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The government has issued a new directive to systematize and make investment-friendly the buying and selling of electricity produced from reservoir-based hydropower projects. The Electricity Regulatory Commission has issued the “Directive on the Purchase and Sale of Electricity from Reservoir-Based Power Generation Centers, mid-April 2025 to mid-April 2026, which provides clear provisions on electricity purchase rates, cost calculation, energy scheduling, and risk management.

The purchase and sale rate of electricity generated from reservoir-based power generation centers has been set at a minimum of NPR 8.45 per unit and a maximum of NPR 14.80 per unit. The Commission has stipulated that, for reservoir-based projects with a capacity of up to 100 megawatts, applications for agreements may be submitted only with a proposal in which the annual average electricity purchase and sale rate during the monsoon season is NPR 8.45 per unit, and the rate during the dry season does not exceed NPR 14.80 per unit.

According to the directive, electricity generated from reservoir-based projects will be purchased through single-part and two-part tariff systems. Under the two-part system, the electricity purchase rate will be calculated separately as a capacity charge and an energy charge.

The directive states that the capacity charge will include costs such as loan principal and interest and foreign currency exchange expenses, while the energy charge will cover costs including operation and maintenance, royalty, and income tax.

The directive has also established a formula for determining separate electricity purchase rates for the monsoon and dry seasons. However, the purchase rate for electricity generated using water that must be continuously released due to environmental flow requirements or other reasons will be equivalent to that of run-of-river projects.

Similarly, it is stated that after the completion of the long-term loan repayment period, electricity produced from reservoir-based projects will be purchased only through the single-part tariff system. This provision is expected to reduce the financial risk of projects and ensure long-term stability.

Urjasanchar