RCOD deadline to extend for delayed projects

By A Staff Reporter, Kathmandu, July 20: The Nepal Electricity Authority (NEA) is preparing to extend the Required Commercial Operation Date (RCOD) for hydropower projects that have signed Power Purchase Agreements (PPAs) but have yet to commence commercial electricity generation.

A meeting of NEA Board of Directors held on Thursday decided to classify the projects into four groups based on the physical progress of the projects, the date of commencement of commercial production (RCOD), and the implementation status of various obligations mentioned in the PPA.

The move aims to determine which projects qualify for an RCOD extension while ensuring greater accountability in project implementation.

Four categories of projects

Category A will include projects whose RCOD has not yet expired and which have fulfilled key PPA obligations—such as obtaining generation licences, securing financial closure, and completing land acquisition—or are still within the contractual timeframe to do so.

Category B will include projects whose RCOD has expired but which have been unable to commence commercial operation because the NEA has not completed the construction of transmission lines or substations required for grid connection under the agreement, and that have fulfilled the conditions set by the Board of Directors for an RCOD extension.

This category will also include projects whose RCOD has expired but that have been granted an RCOD extension by the Authority after submitting an application with supporting documents confirming that the project's construction was affected, during the RCOD period, by circumstances beyond their control as specified in the PPA.

In addition, projects whose RCOD has expired but that achieved more than 25 per cent physical progress during the RCOD period will be included in this category.

Category C will cover projects whose RCOD has not yet expired but which have failed to meet key contractual obligations, including obtaining generation licences, financial closure, or land acquisition. 

Projects with less than 25 per cent physical progress by the RCOD deadline will also be placed in this category.

Category D will include projects that, even after the RCOD has expired, have failed to meet major PPA obligations such as securing generation licences, financial closure, or land acquisition, as well as projects whose survey or generation licences have been revoked.

According to the NEA, physical progress measurement will be done as per the procedure determined by the Authority. 

It has been mentioned that the stage where the construction of main structures (such as headworks, pipe alignment, tunnel and powerhouse) has started and progress has been achieved will be considered as the basis for physical progress.

In the case of solar projects, the stage where the panel purchase agreement, LC has been opened, land management has been completed and the construction of mounting structure and foundation has started will also be considered as an indicator of progress.

The Power Trade Department of NEA may alert and give necessary instructions to the projects in Group ‘B’ to proceed with the work in a timely manner. 

The Power Trade Department will monitor whether the instructions given by the Authority have been followed. 

"Regular monitoring will be done by giving a time limit. The classification will be done in another category as per the requirement within a maximum of six months," said the NEA.

Similarly, a ‘Notice of Default’ will be issued to the projects in Group ‘C’ as per the provisions of the PPA. If a satisfactory response is not received or no improvement is seen, the process of cancelling the agreement will also be taken forward.

The NEA said that the requirement for 25 per cent physical progress will be evaluated in line with the NEA's Physical Progress Guidelines, 2071.

The new classification framework is expected to make power project management more systematic, transparent, and accountable by clearly classifying projects that have been stalled for a long time, projects that are progressing, and projects that have been delayed in coming into operation.