Hydropower Development Policy of Nepal

INDIAN INSTITUTE OF TECHNOLOGY ROORKEE
Hydropower Development Policy of Nepal
Presented by Manish Kumar Deo

M. Tech in AHES, Enrollment No. 17512010
Federal Democratic Republic of Nepal
Landlocked South Asian country
Capital: Kathmandu
Area: 147,181 sq. km
Population: Around 30 million

Standard time: GMT +5:45 hours
Language: Nepali, Maithili, Newari, English, and others.

Religion: Hindu, Buddhism, Islam, and others.
Geography: Terai (60-700)m, Hilly(700-3000)m, Mountain (3000-8848)m;

7 states with 75 districts
Climate: Tropical/Sub-tropical, Moderate, Alpine/Sub-Alpine

Currency: Nepali rupee (NPR) 1US$ = 102.64 NPR
Per Capital Energy Consumption: 140 KWH
2
Hydropower development policy
• First Hydropower Development Policy, 1992 later added

Environmental Protection Act and Rules (1997), Local Self
Governance Act (1999)
• Hydropower Development Policy 2001
Main Objectives
-To generate electricity at low cost utilizing water resources.
-To provide reliable and qualitative electric service at
reasonable price.
-To tie-up electrification with economic activities and extending
the rural electrification.
-To develop hydropower as an exportable commodity.
3
Strategies
• To extend hydropower services to urban & rural economy for
agriculture and industrial development.
• To pursue investment friendly, clear, simple and transparent

procedure for promoting private sector participation.
• To implement small, medium, large hydro projects focusing

on national interest, environment protection.
• To attract investment from private sector as well as jv of

government and private sector.
• To pursue a strategy of regional cooperation for hydropower

development
4
Policies
• Utilizing hydropower potential maximum extent for meeting
domestic demand of electricity.
• Develop and implement hydropower projects as competitive

basis and also to encourage on BOOT model.
• Provide appropriate intensive to attract national and foreign

investment in hydropower development projects.
• Effort on implementation of large storage type hydropower

projects to yield maximum benefits of the nation.
• For multipurpose projects, GON may participate with private

sector for possibility of irrigation development.
5
Policies ….continued
• Contribution to environment protection by developing
hydropower and also provision to resettle displaced families.
• Remote and rural areas electrification are encouraged by

operating small and micro hydro projects at local level.
• Necessary technical measures and legal provision adopted

for unauthorized leakage of electricity.
• Encourage to utilize electrical power during low demand for

water supply, irrigation, industry etc.
• Electricity tariff should be made rational and transparent so

that it should be provided at reasonable price.
6
Environmental Provision
• Provision to implement the programs identified under the

environmental impact assessment study report to be made.
• Licensee can acquire houses, lands as requirement and

bear all expenditure to rehabilitate and resettle the families.
• For generating, transmitting and distributing electricity, GON

can also provide its own land on lease for a license period.
• Legal provisions shall be made to prevent adverse effect on

availability of water or water right.
7
Provision for investment in Generation,
Transmission and Distribution
• Hydropower shall be developed attracting investment of
domestic and foreign investors through sole or joint venture.
• Capital market shall be mobilized to encourage domestic

investment (financial institutions, bonds etc) in hydropower.
• Infrastructure Financial Institution to be established under

the Build, Operate and Transfer for generation & distribution.
• Agreement made to receive loan from foreign institutions for

the investment in projects on approval of GON & laws.
• Incase where irrigation benefits be availed from any storage

projects, GON may be JV partner with private sector.
8
Provision of Special Investment for Infrastructure
Development of Rural Electrification
• Rural electrification shall be encouraged in affected areas
from generation and energy royalty shall be exempted.
• 1% of royalty obtained by GON can be provided to VDC that

are directly affected by hydropower infrastructure.
• Rural electrification fund shall be established for the

development of micro hydro projects from few % royalty.
• Electricity supplied from SHP in remote rural areas, local

cooperative groups are handed for operation & maintenance.
• GON shall provide grant through AEPC to community/private

sector for building of micro hydro projects.
9
Provision relating to transfer of Project
• Any hydropower project has to be transferred in good

running condition after expiration of license period.
• DOED prescribe the guidelines for repair and maintenance

of equipments & structure of hydropower project.
• Provision are made for involvement of GON in the operation

of hydropower projects for two years after transferal.
10
Provision relating to Power Purchase
• Power Purchase Agreement should be transparent.
• Except in cases where private party itself also distributes

generating power in Nepal, a PPA has to be made to sell and
purchase the hydropower generated.
Provision relating to Visa

