Prepared for

SUMMARY OF EXISTING GUIDELINES AND REGULATIONS FOR

ROPOWER LICENSING IN NEPAL

His Majesty's Government of Nepal Ministry of Water Resources

Electricity Development Center

Under the

USAIDINepal Private Electnclty Project Contract No 367-C-00-95-05 117-00

Project No 367-1073-3

Draft Report

June 1998

Prepared by

Peter S Foote Environmental Specialist

I A c r e s I n t e r n a t ~ o n a l 140 John James Audubon Parkway Amherst NY 14228 1180 Telephone 716 689 3737

I Facsimile 716 689 3749 E ma11 amh@acres corn Eng~neermg a Better world" a

1

Summary of Exrstrng Gurdelrnes and Regulatrons for Hydropower Lrcensrng m Nepal

Table of Contents

Llst of Tables and Figures

1 Introduction

2 Electricity Regulation, 2050

3 Envronrnental Impact Assessment Gudelmes

4 Environment Conservation Rules, 1997

5 World Bank Guldelmes

6 Summary

7 References

Acres/USAID Private Electricity Project TOC-1

Summary of Exlstlng Gu~dellnes and Regulations for - Hydropower Llcenslng ln Nepal

Llst of Tables and F~gures

Tables

5- 1 The World Bank Guldelmes for Interagency Consultations

Hydroelectric Licensing Process m Nepal Survey License Application Process m Nepal Product~on License Application Process m Nepal

EL4 Process m Nepal (EIA Guldelmes, 1993)

IEE Approval Process, Envlronment Conservation Rules, 1997 EIA Approval Process, Envlronment Conservation Rules, 1997 Post-Licensmg Compliance, Envlronment Conservation Rules, 1997

Acres/USAID Prlvate Electr~crty Project TOC-2

3

Summary of Exlstrng Gu~del~nes and Regulabons for Hydropower bcenslng ln Nepal

I introductron

Begmmng m the early 19901s, HMGN adopted a policy of encouragmg pnvate Investment m the electnc power Industry m Nepal, as a way to stlmulate the development of Nepal's vast undeveloped hydropower potentlal Legslation was passed to establish a mechmsm for licensmg pnvate hydroelectnc developments, as well as to protect the u q u e physical, biologcal, and soc~al environment of Nepal Thls report sumrnanzes the current regulatorv requrements related to developmg hydroelectnc projects m Nepal

Acres/USAID Prlvate Electrrcrty Project 1-1

Summary of Exrstlng Gu~del~nes and Regulat~ons for Hydropower Lrcens~ng m Nepal

These regulabons were established m 1993, pursuant to Section 40 of the Electncity Act, 2049 The ElectnciQ Act was passed to encourage the development of electncal generation facilities m Nepal, to provide better electncal service and economc development in Nepal, as well as well to encourage development of power facilities for export of power to other countries The Act also established the Electncity Development Center (EDC) w h the Mlmstrv of Water Resources (MOWR), whch functions as the elechcity development m t under the MOWR EDC serves as the "one wdow" agency for the approval (licensmg) of all hydropower development w h Nepal by both domestic and foreign mvestors The Electncity Regulations define the licensmg process for hydroelectnc projects, and specify the mformation that must be mcluded m the application for hcense and associated filmgs Licenses are reqwed only for hydroelectnc projects greater than 1,000 kW m capacity For projects less than 1,000 kW, the developer is only requlred to file a notice wth EDCIMOWR before startmg construction No licensmg or notification requrrements apply to projects less than 100 kW

The two stages of hcensmg are the Survey License and the Production License ( F~gure 2- 1) The Survey License allows the Licensee to meshgate a specific hydroelectnc site for a penod specified by the license ( m m u m of five years) D m g the term of the Survey License, the Licensee has the sole nght to study that site, wthout the possibility of another applicant filing a license application on the same site

As stated in the Electncity Regulations, under the terms of a Survey License, the Licensee must Begm survey work w t h three months after the license lssuance date Subrmt six-month progress reports to EDC d w g the term of the license Submt a report to EDC on the results of the mvestigations, w i h 30 days after the completion of studies under the license

