The Nepal Electricity Authority (NEA) has decided to resume power purchase agreements (PPA) for 5,000 MW of hydroelectric projects, ending a five-year freeze on new agreements.
Private hydropower producers had been pressuring the government to open PPAs for projects in the pipeline. The NEA board, following the appointment of Hitendra Dev Shakya as its new chief, swiftly approved the decision in a meeting held Tuesday night. The meeting had been stalled for the past two and a half months due to disputes between outgoing NEA Managing Director Kulman Ghising and Energy Minister Deepak Khadka.
After ongoing disagreements between Ghising and Minister Khadka, the Cabinet removed Ghising from his position on Monday. Following this, Minister Khadka, backed by newly appointed NEA Chief Shakya, reopened the PPA process for run-of-river (RoR) hydropower projects.
Ghising had prioritized storage and semi-reservoir hydropower projects, including pumped storage systems, which are considered more reliable as they store water for electricity generation during peak demand. According to an NEA study, the cost per unit of electricity from pumped storage projects is only about one-third of the production cost from RoR hydropower projects, estimated at Rs 219.2 million per MW. Experts have raised concerns about RoR projects due to the increasing unpredictability of water flows caused by climate change.
Additionally, the NEA board has decided to issue a whitepaper on the financial health of the state-owned power monopoly, suspecting possible financial misrepresentation by Ghising. Minister Khadka has accused the former NEA chief of presenting misleading reports regarding the organization’s financial improvements.
The NEA board also approved an amendment to the NEA Employee Service Bylaws, transferring authority over employee transfers from the chief executive to the board. In response, two NEA trade unions have warned of protests against the newly appointed NEA Chief Shakya.
The decision to resume PPAs marks a significant policy shift, potentially reshaping Nepal’s energy sector amid ongoing political and administrative turbulence.
