NEA signs PPA deal with Tanahu hydropower project

Nepal Electricity Authority (NEA) has signed a power purchase agreement (PPA) deal with its Tanahu Hydropower Ltd for the 140 MW Tanahu hydropower project located in Seti River in Tanahu district in central Nepal. 

As per the PPA, the NEA will pay NPR12.40 (US$0.1) per unit of electricity during the dry season which lasts from December to May, and NPR6.08 (US$0.05) per unit during the wet season which lasts from June to November. The PPA also includes a provision under which THL can increase the power purchase rate by 3 percent annually for eight years after it commences commercial generation. After the increase, the NEA will have to pay NPR15.38 during the dry season and NPR7.54 during the wet season.   

However, if the project fails to generate 35 percent of the projected output during the dry period, it will be considered to be a peaking run-of-the-river type project, according to PPA. If it is classed as a run-of-the-river scheme, the NEA will pay NPR10.55 per unit during the dry season and NPR4.80 per unit during the wet season. As per the contract, the project has to produce 178.9 million units of electricity during the dry season while the generation during the wet season should be 323.6 million units. 

The construction phase is set to commence for the project.