CEO Correspondent
Kathmandu, July 23: The Nepal Electricity Authority (NEA) has already signed a power purchase agreement (PPA) with Tanahu Hydropower Project, thus bolstering the efforts to tide over the problem of load shedding.
This is the second reservoir type hydropower project in the country after Kulekhani hydropower. It generates low level of electricity, thanks to the low water collection and siltation at its reservoir particularly in the dry season. Thus, this has been resulting into power cuts in very season. However, the construction of an alternative reservoir based power project i.e Tanahu hydropower, is expected to help resolve this problem. The 140 MW project will begin commercial operation from April 12, 2024, as per the agreement signed between NEA and Tanahu Hydropower Company Limited (THCL). The latter is a wholly-owned subsidiary of the former executing the project.
The annual energy generation capacity of the project in the first 10 years of such operation is estimated at 587.7 GWh. The NEA will pay THCL Rs 12.40 per unit of electricity during the dry season and Rs 6.08 per unit during the wet season, as per the PPA.
Similarly, THCL can increase the power purchase rate by 3 percent annually for eight years after it commences commercial generation. After the increase, the NEA is required to pay Rs 15.38 per unit during the dry season and Rs 7.54 per unit during the wet season. The commercial operation date of the project is fixed for April 12, 2024. NEA will purchase surplus energy of the project at 50 percent of the fixed rate.
But if the project fails to generate 35 percent of the projected output during the dry period, it will be treated a peaking run-of-the-river type project, according to the PPA. Likewise, in case of it considered as a run-of-the-river scheme, the NEA will pay Rs 10.55 per unit during the dry season and Rs 4.80 per unit during the wet season. As per the contract, the project has to produce 178.9 million units of electricity during the dry season, while the generation during the wet season should be 323.6 million units.
The project could generate energy for six hours daily during the dry season. It is being built mobilizing the credits extended jointly by the Asian Development Bank (ADB), Japan International Cooperation Agency (JICA) and European Investment Bank (EIB).
The project boasts of a total investment of Rs 50 billion ($505 million). The ADB is making investment worth $150 million in the project while the JICA is investing $184 million. Similarly, EIB is chipping in $85 million in loan investment, whereas the NEA via government is investing $87 million in the project.
According to experts, the project reserves immense potentials to completely do away with the long prevailing problem of power outage.
