Power Purchase Agreement Work Schedule

Preamble

This Work Schedule is prepared for effectively completion of the Power Purchase
Agreement (PPA) Between Nepal Electricity Authority (NEA) & Private Power
Producer (PPP) up to 25 MW.

Service Fee

As applicable following service Fee have to deposit for PPA to NEA before
proceeding for work.

 Up to 1 MW – 75,000/-
 1 MW to 5 MW – 1, 50,000/-
 5 MW to 10 MW – 3, 00,000/-
 10 MW to 25 MW – 4, 50,000/-

PPA Application & Documents

With following documents PPP should apply

1. Survey License
2. Company Registration Certificate
3. Company Certificate of cooperation & memorandum of article
4. Permanent Account Number from Inland Revenue Department
5. No Obligation Certificate from Village Development Committees
6. Letter of Intent from Bank
7. Approved Terms of Reference for IEE or EIA
8. Approval from National Park if inside National Park.
9. Project Feasibility Study Report with Power Evacuation Study Report
Temporary registration

After submitting application with above said document Temporary registration

will be done for verification of document.

Committee formation / Permanent registration

Once document found satisfied the committee will be formed and registration
will be done permanent with asking above service fee. And Process will be more
forward for PPA

Phases for PPA

First Phase:  Study of Document

It will take 7 Days to finish the study of the document submitted.

Second Phase: Techno Study & Evaluation

Experts & Committee will start the Study of the Project, which will take 45 days
to complete.

The Study consist of following

 Conceptual Layout and Design Study

 Geological Study
 Environmental Issues Study
 Electrical Layouts Study
 Cost and evaluation Study
After finishing above study if any comment arises from experts and developer
have to give the reply.

In this phase only following parameters will decided

 Hydrological Parameters
 Electrical Details
 Power and Energy

And Report will be prepared. These all will take 45 days to complete.

Third Phase: Connection Agreement

Developer Company has to do connection Agreement with concerned

department of NEA to flow electricity in NEA Transmission Line. After finishing
Second Phase Power trading department of NEA will send request letter to
concerned department for connection Agreement. It will take approximate 70
days to complete the connection agreement process and come to power trading
department.  Following document will attached while requesting for Connection
agreement.

1. Salient Features
2. Power and Energy Table
3. Electrical Single Line Diagram
4. Location Map
5. Project construction Schedule
6. Power Evacuation Study Report.

Concerned Department will take 60 Days to tell whether it’s possible to have
connection or not to Power Trading Department in advance.
In This Phase, Impact Study for Load flow from the Project to NEA Transmission
Line will be carried out with   Load able to flow or not. According to NEA Grid
Code fee will be determined for the Impact Study.

Fee Structure

For
Transmission
For Transmission Study Carried by
Description study carried
NEA (NRs)
by developer
(NRs)

Impact Study with Load Year – Year –

Year – 1 Year – 3
Flow Only 2 4

Impact Study for >=5 MW 75,000 19,000 38,000 56,000 75,000

to < 25 MW (75 %)
 

In this Process

 Familiarization with Project

 Data Analysis
 Scheme Study
 Updating NEA Model
 Modelling
 Load Flow Study
 Contingency Analysis
 Short Circuit Analysis

Etc will be studied and report will be prepared. Above mention report will
govern the connection agreement. If possible, then only connection agreement
will be done.
If it’s not possible to do the connection agreement, then Developer will be
informed immediately regarding non-happening of PPA.

Whatever comment or answer NEA will be needing for Second and Third Phase
of work will have to provide by the Developer. If Developer fails to submit the
comment in time, then PPA may take longer time then what committed.

Forth Phase: PPA Draft work

Representative from Finance department, representative from Law and

negotiation Department, concern engineer and other expert from NEA will work
no Draft work of PPA

1. Reviewing all document & Connection agreement

2. Study of Technical committee report
3. PPA draft preparation
4. Taking consent from developer
5. Taking approval from NEA management for Draft PPA.

Above work will take approximately 10 days.  After preparation of Draft PPA
within 7 days consent will be taking developer and send for approval from NEA
management.

It will take around 7 days to get approval from the NEA management.

After the approval both party will sign the PPA. It will take approx 5 days to
complete.

It is assumed that if all Above Phase will goes in time then PPA will completed in
99 days.

Guarantee Management 
As per NEA rule PPP should submit performance Guarantee before PPA.

Power Purchase Rate:

As Per NEA Board Decision made on 2065/7/5 BS PPA upto 25 MW the rate will
7 Rs Per unit for Dry Month and 4 Rs. Per unit for Wet Month. In that rate 3%
escalation every year upto for 9 times. Last rate Should 8.89 Rs per   unit for
Dry month and 5.08 Rs per unit for wet month.

