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    Uncertainty over plan to sell 200MW power to India after bidding confusion

    June 8, 2022 - Kathmandu Post


      Kathmandu, June 8 -- The Nepal Electricity Authority appears to be in a fix over its plan to sell 200MW of electricity to India through a five-month-long power purchase agreement, after one of the Indian companies made two separate bids.

      Manikaran Power Limited has quoted INR4.86 (Rs7.77) per unit for 100MW, the highest rate offered by any bidder and INR3.68 (Rs5.88) per unit, for another 100MW, the fifth highest among a total of six bids.

      A senior official at the Nepal Electricity Authority (NEA) told the Post that Manikaran quoted two separate rates at the same time which cannot not be done as per the bid document.

      The second highest bidder for Nepal's power is NTPC Vidyut Vyapar Nigam Limited, which has quoted INR4.3 (Rs6.88) per unit, according to the details received by the Post.

      "Manikaran has quoted the highest price, but only for half of the energy on offer," said the NEA official. The second highest bidder has made a bid for the entire 200MW but quoted a lower price which has created difficulty in taking the decision."

      In early May, the NEA had invited bids from Indian companies to sell a total of 200MW through a long-term power purchase agreement (PPA) as part of a strategy to diversify risks because of volatile prices in the IEX.

      Depending only on the exchange market is fraught with risks because there is no guarantee that all the power would be sold and at good prices.

      The state-owned power utility body has plans to sell 200MW for five months from July 1 to November 29 under the long-term contract.

      All open access consumers, regulated utilities, power distribution companies and traders having valid trading licences issued by the Central Electricity Regulatory Commission of India can participate in the bidding process, according to the notice.

      Anshul Rustagi, assistant general manager of Manikaran who is currently in Kathmandu, told the Post that nowhere in the bidding document is there the provision that says one company is barred from making two separate bids.

      "As per the bid document, a company can submit a bid to buy at least 50MW of electricity," he said. "As required in the bidding document, we have offered the same prices from July to November."

      He said that Manikaran made two separate bids to fulfill the demands from two separate groups of consumers who wanted to pay different prices for the electricity.

      Amid reservations over Manikaran's bidding strategy, the NEA has not taken any decision on the matter.

      Kul Man Ghising, managing director of the NEA, told the Post that a bid evaluation process is currently underway.

      "The prices quoted by the bidders, however, are lower than our expectations," he said. "So, we will take a decision on whether to sell electricity through this process or sell it through the power exchange markets of India. There is no compulsion for us to sell power under this mechanism"

      According to him, the NEA would observe prices in the market for the next 10-15 days and make appropriate decisions.

      He didn't elaborate how.

      With the NEA not ruling out the possibility of not selling electricity through the five-month-long PPA, the Manikaran representative said that it may look badly upon Nepali power utility and its image if it backs out of the deal.

      "This is the first time the NEA is trying to sell electricity for a longer period through competitive bidding. Scrapping of this process may raise questions about the credibility of the NEA," Rustagi told the Post.

      The state-owned power utility body has already been selling 177.7MW generated from the 144MW Kali Gandaki Hydropower Project, 24MW Trishuli, and 15MW Devighat power plants in the Indian market through the Indian Energy Exchange Limited (IEX), a power trading platform.

      "The average price of energy sold through the IEX as of June 6 stood at INR 8.03 (Rs12.84) per unit, according to the NEA.

      The NEA first started selling 37.7MW generated by Trishuli and Devighat from June 1 midnight and an additional 140MW generated by Kaligandaki starting from June 4 midnight.

      With the rise in water levels in the rivers where most of the country's hydropower projects are based, Nepal has started having more energy than the domestic demands, prompting the NEA to sell excess power in the Indian market.

      The Indian authorities have so far allowed the NEA to sell a total of 364 megawatts in the open markets of India from electricity generated by Marsyangdi (67MW), Madhya Marsyangdi (68MW), Trishuli (22MW), Devighat (14MW), Kaligandaki A (140MW) and Likhu (51MW).

      As per the details made available to the Post by a reliable source, Arunachal Power Co Limited has sought to purchase 80MW of electricity at INR 4.21 per unit, PTC Limited has quoted INR 4.14 per unit for 200MW, Tata Power Trading Co Ltd has quoted INR 3.42 per unit for 50MW, and Kreate Power Limited has quoted INR 3.91 per unit for 100MW.

      The NEA, according to officials, was expecting the prices to be lower than that at the IEX in the day ahead market as the southern neighbour is reeling under a power crisis in the wake of shortages and high prices of coals. Coal-fired power plants contribute around 75 percent of total electricity demands in India.

      In the day ahead market, prices for another day are determined one day ahead through the bidding process.

      But officials at the NEA said that prices quoted by Indian companies for a five-month-period PPA are not reflective of those being offered in the IEX where rates have ranged between INR 1.49 per unit and INR 12 per unit as of Monday, according to NEA. The average price stood at INR 8.03 per unit as of Monday.

      NEA is also concerned about the income from power sales if the majority (200MW) of the 364MW approved by the Indian authority is sold at lower than day-to-day market prices maintained at the IEX.

      The power utility body has already faced questions for buying electricity at prices in the range of INR20 per unit from the IEX while it sold electricity at much cheaper rates.

      However, Ghising said at a press meet in late April that it was not true that NEA paid too high a price for importing electricity from India.

      "The average price of imported electricity until mid-March from mid-January through the power exchange market was INR3.5 per unit including transmission costs," Ghising told the press conference. "The average price increased to INR 4.5 per unit by mid-April and rose above INR5 per unit by mid-May because of a surge in electricity demands amid reduced supply due to the coal crisis internationally, including in India."

      According to him, Nepal had sold its 39MW of electricity from November to early December last year at an average price of INR3.5 per month when electricity demand in the exchange market was not high and there was no Russia-Ukraine war, which has pushed up the energy prices.

      "If the current power crisis continues, Nepal is bound to benefit from high energy prices in the Indian market," Ghising had said. Published by HT Digital Content Services with permission from For any query with respect to this article or any other content requirement, please contact Editor at


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