Himal Power Limited (HPL) officials have ruled out a renegotiation of the power purchase agreement with the Nepal Electricity Authority, arguing that the deal was done when there were a different set of uncertainties and that it is wrong to raise the issue now. King Birendra inaugurated the 60-megawatt, $140 million project at Kirnetar in Dolakha district on Monday.

Politicians and government officials have been talking about possible renegotiation of electricity sold by the HPL though the NEA has not made a formal request to that effect. The PPA was signed on 30 March 1994. Under the 20-year agreement NEA is required to purchase the electricity at 5.9 cents per unit (now roughly 6.9 cents after adjusting for inflation). HPL began commercial sale of electricity on 11 July.

Norwegian power-developer Statkraft, the major shareholder in HPL, will have to transfer 50 percent ownership to the government after 20 years under the licence agreement. The remaining stock is to be transferred to the government upon completion of the 50-year Build-Own-Operate-Transfer (BOOT) contract.