*On above rates 20 % increment have been given.

* Present PPA Rates upto 25 MW will be 8.40Rs per unit for Dry Month and 4.80
Rs Per unit for Wet Month. In that rate 3% escalation every year upto for 6
times.

PPA duration:

Duration for PPA will be 30 years from date of commissioning of Project.

Key features of a Power and Energy Purchase Agreement (PPA)
A Power Purchase Agreement (PPA) secures the payment stream for a Build-Own Transfer (BOT) or
concession project for an independent power plant (IPP). It is between the purchaser "offtaker" (often a
state-owned electricity utility) and a privately-owned power producer. The PPA outlined here is not
appropriate for electricity sold on the world spot markets (see Deregulated Electricity Markets below).
This summary is focused on a base load thermal plant (the issues would differ slightly for mid-range or
peaking thermal or hydro plants).

 Where a government agency enters into an arrangement for a private power company to
establish a power plant and sell on the power to the government agency, the public agency
typically enters a PPA.
 The PPA usually takes the place of a BOT or concession agreement: in addition to obligations
relating to the sale and purchase of the power generated, the PPA also sets out the required
design and outputs and operation and maintenance specifications for the power plant.
 Sale of capacity and energy - the power producer agrees to make available to the Purchaser the
contracted capacity of energy and deliver the energy in accordance with the PPA.
 Charges for Available Capacity and Electrical Output - the charging mechanism in the PPA is
generally a pass-through arrangement: the price charged for the power will consist of a charge
(availability charge) to cover the project company's fixed costs (including a return on equity for the
project company) plus a variable charge to cover the project company's variable costs. The
availability charge relates to the availability of the power plant and the variable charge is
calculated according to the quantity of power supplied. The purchaser will want a guaranteed
long-term output from the project and so the availability charge is typically the minimum that it will
be paid, provided that the plant can be shown to make sure power available.
 Third party sales - the ability to make third-party sales can enhance the finance ability of the
project and cushion the purchaser against risks such as a reduction in the purchaser's monthly
tariffs. This flexibility also has the advantage that, given the long-term nature of the PPA, if the
market is deregulated later then the PPA may not need to be completely replaced. However,
purchasers are often nervous about allowing third-party sales as they want to be sure that all
capacity is available to them at all times and so the PPA may include an exclusivity period during
which all power producer is be supplied to the purchaser. Flexibility may need to be incorporated
into the PPA to ensure that this exclusive period is not an impediment to future development/
deregulation of the electricity market. Exclusivity provisions in PPAs can create challenges for
development of energy markets.
 Underperformance and delays by power producer - the PPA may provide sanctions or require the
power producer to pay liquidated damages if the power producer fails to deliver power as
promised; in particular, if the construction of the project is not completed on schedule or does not
perform as required when completed. Lenders will be concerned to ensure that liquidated
damages do not have too damaging an impact on debt coverage ratios.
 Force majeure or purchaser breach of contract - the power producer is usually not required to pay
damages for delays resulting from events beyond its control.
 Testing regime - this should be objective and designed to confirm levels of contracted capacity,
reliability and fuel efficiency or heat rate, ideally certified by an independent engineer.
 Termination - the PPA will need to provide for what happens on termination (whether at the end
of the term of the agreement or early termination for default etc), including obligations of the
power producer on hand-over of assets, calculation of buyout price for IPP (if this is
contemplated), what happens to employees of power producer if IPP transferred to purchaser on
termination.
 Project operation - issues typically include scheduled outages and maintenance outages,
operation and maintenance, emergencies and keeping of accounts and records.
 Change of law - PPA should address impact on tariff in event of a change in applicable law and
the mechanism for tariff adjustment. Lenders will be anxious to ensure that the cash flows of the
project required for debt service are protected against changes in law.
For more detailed analysis of the issues involved in PPAs of this type, see the IFC guide to power
purchase agreements (1996) - found at Annex 2 (page 160) of the World Bank Concessions
Toolkit(pdf).
It is examples of this type of PPA which are provided below. The sample PPAs have been divided up into
those more relevant to smaller and rural power projects, and more complicated PPAs relevant to larger
projects in developing countries.
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When to use a Power Purchase Agreement

Power purchase agreements (PPAs) are used for power projects where:

 the projected revenues of the project would otherwise be uncertain and so some guarantee as to
quantities purchased and price paid are required to make the project viable;
 there is a possibility of competition from cheaper or subsidized domestic or international
competition (e.g., where a neighboring power plant is producing cheaper power) - the PPA
provides some certainty of being protected from such competition;
 there is one or a few major customers that will be taking the bulk of the product. For example, a
government utility may be purchasing the power generated by a power plant. The government will
want to understand how much it will be paying for its power and that it has the first call on that
power. The project company will want certainty of revenue; and,
 the purchaser wishes to secure security of supply.