Once the Licensee completes the studies under a Survey License and concludes that the Project is feasible, a Production License must be obtamed for actual construction of the project (Figure 2-1) Under the Electncity Regulations, if a Production License is issued, the Licensee must

Begln construction work wtlw 12 months after the license issuance date Submt six-month progress reports to EDC until construction is completed Comply with any other reqwements of the license throughout the term of the license

The Produchon License remams in effect throughout the operation of the project, wth a m a u u m license term of 50 years The license must be renewed one year pnor to the explration date of the ongmal llcense No other relicensing provisions, however, are descnbed m the current regulations

The Electricity Regulations spell out the overall process for applylng for a Survey License and a Production License Figures 2-2 and 2-3 illustrate the application review procedures under the current regulations, for both categories of licenses The regulations, however, do not provlde any gwdelmes or specifications for mteragency consultations or public participation dunng the licensmg phase, other than the 35-day public notice penod provided under the Production License application process (Figure 2-3) License applications are requu-ed to contam an analysis of the envlronmental effects of the project, and a descnption of nutigative and enhancement measures proposed by the Applicant The current envlronmental Impact assessment (EIA) gudelmes and envlronmental regulations provide a description of the environmental revlew and consultation process reqwed for hydropower licensing m Nepal and descnbe the format for EIA documents

Acres/USAID Pr~vate Electrrcrty Project 2- 1

Summary of Ex~stlng Gurdelmes and Regulatrons for Hydropower Llcensrng ln Nepal

Applicant Applies for and Recelves

9 ,,P---LZ----Z------ -T.----*=-----

SURVEY LICENSE i: : --------- - - - - - - - - - - - - - - - - -

Engineering and Environmental

U P ~ O 5 years

I Applicant Applles I Production License I I 0 ' License

r - - - - - - - - - - I PRODUCTION LICENSE - - - - 1 - - - - I - - - - - 1

B egln Construction Within 1 year

I + + Construct and Operate Project

Up to l50-year

Term

Figure 2-1 Hydroe lec t r~c L i c e n s ~ n g Process In Nepal

Acres/USAID Pr~vate Electrrcrty Project 2-2 i

Summary of Existing Guideknes and Regulations for Hydropower Licensing in Nepal

SURVEY UCENSE

@-{sb) {wgstData] EDC staff (Ifrequued)

Figure 2-2 Survey hcense Applidon P r o m m Nepal

Acres/USA/D Private Electr~oty Projecf 2-3

Summary of Exlst~ng Gurdel~nes and Regulations for Hydropower Licensing m Nepal

PRODUrnON LICENSE

120 Days

F~gure 2-3 Production L~cense Applic&on Process m Nepal

Acres/USAID Pr~vafe Elecfr~c~fy Project 2-4

Summary of Exrstrng Gurdelrnes and Regulations for Hydropower Licensing rn Nepal

3 Envlronmental Impact Assessment Gu~delines

Two major gudelmes for conductmg EIA's m Nepal have been issued m recent years These are

(1) National Envlronmental Impact Assessment Guldelmes, published m 1993 by the National Planrung Comssion, HMGIN, m collaboration wth IUCN - The World Conservation Umon

(2) Envlronmental Impact Assessment Guldelmes for the Water Resource Sector, published m Fmal Draft m 1994 by the National P l m g Comss ion and Mmstry of Water Resources, HMG/N, m collaboration with lUCN - The World Conservation Umon

The gwdehes are smular m content, and spell out a relatively detailed process for conductmg an env~onmental revlew of proposed development m Nepal usmg a two-tiered process of an h t i a l Envlronmental Examation (IEE) and the full EIA Figure 3-1 dustrates the overall EIA process for hydropower development m Nepal The following general cntena also apply, based on the capacity of the proposed project and the type of activity proposed

