri Khola is the first venture of HIDCL, a newly established public enterprise. The company has paid-up capital of Rs 8 billion.

GMR seeks generation license for Upper Karnali

GMR Upper Karnali Hydropower Company Limited, a subsidiary of Indian infrastructure developer GMR, has applied for power generation license for Upper Karnali (900 MW) hydropower project.
"GMR has applied for the generation license as the validity of its survey license is expiring soon," a source privy to the development told Republica. "The application for generation license will keep the company in a safe side."
The company has submitted application for generation license at the Investment Board Nepal (IBN).
"The IBN will now lead the company towards project development agreement (PDA) negotiation," the source further revealed. "Before that, the IBN has asked the company to sign the project negotiations agreement (PNA)."
According to the source, the IBN has asked GMR to sign PNA as soon as possible so that they could enter in the PDA negotiation process.
“Officials of GMR have informed us that the company was holding discussion about signing PNA with the authorities concerned,” the source said.
The government had first granted survey license to GMR for the Upper Karnali in May 2008.
The Mohan Vaidya led CPN-Maoist has been repeatedly threatening to halt the development of the project that is based in the mid-western region of the country.
Himtal Hydropower Company, another subsidiary of GMR in Nepal, is involved in the development of Upper Marsyangdi (600 MW) hydropower project.
"The GMR officials seem proactive at some point," an official at the IBN engaged in the issues told Republica. "They even make a calculation of what other developers are going through."
GMR says 46.85 hectares of private land has to be acquired for the Upper Karnali project.