Govt finalises PPA draft to buy electricity from sugar mills

Kathmandu, July 27: The government has given finishing touches to the draft of the Power Purchase Agreement (PPA) template for buying electricity generated by the sugar industries.

“We are at the final stage of purchasing the electricity produced by the sugar mills. The Nepal Electricity Authority (NEA) board has already approved the template,” said Prabal Adhikari, spokesperson of the NEA, the sole electricity off-taker in the country.

As per the PPA draft, the NEA will purchase the electricity from the sugar mills at Rs. 8.40 per unit during the dry season and Rs. 4.6 during the wet season. It has suggested the same purchase rate for both hydroelectricity and bio-electricity. There will be a 3 per cent annual escalation in the price for a maximum eight times.

The sugar industries generate electricity by burning the bagasse, sugarcane fibre left over after extracting juice. It is a byproduct of the sugar mills.

The Department of Electricity Development (DoED) had signed agreements in September last year with Reliance Sugar Mills to purchase 15 MW of electricity and with Indu Shankar and Everest Sugar Mills to purchase 3 MW each.

Reliance Sugar Mill

Seven out of the 13 sugar mills across the country have shown interest in generating electricity.

The Nepal Sugar Mills Association expressed hope that energy from the mills would be connected to the national grid by next year.

“It’s already late, and we have already lost large amounts of power in the past years. We had urged the government to facilitate us in generating electricity when the country was facing a severe energy shortage in the past,” said Sashi Kanta Agrawal.

He said that the government responded late to their call. As sugar mills start operating as early as October and continue till April, and the country faces an energy shortage during the dry season, bio-energy produced by them can contribute to the energy-mix.

Adhikari said that the government has removed the provision of imposing a penalty on the sugar mills, unlike the hydroelectricity projects, if they failed to supply the electricity as per the agreement.

“If there are disturbances in sugarcane supply, strikes and other untoward incidents, power generation might be affected. The mills need not pay any penalty in such a situation,” he said.

Electricity generation from the bagasse will give relief to the industries as the residue tends to pile up on the premises.

Energy Minister Barsha Man Pun has announced in his white paper, published a couple of months ago, that the government would implement an energy-mix policy for energy security.

 In the last 108 years, the country has been able to produce 1,076 MW of electricity, of which 1,016 MW is hydroelectricity, 54 MW thermal and 2.68 MW solar.

The NEA is generating 562 MW while independent power producers are generating 511 MW, and the country imports up to 450 MW from India during the dry season.

Published in The Rising Nepal daily on 28 July 2018.