Joint secretary at the Ministry of Energy, Keshab Dhoj Adhikari made the observation presenting a paper titled ´Current Project Development Agreement and legal issues´ at the Power Summit 2013, which concluded in the capital on Tuesday.
Adhikari, who heads the policy division at the finance ministry, said that a number of issues such as bonus distribution, royalty, land acquisition, among others, need harmonization as the laws are contradictory regarding the hydro power development in the country. [break]
For example, the Electricity Act stipulates bonus distribution of 2 percent whereas the Bonus Act ensures bonus distribution of 10 percent.
“It causes difficulties while dealing with the hydropower developers for Project Development Agreement,” he said, adding “Our negotiations will lead us nowhere if we can not remove all such anomalies,”
“Likewise, the legal framework for a power developer to issue shares to the people who need to be resettled, the amount the projects need to allocate as the corporate social responsibility are the other new issues that need to be incorporated in the law,” added Adhikari.
On the second and the concluding day of the summit organized by the Independent Power Developers, presenters had shed light on the governments´ policies and legal provisions and the bureaucratic hassles and the lack of inter-ministerial coordination regarding the hydropower development.
Presenting a paper on ´a bankable project development agreement,´ Senior Advocate Bharat Raj Uprety expressed dissatisfaction over the provision to keep PDA templates secret. “There is no basic free climate for the investment in the hydropower sector. Even the courts are not tuned with the gravity of issues pertaining to the hydropower sector,” added Uprety.
He said the Supreme Court had issued a stay order on a minor petition on the Upper Karnali Project-delaying the project by three months, which had resulted in a huge loss.
Likewise, the change in policies with the change of guard at MoE has badly affected the energy sector. Other challenges include the lack of checklists for various issues, and the tradition among the senior government officers to base their decisions on indiscretion, said Anil Kumar Sinha, a senior advocate.
Banks and promoters playing blame game: Governor
Governor of the Nepal Rastra Bank Yubaraj Khatiwada said that the banks and the promoters of hydropower projects are playing blame game with each other.
Addressing the Power Summit, Khatiwada said, “The banks say that the promoters tend to inflate the equity amount of the projects while the promoters blame the banks of under evaluating the asset while financing their projects.”
Shedding light on the risk aversion issue in the hydro sector investment, he advised both the sides to try to build confidence rather than hold each other responsible for the problem.
The central bank governor also opined that the project developers should include the risk of exchange rates in the project analysis and financial appraisal instead of seeking risk guarantee from the government on foreign investment.
Governor of the Nepal Rastra Bank Yubaraj Khatiwada has ruled out any possibility of abandoning the peg with the Indian currency, saying that it will not be timely or beneficial for the economy.
“The current depreciation (of the Nepali currency) is a kind of wave and, I think, it will not last forever,” added Khatiwada.
He further said, “The problem is not the same kind of the problem the Indian economy faced during early 1990s, therefore, hopefully the falling Indian rupee will stabilize soon and it will also help our currency to stabilize, too.”
Stating that everybody were concerned about the status of the Indian economy, he added: “However I can not answer that multi- billion dollar question; even the newly appointed IRB governor and renowned economists can not explain the mystery.”
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