At a time the sugar mills in Nepal are criticized for promoting quota system in the trade to enjoy government subsidy, some of the companies are planning to generate electricity by burning bagasse. The state-owned Nepal Electricity Authority (NEA) has signed a power purchase agreement (PPA) with Indu Shankar Sugar Mill to purchase electricity. With the agreement, the sugar mill will supply 3MW of electricity to the nearest substation of NEA. The mill will be generating electricity from the residue left after extracting juice from sugarcane sticks. According to The Kathmandu, “The bagasse is a fibrous pulp that remains after the cane is crushed to extract juice. Once the bagasse is burnt, the steam generated from it is used to rotate the turbine to generate electricity.”
Although the quantum of electricity that will be added to national grid is relatively low, the recent deal is significant in terms of the NEA’s aim to diversify its energy mix which is still dominated by hydroelectricity. The power utility is also planning to sign PPA with two other sugar mill. The NEA’s top management has already approved the draft of the PPA to be signed with Everest Sugar and Chemical Industries of Mahottari and Reliance Sugar Mill of Bara. Everest Sugar will supply 3MW while Reliance has claimed to supply 15MW of electricity to the power utility. The power utility has already sent a letter to owners of Everest Sugar asking them to be present with the bank guarantee and sign the agreement. “Once the owners of the factories come up with bank guarantee, we will sign the PPA with them,” said Prabal Adhikari, spokesperson at the NEA. Likewise, the power utility has asked representatives of Reliance Sugar Mill to initial the PPA which later has to be approved by the NEA chief before the final deal.