Kathmandu, July 20: The Nepal Electricity Authority (NEA) has introduced a new framework to classify hydropower projects seeking an extension of their Required Commercial Operation Date (RCOD), aiming to improve transparency, accountability and timely project implementation.
A meeting of the NEA Board of Directors on Thursday decided to categorise projects that have signed Power Purchase Agreements (PPAs) into four groups based on their physical progress, RCOD status and compliance with key contractual obligations.
The classification is intended to determine which projects qualify for RCOD extensions while identifying projects that have failed to meet their contractual commitments.
Four project categories
Under the new framework, Category A will include projects whose RCOD has not yet expired and which have either fulfilled major PPA obligations—such as obtaining generation licences, achieving financial closure and completing land acquisition—or remain within the contractual deadline to do so.
Category B will cover projects whose RCOD has expired but have been unable to begin commercial electricity generation because the NEA has not completed the transmission lines or substations required for grid connection. It will also include projects that have been delayed due to force majeure or other circumstances beyond the developers’ control, as recognised under the PPA, provided they have submitted supporting evidence and met the conditions set by the NEA Board.
Projects that have achieved more than 25 percent physical progress before the RCOD deadline will also qualify under Category B.
Category C will consist of projects whose RCOD has not yet expired but which have failed to meet key contractual milestones, including securing generation licences, financial closure or land acquisition. Projects with less than 25 percent physical progress by the RCOD deadline will also fall into this category.
Category D will include projects whose RCOD has expired and which have failed to fulfil major contractual obligations, as well as projects whose survey or generation licences have already been revoked.
Monitoring and enforcement
According to the NEA, physical progress will be assessed in accordance with its established Physical Progress Guidelines, 2071. For hydropower projects, progress will be measured based on the commencement and advancement of major civil works, including headworks, tunnels, penstocks and powerhouse construction.
For solar projects, progress will be determined by milestones such as completion of land acquisition, execution of panel purchase agreements, opening of letters of credit (LCs), and the start of mounting structure and foundation works. The NEA’s Power Trade Department will regularly monitor projects classified under Category B, issue necessary directives and set deadlines for compliance. Projects may be reclassified within a maximum of six months, depending on their progress.
Projects placed in Category C will receive a Notice of Default under the provisions of their PPAs. If developers fail to provide a satisfactory response or make adequate progress, the NEA will initiate procedures to terminate their agreements.
The authority said the new classification system is expected to make hydropower project management more systematic, transparent and accountable by distinguishing between projects progressing as planned, those facing genuine implementation challenges and those that have remained stalled without sufficient justification. #nepal
