- When was the Upper Bhote Koshi Hydroelectric Project ( UBKHEP) built and when did it commence commercial operations?
Construction of UBKHEP commenced in 1997 and was completed/ synchronized to the Nepal Electricity Authority (NEA) grid on 3rd January 2001, with commercial operations beginning on 24th January, 2001.
- How is the generated power connected to the NEA grid?
The power produced by Bhote Koshi Power Company (P) Ltd ( BKPC) is connected to the NEA substation in Lamosanghu, 25 kilometers away via a 132 KVA transmission line. BKPC is the only project that has built such a transmission line at its own cost. Both the transmission line ‘operation and maintenance’ costs and transmission losses are borne by BKPC.
- When did foreign investors sell their shares and transfer management rights to the Nepalese investors?
In 2006, Panda Energy (the original developer and majority shareholder of BKPC) divested its 75% holding in BKPC which was bought over by the Nepalese shareholders. Similarly, in 2007, IFC’s 10% shareholding was also bought over by the local shareholders.
- Why does BKPC invoice NEA in US Dollars?
Since this project was developed and funded entirely in foreign currency,the PPA tariff/rate was based in US Dollars and hence the invoice is in US Dollars. Any foreign exchange risk borne by the developer is reflected in the tariff, and in this case NEA absorbed it in the PPA tariff.
- What is the Generation License capacity and installed capacity of UBKHEP?
The Generation License for UBKHEP was initially for 36 MW. To facilitate the sale of additional capacity energy available from BKPC’s installed capacity of 45 MW, an amendment to the Generation License was obtained on August 23, 2012 to increase the total licensed capacity to 45 MW.
- What was the Supplemental Power Purchase Agreement (SPPA) for Additional Energy?
BKPC has signed the SPPA with NEA on July 8, 2012 for the sale of Additional Energy of 9 MW available from its total capacity of 45 MW. The additional energy tariff is NRS1.625/kwh with no escalation. This reduces the BKPC’s tariff rate by about 14%.
- What is the status of the Short-Pay issue with NEA?
The Short-Pay accumulation of USD 12.35 Million was written off by BKPC in August 2012 upon effectiveness of the SPPA that was signed on July 08, 2012.
- Does BKPC pay any royalty to the Government of Nepal?
The Royalty structures are prescribed in the Electricity Act.
BKPC pays Energy Royalty on its energy sales to NEA at the rate of 2% for 15 years from the Commercial Operation Date (COD) and will pay at the rate of 10% thereafter - as per the Electricity Act.
Additionally, BKPC also pays Capacity Royalty on its installed capacity of 45 MW at the rate of Rs. 100,000/MW for 15 years from the COD and will pay at the rate of Rs. 1,000,000/MW thereafter – as per the Electricity Act.This amounts to Rs. 4.5 million per annum till 2015/16 and Rs. 45 million thereafter.
- When will the UBKHEP be transferred to NEA/GoN?
As per the PPA, 50% of the ownershipof the project shall be transferred to NEA after 25 years of operation in 2026, at a nominal consideration of just one rupee. Thereafter, NEA would enjoy 50 % of the profits without any financial investment in UBKHEP.
As per the Project Agreement, UBKHEP will be transferred to the Government of Nepal (GoN) after 40 years, in the year 2036, at zero value. GoN will enjoy 100% of the benefits of this project once the project is handed over in the year 2036.
- Is the cost of power supplied by BKPC to NEA expensive?
When the PPA was signed in 1996, the tariff was equivalent to only NRs. 3.12, the exchange rate of one US Dollar then being approximately NRs. 52. As the PPA tariff is in US Dollar, the equivalent Nepalese Rupee value has increased due to devaluation of the Nepalese Currency.
Rupee devaluation is beyond the control of both the parties and as such, BKPC’s change in tariff is merely a reflection of change in foreign exchange rate.
- What role has BKPC played to help the community of the Project area?
Over the years BKPC has taken several initiatives to meet its corporate social responsibilities within the area that UBKHEP operates. The project has also implemented all Environmental Mitigation measures and related responsibilities in the project area. Assistance is provided in the form of grants and subsidies to numerous local schools along with scholarships to students and under-privileged sections of the society in the Phulpingkatti and Tatopani VDCs of Sindhupalchowk District. Similarly, support is also extended continuously to the local VDCs for health posts, temples & gombas, repair of roads, landslide protection, open water fish stocking program, sports & games, etc. BKPC has also provided financial support, jointly with the local Community, to Hindi Health Center, which is operated by Dhulikhel Hospital. Large amounts are spent annually for the development of local infrastructure, road construction, water supply, environment protection, capacity building, etc.