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Sample Power Purchase Agreements (PPAs)

Sample PPAs: Emergency Power and Mobile Plants
Power Purchase Agreement (PPA) for short term temporary, mobile, or emergency power Short
term, temporary or emergency power purchase agreement for purchase of power from a mobile
plant (on skids). Prepared by international law firm for a small-scale rural power project in Africa, together
with an Implementation Agreement.

Sample PPAs: Small and Rural Projects

Power Purchase Agreement (PPA) for Small Scale Rural Power Projects Part of suite of documents
prepared by international law firm for use in small scale rural power projects. Documents prepared for
country in South East Asia.
Power Purchase Agreement (PPA) - short-form agreement developed for small scale power
projects in Namibia Standard short-form power purchase agreement developed for small scale power
projects in Namibia. This is part of a suite of documents including a fuel supply agreement that can be
found on the Namibian Electricity Control Board .
Kenya - Power Purchase Agreement (PPA) - simplified agreement developed for Kenya Short-form
relatively simplified power purchase agreement developed for the Kenyan Electricity Regulatory Board for
use in "hydro, geothermal or gas fired" power generation facilities. It anticipates both a capacity charge
and an energy charge. Seller is to sell all the net electrical output of the plant to purchaser. The Energy
Regulatory Commission provides also a link to a Model PPA for larger renewable generators more
than 10MW and a PPA for smaller renewables projects less than 10MW on its Renewable Energy
Portal.
Tanzania - Short-form relatively simplified power purchase agreements developed for Small Power
Producers in Tanzania - Standardized PPA for Main Grid Connection and Standardized PPA for
Isolated Mini Grid Connection together with Standardized Tariff Methodologies for each case and
Detailed Tariff Calculations, which can all be found on the EWURA web site. Also see Guidelines for
development of small power projects.
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Sample PPAs: Mid-sized and Large Projects

Power Purchase Agreement (PPA) for medium to large scale oil fired plants (Example 5) - Longer-
form sample power purchase agreement for use in developing countries for oil fired plants. Prepared by
international law firm for the World Bank as an outline of provisions commonly found in power purchase
agreements in international private power plants.
Power Purchase Agreement (PPA) and Implementation Agreement produced for Pakistan's Private
Power and Infrastructure Board by international law firm (issued 2006) - standard form power
purchase agreement and implementation agreement for fossil fuel fired electric power generation facility
developed by international law firm for Pakistan's Private Power and Infrastructure Board, together with a
Model Pricing Schedule for PPA, and the Policy that set the general framework that led to the production
of the three standard form documents Policy 2002 (PDF).
Long Term Draft Power Purchase Agreement (PPA) produced by Indian Central Electrical
Regulatory Commission (CERC) (for projects where location and fuel is specified) (pdf) - Draft
power purchase agreement developed by CERC for Indian IPP market - intended for long-term
agreements (more than 7 years) for use for setting up power stations where location or fuel is not
specified. Attached link is draft request for proposals - for draft PPA go to page 70.
Power Purchase Agreement (PPA) produced by Pacificorp for large scale power plants (pdf) - Draft
power purchase agreement developed by Pacificorp for power plants in excess of 1000 kilowatt net
output - relatively short-form agreement. Drafted in the context of U.S. regulatory structure.
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Deregulated Electricity Markets

The above PPAs should be distinguished from power purchase agreements in a deregulated electricity
market where the agreements are typically contracts for purchase of power from a private producer where
the power plant is already in existence or where the power plant is being constructed at the initiative of
the private producer. For examples of this type of PPA click on the following sample links: Edison
Electric Institute Master Power Purchase & Sale Agreement (PDF) (4/25/2000)and Tri-State PPA.
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French Standard Power Purchase Agreements (PPAs): Small Plants/Renewable

Energy Sources (Les modèles indicatifs de contrats d'obligation d'achat
d'électricité)
French standard power purchase agreements (Les modèles indicatifs de contrats d'obligation
d'achat d'électricité) for small installations / renewable energy sources, within the framework of the
law of 2000 (loi no.2000-108 du 10 fevrier 2000) and decree relating thereto (decret no.2000-877 du 7
septembre 2000) and decree of 2001 (decret no.2001-410 du 10 mai 2001) setting out the terms on
which the grid and power distributors are to purchase electricity from the small power producers and wind
power - Arrêté du 8 juin 2001 fixant les conditions d'achat de l'électricité produite par les
installations utilisant l'énergie mécanique du vent telles que visées à l'article 2 (2o) du décret no
2000-1196 du 6 décembre 2000.