KATHMANDU: The Nepal Electricity Authority (NEA) has initiated the process of extending the Required Commercial Operation Date (RCOD) for 218 hydropower projects that have signed Power Purchase Agreements (PPAs) but failed to begin commercial electricity generation on time.
For the first time, the NEA is implementing a policy that classifies projects into four categories based on clear criteria to determine eligibility for RCOD extensions.
The NEA Board of Directors, at its meeting on July 16, approved the classification system, which evaluates projects based on physical construction progress, compliance with PPA obligations, and the status of their RCOD. The authority has begun processing extensions for projects falling under Category A and Category B.
Speaking during a discussion with hydropower developers on Wednesday, Minister for Energy, Water Resources and Irrigation Biraj Bhakta Shrestha said the government’s objective is not to penalize the private sector but to facilitate the completion of under-construction projects.
He said decisions on RCOD extensions would be made through an institutional mechanism rather than at the discretion of individuals, adding that the government remains committed to protecting private investment while expecting developers to fulfill their contractual obligations on time.
According to the NEA, 320 hydropower projects with a combined installed capacity of 8,292 MW are currently under construction. Of these, 150 projects with a total capacity of 4,491 MW fall under Category A, while 68 projects with a combined capacity of 1,420 MW have been placed in Category B. The remaining projects have been classified under Categories C and D.
Under the new criteria, Category A includes projects whose RCOD has not yet expired and which have fulfilled key PPA obligations, including securing generation licenses, financial closure, and land acquisition, or still have time to meet those requirements.
Category B includes projects whose RCOD has expired but whose commercial operation has been delayed due to NEA-related factors, such as delays in transmission line or substation construction. It also covers projects affected by force majeure that have received approval for RCOD extensions and those that had achieved at least 25 percent physical progress before their original deadline expired.
Projects in Category C include those that have failed to meet essential obligations such as obtaining generation licenses, financial closure, or land acquisition despite their RCOD remaining valid, or those with less than 25 percent physical progress by the expiry of the deadline.
Category D includes projects that have failed to fulfill mandatory obligations even after the RCOD expired or whose survey or generation licenses have already been revoked.
The NEA said physical progress will be assessed using the 2014 evaluation guidelines, considering substantial construction work on key infrastructure such as headworks, tunnels, pipelines, and powerhouses. For solar projects, indicators including solar panel procurement agreements, letters of credit, land acquisition, and the commencement of mounting structure and foundation works will also be recognized.
Projects classified under Category B will be subject to regular monitoring by the NEA’s Power Trade Department, which will issue directives to ensure timely completion. Their classification may be reviewed and revised within six months if necessary.
Meanwhile, projects placed in Category C will receive a Notice of Default under the terms of their PPAs. If developers fail to provide a satisfactory response or demonstrate sufficient progress, the NEA said it will proceed with the cancellation of the agreements.
Comment