{"id":255676,"date":"2025-05-31T09:07:34","date_gmt":"2025-05-31T03:22:34","guid":{"rendered":"https:\/\/insurancekhabar.com\/what-has-become-the-bone-of-contention-between-the-government-and-the-private-sector-take-and-pay-2\/"},"modified":"2025-05-31T09:07:34","modified_gmt":"2025-05-31T03:22:34","slug":"what-has-become-the-bone-of-contention-between-the-government-and-the-private-sector-take-and-pay-2","status":"publish","type":"post","link":"https:\/\/english.insurancekhabar.com\/what-has-become-the-bone-of-contention-between-the-government-and-the-private-sector-take-and-pay-2\/","title":{"rendered":"What has become the bone of contention between the government and the private sector, ‘Take and Pay’?"},"content":{"rendered":"

Kathmandu. The Government of Nepal has announced to purchase electricity from hydropower projects based on river water flow only under the ‘Take and Pay’ policy. <\/p>\n

Deputy Prime Minister and Finance Minister Bishnu Poudel presented the fiscal year 2082 BS in the federal parliament on May 15. He announced that such a provision would be implemented in the purchase of electricity through the budget and program of 83. <\/p>\n

With this announcement of the government, the Independent Power Producers Association (IPPAN), a common organization of private sector-promoted hydropower project construction companies, has come out in protest. It has also threatened to launch an agitation if the government does not withdraw its decision. <\/p>\n

What is tech and pay<\/strong><\/span><\/div>\n<\/p>\n

‘Take and Pay’ policy is one of the various policies implemented in the Renewable Energy Buy and Sell Agreement. Apart from this, the ‘Take or Pay’ policy is also applicable to the purchase and sale of electricity of hydropower projects. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Nepal Electricity Authority (NEA), which has the monopoly to purchase and distribute electricity, has so far reached an agreement to pay all the amount as per the agreement even if it does not consume electricity. TAG_OPEN_div_60 <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

For example, if a child studying in a private school has to pay the canteen fee (lunch amount) for 12 months even if he is served lunch at school or if he cooks lunch from home some day, then this is the situation of take-or-pay, where even if the lunch is not eaten, the whole year’s lunch expenses have to be paid. In this case, the seller (school) side is at a profit and the customer (parent) side is at a loss. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

On TAG_OPEN_div_56 the other hand, if a child studying in a private school has to pay the canteen fee only on the day of the lunch in the school, if the parent does not have to pay the lunch fee for the day the child does not eat the school lunch without prior notice, then this situation is called take and pay. Where the lunch expenses are paid only by calculating the day of lunch, there is no need for other days. In this case, the seller (school) side is in relative loss and the customer (parent) side is at a loss. Since the cost of running the canteen (salary, sanitation, the amount of area used for the canteen) is the same for 12 months, there is a situation of loss due to uneven sale of lunch to the seller party. <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

TAG_OPEN_div_54 The government has now announced to purchase electricity from reservoir-based and river-based hydropower projects on the basis of two different policies. <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

The government TAG_OPEN_div_52 is going to enter into a ‘take-and-sell’ agreement for the run-of-river ROR project announced on May 15. <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

But in the case of reservoir-based projects, ‘take-or-pay’ means that even if you do not consume electricity, you have to pay the amount of electricity mentioned in the agreement. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Under the <\/p>\n

policy, the Electricity Authority will now pay only for the electricity used. The announcement made through the budget and programme of May 15 will be applicable only in the case of PPAs to be made with hydropower projects based on river flow. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Power purchase agreement will be continued under the previous ‘take-or-pay’ policy for reservoir-based hydropower projects. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Under the ‘Take TAG_OPEN_div_44 or Pay’ policy, nea will enter into an agreement with hydropower projects based on river flow under construction or preparing to start construction work only under the ‘Take and Pay’ policy in the Power Purchase Agreement (PPA). <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Private sector hydropower project operators have expressed concern that the bank will not invest loans for projects if the ‘Take a Pay’ policy is implemented for river flow-based projects. TAG_OPEN_div_41 <\/p><\/div>\n<\/p>\n

they have urged the government to cancel the announcement, saying that additional loan investment in under-construction projects will be stopped, the huge investment of private sector promoters will be sinking due to the inability to raise loan capital for new projects. <\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Nepal Electricity Authority TAG_OPEN_div_38 (NEA) has the monopoly to purchase and distribute hydropower and solar energy produced in Nepal. NeA has so far been purchasing electricity under the ‘take-or-pay’ provision, on the condition that the full amount has to be paid as per the agreement with the hydropower project even if the electricity is not consumed during the purchase agreement. <\/p><\/div>\n<\/p>\n

<\/div>\n<\/p>\n

Private sector investor TAG_OPEN_div_36 s are worried that banks will not invest in hydropower projects based on river flows, citing the high risk of sinking of investment due to lack of assurance that all the electricity produced will be sold. <\/p><\/div>\n<\/p>\n

<\/div><\/p>\n","protected":false},"excerpt":{"rendered":"

Kathmandu. The Government of Nepal has announced to purchase electricity from hydropower projects based on river water flow only under the ‘Take and Pay’ policy. Deputy Prime Minister and Finance Minister Bishnu Poudel presented the fiscal year 2082 BS in the federal parliament on May 15. He announced that such a provision would be implemented […]<\/p>\n","protected":false},"author":5,"featured_media":123389,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45212,45159],"tags":[],"class_list":["post-255676","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-hydropower-en","category-news-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/255676","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=255676"}],"version-history":[{"count":0,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/255676\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/123389"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=255676"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=255676"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=255676"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}