The Gmdelmes state that both mteragency and public consultations should occur throughout the EIA process, and should begm as early as possible m the process (Figure 3-1) The stated advantages are that, for the public, thelr partmpabon m the process wdl provide a sense of ownership, wll allow for inclusion of tradtional wsdom lnto the analysis, and may be valuable for rallymg public support for the project For government agencies, theu participat~on in the process wll prov~de early identification of significant envlronmental issues, whlch may be more easlly mhgated through project design and p l m g Early agency involvement wll also allow the agencies to offer thelr specific experhse m deslgrvng mtlgative measures, and w11 keep the agencies fully Informed about a proposed project, avoidlng any ' surprises" that may act to later erode agency support for the project Another aspect of the agency consultation process that is recommended by the Gmdelmes, is scopmg of the EIA studes to focus the studes on the most unportant, potentially significant issues The ultlrnate objective of scopmg is to produce Terms of Reference (TOR) for the EIA studies that are focussed on the unportant issues, and are acceptable to the government agencies and other interested groups

Type of Actlvlty Master Plan or Bas~n wlde Stud~es Feas~billty Study Not Under L~cense Feas~b~l~ty StudyIDeta~led Design Under Llcense

Once the TOR are finalized, the Applicant wll conduct the stuhes accordmg to the TOR and prepare ather an IEE or EIA report, depenchg on the scope of the project Addtional details of the IEEtEIA process are described in Section 4

Acres/USAID Private Electr~c~ty Project 3-1

No Requirement for IEE or EIA

N A

Applies For Projects Up To 50MW Appl~es For Projects Up To 1 0 M W

Requlres IEE Applies

Applies For Projects Greater Than 5 0 MW Applies For Projects From 1 0 to 50MW

Requ~res Full EIA N A

NA

Appl~es For Projects Greater Than 5 0 MW

Summary of Ex~stlng Guidel~nes and Regulat~ons for Hydropower Licensing in Nepal

Figure 3-1

Adjustment 4 Requ~red

EIA Process in Nepal (EIA Guidelines, 1993)

Acres/USAID Pr~vate Electricity Project 3-2

b

In~ttal Envtronment

Maybe Assess

Examination

'?!:Needed ~f equired EIA Yes Requlred

0 N

EIA 4 +

- - - - - - - - - - Post -Cons truc t ion : E n v ~ r o n m e n t a l :

M o n t t o r l n g I A u d l t : \ - - - - - - - - - - /

I N T E P R~

A G E C N C C

c 0 0 R T D A I N A T I

Project Proceeds with any

Mi t~gat~on ident~fied

A W

B

L I

S u L

T I 0 N

I

EIA TOR

f EIA Study I 7 Baselme Condttions Effects Pred~ction Mttrgation Measures Residual Impacts

I I

EIA Report

-

- Y :

Summary of Existing Guidelrnes and Regulatrons for Hydropower Licensmg rn Nepal

4 Envlronrnent Conservation Rules, 1997

These are the most recent national envlronmental regulations Implemented m Nepal, havlng been officiallv published on September 7, 1997 These rules were mplemented pursuant to Section 24 of the Envlronrnent Conservation Act, 2054 (1997) Smlar to previous EIA gwdelmes, these new rules also set out a two-tiered envu-onmental assessment process usmg the IEE and the EIA These rules, however, apply to all types of potential development in Nepal, mcludmg forest management and utilization, mdustnal development, rmntng, road constructron, water resources and energy development, tomsm, dnnl\mg water supply, garbage management, and agriculture (whch mcludes all types of food production, processmg, and fish f m g ) Smce these rules cover such a wde range of busmess sectors, they are somewhat general, and reqwe some mterpretation for applicability to the hydroelectnc licensmg process

