Prime Minister KP Sharma Oli and Nepali Congress President Sher Bahadur Deuba have reached an agreement to remove the “Take and Pay” provision included in the budget for the electricity purchase and sale agreement (PPA).

In the Prime Minister’s chamber in Parliament, Deuba and Oli reached an agreement on Monday evening to remove the provision without sending a message of budget amendment.

According to a source, an understanding was reached that Finance Minister Bishnu Poudel would inform Parliament about the removal of the provision from the budget, and the Cabinet meeting would formalize the decision. On Monday evening, Deuba had called Prime Minister Oli and Finance Minister Poudel, requesting the removal of the provision. Quoting Deuba, a Congress MP said, “Our party colleagues are not agreeing; it will create complications if the ‘Take and Pay’ provision is not removed. The party president’s view is that the budget should be passed only after removing it.”

In a “Take and Pay” PPA, the authority purchases the amount of electricity it needs and pays only for that amount. In a “Take or Pay” PPA, the authority must take the electricity as per the agreement with the developer, and if it does not take it, it must pay the price to the developer. If the developer fails to supply electricity as per the agreement, the developer must also pay a penalty to the authority. The authority has been operating under a “Take or Pay” PPA. When a hydropower project is completed but the new transmission line is not finished or the transmission line capacity is low, the authority sets a deadline for PPAs made on the “Take or Pay” basis and takes and pays for electricity on a “Take and Pay” basis.

Deuba pressured Prime Minister Oli to remove the “Take and Pay” provision. Since the provision was included in the budget, Energy Minister Deepak Khadka had been stating publicly and even in Parliament that the “Take and Pay” clause would be amended and that he had not sent it to the budget. Energy promoters and lawmakers have also been opposing the provision, saying it was included in the budget to undermine the private sector. However, on-June 16 during the House of Representatives meeting, Finance Minister Poudel indicated that the provision would not be corrected. He said that a law had been proposed in the House to enhance the private sector’s role not only in electricity production but also in transmission and sales.

Along with this, the Independent Power Producers’ Association, Nepal (IPPAN) has announced the first phase of a movement to apply pressure. As a form of protest, IPPAN had sent SMS messages on June 21 to the Prime Minister, Finance Minister, Energy Minister, and the Managing Director of Nepal Electricity Authority, requesting the withdrawal of the “Take and Pay” provision.

On June 22, messages were also posted on social media requesting the withdrawal of the “Take and Pay” PPA policy. Although it was planned to hold discussions with various private sector organizations on June 23 to issue a joint statement about the impact of “Take and Pay,” IPPAN stated that it could not happen because the President of the Federation of Nepalese Chambers of Commerce and Industry, Chandra Dhakal, was abroad.

Source: Kantipur