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IPPAN needs to be steered with vision of generating 25,000 MW in 10 yrs: Ganesh Karki (interview)

Deepak Bhatta

Deepak Bhatta

 |  Kathmandu

IPPAN presidential candidate Ganesh Karki. (Photo: Nepalkhabar)

Born in Kamal Rural Municipality-1 Jhapa, Ganesh Karki did his School Leaving Certificate (SLC) from Dharan.

Karki came to Kathmandu in 2041 BS and has been involved in business for the last 39 years. He started his business by spinning carpet yarns and then ran carpet and pashmina industries. He has been working in the hydropower sector for 20 years. Having been involved in many projects, he himself has completed 10 hydro projects including CD Khola Hydro as a Chief Executive Officer (CEO). He was Managing Director at Singati Hydro power project, until recently.

Currently, he is the Managing Director of Beni Hydropower. Karki, who is the incumbent vice president of the Independent Power Producers Association (IPPAN), has announced his candidacy for the new leadership election to be held on June 15.

Nepalkhabar’s Deepak Bhatta  talked to Ganesh Karki, the IPPAN presidential candidate, on business, energy production and marketing, and institutional reforms. Excerpts:  

You have announced your candidacy for the next president of IPPAN. What is your agenda?
The biggest issue is that even after getting the electricity license, the power producers have are facing the same problems. Power Purchase Agreement (PPA) must be done within five years after getting the license. Some projects do not get approval at all, the license period expires. Many problems including these have to be faced. PPA has been stopped since 2075 BS. This is a problem with the license itself. It is because of the government that energy producers are facing problems. The problems of land acquisition and forest transmission are still existing. No more than 75 ropani of land can be purchased. There is a restriction on the plotting of lands. Problems are galore. To solve these problems are my main agenda.

You mentioned the problem of PPA, but PPA for 1,500 megawatts has been done, hasn’t it?
Yes. PPA has been signed for 1,500 MW. But there are already 11,000 MW in the queue. How and when is this contract signed? Further, we regret that we have to take many loans from the bank. The interest rate of the loan at which we borrow, is very high. The most important thing is to generate electricity, connect it to the grid. But, there is no transmission. Even if it is transmitted, only half. Currently, there is no transmission in Dordi Corridor. Even after production, if the electricity does not transmit, what could be greater loss than this? Who pays the interest? Solutions need to be found.

After the Prime Minister's visit to India, there has been a hope among power developers. It is  partially successful. There is much to be done to make it a success. It is said that India will purchase 10,000 mega units within 10 years. For that, it should be produced accordingly. Do we have that product? If we produce 10,000 megawatts in the current situation, it will be consumed. If 10,000 megawatts are produced in 10 years, Nepal itself will consume the whole 10,000 megawatts. Then Bangladesh is also joining us. How much to sell to Bangladesh? Up to 25,000 megawatts of electricity should be produced within 10 years to meet the demand. Investment environment has to be created to attract investors. The government has to collaborate and lobby for transmission lines. If the government is not able to do it, now the private sector has to come forward to do it. That work has to be done by the future leadership. But a lot of good work has been done in the last two-three years. However, the work done so far is not enough. Investment should be increased urgently. Up to 25 thousand MW should be produced in 10 years. As Nepal Securities Board has adopted a new policy. There is a situation where it cannot proceed according to the policies it has introduced. This policy needs to be simplified. The investment environment should be improved to attract the private sector. What IPPAN's leadership has achieved so far is not enough. Now the important role of the private sector has come to IPPAN. I have held many responsibilities while serving as Vice President. I have also gained a lot of experiences. This field is challenging, the center of hope and the basis of prosperity. The future leadership has to play a special role to make it better and productive. I am ready for that.

There is no mega project in Nepal's private sector. Now mega projects have been signed with India. How will you take it?
So far the agreements are reached between the two countries, we want cooperation. Bangladesh has demanded a new project. We have demanded that we should also participate in that. If we talk about exporting 10,000 megawatts, the government of Nepal must also think from a different perspective. The Nepal government should involve the private sector in that. We are ready for that.

Aren’t you encouraged after having seen the agreement with India, the interest of Bangladesh, the increasing domestic consumption? 
Yes, of course we are. What kind of goal has the government taken? Which kind of agreements have been made? We are ready to help with that. Accordingly, the government should also change its attitude towards us. Facilities should be increased. We did not ask for money from the government. The legal system should be changed. We have said that security should be provided. Many places have been demolished after getting construction permission. The government should guarantee how it will provide security. Of late, the government has certainly given some importance to IPPAN. During the Prime Minister’s visit to India this time 4-5 people from IPPAN got a chance to participate.

It is alleged that private hydro undertook the project, took money from the public and ran away. How do you deal with it? 
Allegations are made. According to the report of the Auditor General, the projects made by Nepali promoters are made at an average of 200 million. The Nepal government is spending 400 to 500 million rupees to build such a project. If this report is anything to go by, the private sector is building the same project at half of the investment made by the government, isn’t it? When the government builds a 20 MW project, it buys 8 to 10 vehicles, while the private sector buys one vehicle.

At present, the bank collects the equity that we put in. Previously, it would have been collected gradually, now it must be collected in advance. The bank hires financial and technical consultants while spending. The bank gives money only after verifying it. The accusations against us now are baseless.

There is an economic recession. You are raising the issue of interest rates. What would be its overall impact?
Many projects have not been able to pay the principal and interest. A projected interest rate of 9 percent climbs to 13-14 percent, the balance sheet will be negative. The electricity  will be sold at a fixed rate. Our rates will not increase. However, the revenue decreases. Sometimes it doesn't rain, sometimes it floods. In such a situation, the problem arises as soon as the interest rate of the bank fluctuates. We can sustain only when the rate of interest is fixed. The hydropower loan should be fixed until the loan is repaid.

Those who lead the private sector umbrella organizations are accused of putting pressure on policy making for personal profit rather than solving problems. What do you say?
Unlike the other sector, we cannot exploit it for personal gains. Acts and regulations should be amended to solve the problem in this sector. It covers everyone. We work with collective decisions rather than individual ones.

Why choose you for leadership? What is the basis? 
There were aspirants including myself. Friends suggested that I should take the lead. I play an important role in making this area dignified by solving the problems facing this sector in collaboration with my friends. That's why I can win the election.


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