Figures 4- 1 and 4-2 surnmanze the envlronmental approval process under the new rules Companson of these figures wth Figure 3-1, the 1993 EIA Guidelines, mchcates many smlanties between the two processes The categones of projects for whch an IEE or EIA apply are also the same (as descnbed m Section 3) An area where the 1997 Rules are more specific is the requirement for public notices and providmg the public and other mterested pmes the opportutllty to revlew draft IEEYs or EIAYs pnor to their subnuttal to the regulatory agencies (EDC and Muustry of Population and Envlronrnent [MOPE]) Under the IEE process, the Applicant must issue a 30-day notice to local agencies and groups on the proposed project as the first step m the process Later the Apphcant must also provide the draft IEE to local groups for a 30-day review penod, pnor to filmg the project applicabon wth EDC (Figure 4-1) S~mlarly, two public comment penods are provided wthm the EIA process (Figure 4-2) The Apphcant is requed to provlde the draft EIA to mterested parties, before filmg the application Under the EIA process, MOPE must approve the project, and wll issue a public notice (30-day notice penod) after it receives the application and fmal EIA Under the new Rules, MOPE may also establish an mteragency committee to review the EIA, before the fmal approval is gven on the project

The Envlronment Conservation Rules also mclude specific requirements for the post-licensmg penod Once the Licensee begmi consttuctron, the licensmg agency (EDC m the case of hydroelectnc developments) must monltor the Licensee's compliance wth license terms, and contmually evaluate the ongomg nutigative measures (Figure 4-3) If the ongolng nutigation is considered to be madequate, EDC may requlre the Licensee to Implement additional measures In addition, MOPE is charged wth conductmg its own evaluation of project Impacts and mtigative measures, two years after the start of construction Although it is not specifically stated m the Rules, the implication is that MOPE may also requlre additional mtigation if it believes that ongomg measures are ~nsufficient The rules do not speclfy any other consultahons with other agencies dunng the post-licensmg penod

Acres/USAID Prrvate Electr~c~ty Project 4-1

Summary of Exrstlng Gurdelmes and Regulat~ons for Hydropower Llcens~ng ~n Nepal

30 Day Notlce 0 CONDUCT EIA

I? Appllcant Request

Appllcant Publishes Local Notlce of

Determination to Proposed Pro] ect EDC/MOPE

Appl~cant Prepares TOR for IEE

Appl~cant Applicant Pro- Appl~cant Flles Conducts Studies v~des Draft EE IEE With

Prepares IEE to Local Groups EDCNOPE J L

I1

30 Days Approval After Flllng

Flgure 4-1 IEE Approval Process, Envlronrnent Consemahon Rules, 1997

Acres/USAID Prlvate Electnc~ty Project 4-2

Summary of Exlstmg Gu~dellnes and Regulat~ons for Hydropower Llcens~ng ln Nepal

Apphcant Prepares Apphcant Conducts Studles and

Prepares EIA

Apphcant Provides Draft EIA to Local Groups

Figure 4-2 EIA Approval Process, Environment Conservation Rules, 1997

Acres/USAID Private Electr~oty Project 4-3

Summary of Existing Gurdelines and Regulations for Hydropower Licensing in Nepal

After Start of Construction

Licensee Licensee Beglns MOPE Evalua- Comphance With Construchon tion of Impacts License Terms and hhhgatlon

Additional

Evaluation (If Needed)

Figure 4-3 Post-Licensmg Compl~ance Envronment Conservation Rules 1997

Acres/USA/D Private Electriaty Project 4-4 I

Summary of Exrstlng Gu~deknes and Regulat~ons for Hydropower bcensrng ln Nepal

The World Bank Gu~delines

The World Banh Guldelmes for Environmental Assessment of Energy and Industry Projects have no legal mandate m Nepal, but may be applied as a review standard by The World Bank if The Bank becomes mvolved in project fmancmg These gudelmes were issued m 1991, and have served as the basis for many other EIA guidelines prepared around the world The Nepalese EIA gudelmes prepared m 1993 and 1994, cbscussed m Sechon 3, are very s d a r to the World Bank Guldelmes Regardmg mteragency consultations, the World Banh Guidelmes also stress that such consultations are very important m the EIA process, and recommend that thev begin early, and contmue throughout the process The Guldelmes provide some adhtlonal detail on the recommended structure for Interagency consultatxons, mcludmg an nutla1 scoplng meetmg, "md-term7' meetmgs and cuculation of draft reports to the agencies for comment Recommendations are also made for commumty involvement and consultation with NG07s, devotmg an entlre chapter to thls subject The followmg table generally summarizes the World Banh suggested process for mteragency and commwty consultations, throughout the life of a project