• Non tourist visa and work permit shall be provided to investor
and its authorized representative of hydropower project.
11
Maximum Utilization of Local Resources Means
• Foreign investor shall be encouraged to develop the project
using domestic materials & construction entrepreneurs.
• The licensee to build or operate hydropower project cause to

be carry out works such that technology is transferred to
Nepalese citizens in accordance with the license.
• The licensee to build & operate hydropower project shall use

Nepalese labor, skills & resources to the maximum extent
possible.
• Development of industries producing construction materials

and equipments to be used in power sector shall be
encouraged.
12
Management of Investment Risks
• Hydropower project, transmission & distribution system will
not be nationalized during the term of the license.
• Exchange facilities shall be provided to foreign investors for

power generation, transmission and distribution project.
• If any geological and hydrological adverse condition occurs,

provision shall be made to extend the generation license.
• Customs and VAT facilities will be provided for upgrading the

capacity of the electricity generation and repair maintenance.
• Settlement of any disputes shall be governed by the

agreement or by prevailing law on foreign investment.
13
Provision on Internal Electricity Market
• Establishment of power-based industries shall be encouraged.
• Up to 1MW project and not linked with national grid, private

producer may sell electricity as on its own tariff rate.
• The licensee distribute electricity at different rates as tariff for

peak, off-peak, seasonal and bulk to various customers.
• For demand side mgmt., provision for TOD and seasonal tariff
shall be made to harmonize with supply of electricity.
• Provision to create awareness among consumers on

increased use of energy conserving electric equipment & grant
tax exemption on such equipments.
14
Provision on Export of Electricity
• If generated energy in the country is to be export abroad, it

shall be done as per the agreement between GON & exporter.
• As mutual understanding, GON shall purchase 10% of power

from export-oriented projects for domestic consumption.
• Electricity shall be exported by identifying export-oriented

projects & necessary study conducted towards extending
power at bilateral and regional level.
• Non-power benefits such as irrigation, flood control shall be

evaluated to acquire maximum benefits from storage projects.
15
Provision on License
• Provision shall be made such that the local people can also be
benefited from hydropower development projects.
• The provision of license shall be as: Study/Survey license,

Generation license, Transmission license, Distribution license.
• No license required up to 1 MW hydro project. Such projects are

registered with DWRC and information shared to DOED.
• Survey license up to 10MW hydro project shall be provided within

60-120 days after submission of all details to DOED.
• For license more than 10MW in which feasibility study has already
been done by GON, shall be issued in with competitive basis in
bidding process.
16
Terms of the License
• For survey and generation license has to be obtained for
captive plant and issued within 120 days of submission of all
details.
• License may be granted to export electricity from the projects

that have capacity more than 100MW & need approval of GON.
• Study/Survey license: Maximum period of 5 years
• Hydro Power Generation license: Maximum period of 35 years

& 30 years for captive plant
• Transmission & distribution license: Maximum period of 25

years and can be renewed for 10 years with prevailing law.
17
Provision relating to Fees
• Royalty for Internal consumption project
• Royalty for Export-oriented hydro power project
18
Facilities relating to Tax and Customs
• Income tax payable in operating hydropower generation
project, T&D system shall be as prevailing income tax act.
• After obtaining permission for import of spares & machinery

for hydro power projects, value added tax will not be imposed.
• Only 1% custom duty will be imposed on these spares how-

ever the value shall not exceed 20% total value of devices.
• In construction period, machines required can be imported,

but after completion of project, these have to taken back.
• Inability to take them back, custom duty shall have to be paid

at the prevailing rate after construction of the project.
19
Institutional Provision
• The existing Electricity Tariff Fixation Commission shall be
developed as regulatory body.
• In course of monitoring and supervising the quality standards

of electricity, this regulating body may give direction and
supervision as per necessity and also taking into account of
power purchase agreement of the public and private sector
producers.
• Functions of the regulatory body shall be as follows:

