Nepal Advances Process to Extend Commercial Operation Date for Hydroelectric Projects

Nepal’s Electricity Authority has initiated the process of extending the commercial operation date (COD) for several hydroelectric projects that have failed to meet their scheduled deadlines despite having signed power purchase agreements (PPAs) and being in various stages of construction.

The authority has categorized the projects into four groups based on their physical progress, implementation of PPA obligations, and COD status. The first group, ‘A’, comprises projects with unfinished COD periods and those that have fulfilled their PPA obligations, such as obtaining production licenses, financial management, and land acquisition.

The second group, ‘B’, includes projects whose COD has expired but have been delayed due to circumstances beyond their control, such as transmission line or substation construction delays, or have achieved at least 25% physical progress. The third group, ‘C’, consists of projects that have not met their COD deadlines and have not fulfilled their basic obligations, such as obtaining production licenses or achieving 25% physical progress.

The fourth group, ‘D’, comprises projects that have expired CODs and have not fulfilled their mandatory obligations, such as obtaining production licenses, financial management, or land acquisition, or have had their surveys and production licenses revoked. The authority has based its physical progress measurement on the 2071 guidelines, which consider the commencement of main structure construction, such as headworks, tunnels, and powerhouses, as a sign of progress.

In the case of solar projects, the authority will consider panel procurement agreements, LC openings, land acquisition, and mounting structure and foundation construction as indicators of progress. The authority will regularly monitor the projects in group ‘B’ and provide necessary instructions for timely completion. If necessary, the authority may reclassify the projects within a maximum of six months.

Meanwhile, projects in group ‘C’ will be issued a ‘Notice of Default’ in accordance with their PPAs. If no satisfactory response or improvement is received, the authority will initiate the process of terminating the agreement.