PM Oli clarifies removal of ‘Take and Pay’ provision from budget

KATHMANDU: Prime Minister KP Sharma Oli has said that the ‘Take and Pay’ provision included in the budget was removed after concerns arose that it might lead to negative consequences.

Responding to lawmakers’ queries during Tuesday’s session of the House of Representatives, PM Oli explained that the provision was initially introduced with good intentions but was later withdrawn as doubts surfaced. “It was brought with the aim of doing good, but we feared it could have adverse effects, so it was removed,” Oli stated.

Lawmakers had questioned the rationale behind including and then removing the ‘Take and Pay’ policy, suggesting that if such budgetary provisions can be withdrawn arbitrarily, the Prime Minister should take the lead in amending the budget.

The removal of the ‘Take and Pay’ clause from the Power Purchase Agreement (PPA) framework was agreed upon during a recent discussion between PM Oli and Nepali Congress President Sher Bahadur Deuba.

Under the ‘Take and Pay’ model, the Nepal Electricity Authority (NEA) pays only for the amount of electricity it purchases. In contrast, the ‘Take or Pay’ model — which NEA has traditionally followed — requires the authority to pay producers even if it doesn’t consume the electricity, based on the agreement terms. If producers fail to deliver the agreed amount, they must pay penalties to NEA.

NEA had recently started implementing time-bound ‘Take and Pay’ PPAs in cases where hydropower projects were complete but transmission infrastructure was either delayed or under capacity.

Reports suggest that Deuba had pressed PM Oli to remove the ‘Take and Pay’ provision from the budget, leading to its eventual exclusion.