-To fix electricity tariff,
-To monitor & supervise the safety of electric system, and the
reliability of supply and quality standards of electricity,
-To protect the interest of consumers,
20
Institutional Provision
- To prepare grid codes,
- To approach the criteria for load dispatch,
- To prepare criteria for safety and quality standards of
electricity, etc,
• Study and Promotional Body: DOED

• Electric Energy Management & Research Institute: NEA
Construction and Operation of Hydropower

Projects by Government of Nepal
As per necessity build and operate hydro power projects on its
own by concluding & accordance with treaty with any friendly
country and international organization.
21
Major rivers in Nepal
22
Major Hydropower Projects in Nepal
Kaligandaki Hydropower Project 144 MW Middle Marsyangdi Hydropower 72 MW
23
Major Hydropower Projects in Nepal
Upper Tamakoshi Hydropower 456 MW - Construction site
24
References
1. Ministry of Energy http://www.moen.gov.np

2. Department of Electricity Development http://
www.doed.gov.np
3. Nepal Electricity Authority (NEA) http://www.nea.org.np
4. Jalvidhyut Lagani Tatha Bikas Company Limited http://
www.hidcl.org.np
5. Water and Energy Commission Secretariat (WECS)
http://www.wecs.gov.np
6. Investment Board Nepal (IBN) http://www.ibn.gov.np
25
Thank you
26

Hydropower Development Policy of Nepal

Uploaded by

Copyright:

Available Formats

Hydropower Development Policy of Nepal

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Hydropower Development Policy of Nepal

Uploaded by

Copyright:

Available Formats

INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

Hydropower Development Policy of Nepal

Presented by Manish Kumar Deo

Population: Around 30 million

Language: Nepali, Maithili, Newari, English, and others.

Geography: Terai (60-700)m, Hilly(700-3000)m, Mountain (3000-8848)m;

Climate: Tropical/Sub-tropical, Moderate, Alpine/Sub-Alpine

• First Hydropower Development Policy, 1992 later added

• To pursue investment friendly, clear, simple and transparent

• To implement small, medium, large hydro projects focusing

• To attract investment from private sector as well as jv of

• To pursue a strategy of regional cooperation for hydropower

• Develop and implement hydropower projects as competitive

• Provide appropriate intensive to attract national and foreign

• Effort on implementation of large storage type hydropower

• For multipurpose projects, GON may participate with private

• Remote and rural areas electrification are encouraged by

• Necessary technical measures and legal provision adopted

• Encourage to utilize electrical power during low demand for

• Electricity tariff should be made rational and transparent so

• Provision to implement the programs identified under the

• Licensee can acquire houses, lands as requirement and

• For generating, transmitting and distributing electricity, GON

• Legal provisions shall be made to prevent adverse effect on

• Capital market shall be mobilized to encourage domestic

• Infrastructure Financial Institution to be established under

• Agreement made to receive loan from foreign institutions for

• Incase where irrigation benefits be availed from any storage

• 1% of royalty obtained by GON can be provided to VDC that

• Rural electrification fund shall be established for the

• Electricity supplied from SHP in remote rural areas, local

• GON shall provide grant through AEPC to community/private

• Any hydropower project has to be transferred in good

• DOED prescribe the guidelines for repair and maintenance

• Provision are made for involvement of GON in the operation

• Power Purchase Agreement should be transparent.

• Except in cases where private party itself also distributes

Provision relating to Visa

• The licensee to build or operate hydropower project cause to

• The licensee to build & operate hydropower project shall use

• Development of industries producing construction materials

• Exchange facilities shall be provided to foreign investors for

• If any geological and hydrological adverse condition occurs,

• Customs and VAT facilities will be provided for upgrading the

• Settlement of any disputes shall be governed by the

• Up to 1MW project and not linked with national grid, private

• The licensee distribute electricity at different rates as tariff for

• Provision to create awareness among consumers on

• If generated energy in the country is to be export abroad, it

• As mutual understanding, GON shall purchase 10% of power

• Electricity shall be exported by identifying export-oriented

• Non-power benefits such as irrigation, flood control shall be

• The provision of license shall be as: Study/Survey license,

• No license required up to 1 MW hydro project. Such projects are

• Survey license up to 10MW hydro project shall be provided within

• License may be granted to export electricity from the projects

• Study/Survey license: Maximum period of 5 years

• Hydro Power Generation license: Maximum period of 35 years

• Transmission & distribution license: Maximum period of 25