Table 5-1

T h e World B a n k Genera l G u ~ d e l l n e s for ln teragency Consul ta t ions

* Estimated duration for medium to large projects T ~ m e intervals not based on specific project experience

As noted above, these gudelmes have no legal mandate m Nepal, but potential developers should be aware that these guidelmes often serve as the "standard" to whch the EIA process is compared

T y p ~ c a l Durat ion (years)*

0 5

0 5

0 5

10-1 5

1 0

Project Stage

lnltlal Plannlng

Pre feaslb~llty Study

Feaslblllty Study Begins

Conduct EIA Stud~eslFeasrb~lrty Study Continues

Prepare Draw Flnal EIAIComplete

Acres/USAID Pr~vate Electrrcrty Project 5-1

Consul ta t ion S t e p

lnltlal lnformatlon Meetlngs and Request for Comments

Begln EIA Scoplng and Conduct Scoplng Meetlng(s)

Select EIA Studles Conduct Further Meetlngs

Perlodlc Progress Meet~ngsllnterlrn Reports

Draft EIA Issued for CornmenWRev~ew Meeting(s)

L~cens~ngIPerm~tt~ng

Construct~on

Operatron

Publlc NotlcesIFurther Community Meetings

AgencyICommun~ty Input to Ongorng Mlt~gatlon

AgencyICommun~ty Input to Ongolng Monltorlng

P

05-1 0

5 0

30 O+

Summary of Exlstmg Guidelmes and Regulabons for Hydropower Llcensmg m Nepal

6 Summary

This document has summanzed the licensmg and envu-onmental requrements that potential hydropower developers w d face Ifproposlng a hydroelectric project m Nepal The most tune-consummg part of the regulatory procedures are those related to the analysis and documentat~on of the envlronrnental Impacts of the proposed project Nepal's most recent envu-onmental regulations are slmtlar to those found m more developed countnes, and should be followed m order to successfully complete a project One of the most important aspects of the project envronmental Impact assessment review is the agency and pubhc consultation program Addressmg social and envu-onmental issues early m the project planrung, and contmumg throughout the process, w11 greatly enhance the probability that the project wl l be successfully completed Developers are also encouraged to communicate regularly wth EDC for assistance m proceedmg through the regulatory process, and to employ personnel or consultants who have had expenence wth the Nepalese licensmg and EIA process

Acres/USA/D Pr~vate Electrrcrty Project 6-1

Summary of Ex~stmg Gurdelrnes and Regulat~ons for Hydropower Llcenslng 1n Nepal

7 References

Acres International Corporation 1998 Report on Interagency Consultation Process for Envlronmental Review of Hydroelectric Developments (?raft) Techcal Assistance to the Electncity Development Center, HMG/Nepal Pnvate Electnclty Project, Contract No 367-0 167-C-00-5 117-00

HMG/Nepal 1993 Electnc~ty Regulations, 2050 B S

HMG/Nepal Mlnlsby of Water Resources 1993 Nepalese Legal Provisions on Hydropower Development Hydropower Development Policy, 2049, Water Resources Act 2049, Electncity Act, 2049

HMG/Nepal National Planrung Cornrmsslon 1993 Nabonal Enwonmental Impact Assessment Guldelmes 1993 Nabonal Conservahon Strategy Implementation Project In Collaborat~on wth IUCN - The World Conservation Union

1994 Envrronmental Assessment Guldehnes for the Water Resources Sector (Power and Imgation) Flnal Draft In Collaboration wth IUCN - The World Conservation Union

Nepal Recorder 1997 Environment Conservation Rules, 1997 Mmstry of Population and Envrronment, Kathmandu September 7, 1997

The World Banh 199 1 Envlronmental Assessment Sourcebook Envrronment Department The World Bank Techcal Paper ISSN 0253-7494, No 139 Washgton, D C

Acres/USAID Prlvate Electrroty Project 7-1