By A Staff Reporter, Kathmandu, Oct. 11: Independent Power Producers’ Association, Nepal (IPPAN) has urged the government and the Electricity Regulatory Commission to review the wheeling charge imposed for using the national electricity transmission grid.
Addressing the ‘Friday Forum’ organised by IPPAN in collaboration with the Canada Fund for Local Initiatives on Friday, IPPAN President Mohan Kumar Dangi welcomed the decision to ensure private sector access to the transmission system.
However, he said the existing charge could affect the financial viability of hydropower projects, discourage new investment and challenge the competitiveness of Nepali electricity in international markets.
President Dangi stressed the need to make the rate scientific, practical and investment-friendly.
He also called for further discussions among the government, the Electricity Regulatory Commission and the private sector on the methodology and rate used to calculate the wheeling charge.
“Hydropower projects earn an average annual revenue of around Rs. 30 million per megawatt. If they have to pay around Rs. 5 million per megawatt annually as transmission charges, it could significantly affect their revenue and return on investment,” he said. “This could weaken the financial position of operational projects and discourage private sector investment in new project development and electricity trading.” Stating that the government had set a target of generating 30,000 MW of electricity over the next 10 years, Dangi said the private sector was committed to achieving it.
He said the private sector should now be allowed to participate not only in electricity generation but also in electricity trading, transmission infrastructure development and securing markets.
“Allowing the private sector to participate in electricity trading and providing it with investment opportunities in transmission line construction would help address existing problems in the energy sector,” he said.
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