IPPAN Delegation Team led by Dr. Subarna Das Shrestha, IPPAN President met with Hon'ble Mr. Gokarna Bista, Minister for Energy , Government of Nepal at his residence on June 1, 2011. Other members of the team were: Mr. Kumar Pandey, Narendra Prajapati, Mr. Kiran Malla, Mr. Pashupati Murarka, Mr. Bijaya Man Sherchan, Mr. Krishna Acharya and Mr. Pradeep Gangol. Also present in the meeting were Mr. Hari Bairagi Dahal, President of the Small Hydropower Association, Nepal (SHDAN) and Dr. Bhogendra Guragain.

Dr. Shrestha congratulated the Hon'ble minister on being appointed the minister for energy and handed over IPPAN's publications; Hydropower Nepal Book, IPPAN brochure and IPPAN Newsletter.

Dr. Shrestha made following comments regarding the power issues and requested for Hon'ble Mr. Bista's kind attention to solve the issues.

IPPAN welcomes the proposal of the government to raise the PPA rates by 20 %. Though, the present increase in PPA rates is still not sufficient to enthuse power developers, it has certainly eased the difficulties of power developers. However, the decision to apply the new PPA rates only for those projects, which enter into PPA now, is incomplete, in the sense that it does not cover the power projects which are under construction, or which are in operation.

These projects/plants should also be incentivized by the new PPA rates and other financial measures. The spiraling prices of construction materials, laour costs, high interest rates have made the projects under constructions unfeasible. Banks are not willing to finance in these projects. If the construction of these projects, with combined capacity of over 300 MW , are halted, it will only worsen the energy crisis of the country, and send negative message to potential power developers.

We therefore request the ministry to take this issue seriously.

The construction of many large hydropower projects has not started yet due to the delay and postponement in the signing of the Project Development Agreement (PDA). Since it is affecting seriously the investment climate, we request the government for expeditious signing of the PDAs.

We also attract the attention of the government to the delay in the issuance and renewal of generation Licenses. And we request the ministry for its expeditious processing, including that of EIA/IEE reports.

12 months additional time to the survey study period

PPA Rates of Rs. 5.99/unit; with price escalation of 5 % for nine years (base Year: 2067/68)

Accelerated development Storage projects and cross border transmission lines and inter connecting TLines

VAT Exemption and 1 % custom duties

Income tax holiday for 15 years for projects that went into commercial operation of generation or generation and transmission, or generation and distribution and generation or transmission and distribution by 2075 AD

Generation license period for both domestic and export oriented projects should be 40 years

The capital available with Nepal's banks not adequate to met the financial requirements of the hydropower projects, Nepal Power Development Fund to be initiated by NRB, Concept Paper sent to NRB, MoEn, and Ministry of Finance last year.

Hon'ble Mr. Gokarna Bista, Minister for Energy

The government is trying its best to end load shedding at the soonest time possible. You must have heard about recent decisions of the government in this regard. I have made arrangement to appoint MD of NEA on competition (based on experience, proposal…). Soon, the provision of charing the NEA Board by the minister will come to an end.

I have instructed to deal with strictly with the people who pilferage energy. Plans are being made to repair and maintain the NEA's power plants. I am ready to assist the genuine developers. However, the request of IPPs to apply the proposed PPA rates to the projects under constructions is not possible due to resistance from NEA's Trade Unions.

Regarding power development fund, we will soon come up with Power Finance Corporation, which will make available loans exclusively to power projects. The Corporation will make available loans from the Exim Banks of India, China, and other countries, at say, 1 – 2 %. It will make available loans to power developers at 11 %. If the prevailing bank interests is more than that , the difference in interests will be subsidized by the corporation. Therefore, the developers will not have to pay more than 11 % interest.

Regarding the need for sovereign guarantee for hydropower loans, I have asked Chief Secretary about its mechanisms.

I have requested the finance minister to allocate substantial amount of budget for power development.