Location Map - Nepal

Nepal

Source: Great Rivers of the World, National Geographic Society, 1984

Hydropower Potential of Nepal

Average annual flow : 225 Billion m3

Theoretical generation capacity : 83,000 MW

Economically feasible capacity : 44,000 MW

Number of feasible sites : 66

Existing, under construction and committed capacity : 666 MW

Potential to meet national and regional needs

ED C, HM G/N

W . Seti

BheriKali Gandaki

Trisuli

M arsayangdi

Burhi Gandaki

Arun

Sun Koshi

D udh K oshi

Tam a K oshi

BagmatiBasin

KankaiBasin

W est R apti

Babai

Sapta Koshi

BhoteK oshi

Rapti

N

Upper K arnali(300 M W )

Upper K arnali(300 M W )

Budhi G anga(22 M W )

Budhi G anga(22 M W )

Likhu K hola(50 M W )

Likhu K hola(50 M W )

Tam ur(101 M W )

Tam ur(101 M W )

*KATH MANDU

Rahughat K hola(27 M W )

Rahughat K hola(27 M W )

K abeli ‘A’(30 M W )

K abeli ‘A’(30 M W )

Dudh Koshi(300 M W )

Dudh Koshi(300 M W )

CHINA

INDIA

Andhi Khola(5 M W )

Andhi Khola(5 M W )

K arnali (Chisapani)(10,800 M W )

K arnali (Chisapani)(10,800 M W )

Bhote Khosi(36 M W )

Bhote Khosi(36 M W )

K ali G andaki-2(572 M W ??)

K ali G andaki-2(572 M W ??)

W est Seti(750 M W )

W est Seti(750 M W )

Pancheshwar(6,400 M W ?)

Pancheshwar(6,400 M W ?)

K himti K hola(60 M W )

K himti K hola(60 M W )

Jim ruk(12 M W )

Jim ruk(12 M W )

M ahakali BasinLegend:

Karnali B asin

Gandaki Basin

Southern Rivers Basin Koshi Basin

Major River Basins and Hydropower Projects in Nepal

Nepal: Power Demand and Supply

Demand by 2005: 622 MW

Existing Capacity: 535 MW

Committed additions : 23 MWPrivate Sector 16 MWPublic Sector 7 MW-20 % population have access to electricity

Total generation by 2005: 660 MW

Scenario of Generation by 2002/03

• Peaking Capacity : 604 MW• Expected Peak (annual) : 482 MW• Max. Surplus (wet season) : 154 MW • Surplus Capacity (dry season) : 41 MW • Average Energy : 3260 GWh• Demand Energy : 2110 GWh• Surplus Energy : 1150 GWh

Policy & Legal Framework

Hydropower Development Policy - 1992

Industrial Policy - 1992

Foreign Investment & One-Window Policy-1992

Electricity Act - 1992 (Regulations – 1993) Electricity Theft Control Act - 2002

Industrial Enterprises Act - 1992

Foreign Investment and Technology Tfr. Act,1992 Environment Conservation Act - 1996 (Regulation-1997)

National Environmental Impact AssessmentGuidelines - 1993

Legal Framework

Survey license issued within 30 days

Period of such licence up to 5 years

Project license issued within 120 days

Period of such license up to 50 years

Exclusive water rights

Public consultation before issuance of Project license

Government land provided on lease or acquisition of private land

Major Players in Water and Energy Sector

Ministry of Water Resources (MOWR) Line Ministry responsible for development & Protection of Nepal’s Water and

Energy Resources Overall regulatory authority for Power Sector Oversight of operation of Public and Private Power sector development

Water and Energy Commission & its Secretariat (WEC/WECS)

Formulation policy and Strategy Analyzing Bilateral and Multilateral Projects Reviewing multipurpose large & medium projects Coordinating national sectoral policies

Tariff Fixation Commission (TFC) Review on electricity tariff levels Fixation of tariff structures Fixation of charges for all consumers

Major Players in Water and Energy Sector

Tariff Fixation Commission (TFC) Composition:

Person nominated by His Majesty’s Government from non-governmental sector ChairmanRepresentative , Ministry of Water Resources MemberEconomist nominated by His Majesty’s Government from non-government sector MemberPerson nominated by His Majesty’s Government among the licensee of the electricity generation, transmission or distribution MemberRepresentative, Federation of Nepal Chamber of Commerce and Industry MemberPerson nominated by His majesty’s Government from among the Consumers MemberDirector General, Department of Electricity Development Member

Secretary

Major Players in Water and Energy Sector

Department of Electricity Development (DoED) Study and Development of Multipurpose, Bilateral and Major Hydropower Projects Promotion and Development of Private investment in Power Sector including Licensing Preparation of Standards for Transmission and Distribution of electricity and Inspection &

Monitoring for its compliance Advisory assistance to MOWR Acts as secretariat of Tariff Fixation Commission. Department of Electricity Development (DOED) has been established as “One Window” for

Issuance of survey & project licenses Providing concessions & incentives Assistance in importing goods Assistance in obtaining land Assistance in obtaining permits, approvals Acts as a Regulatory and monitoring body

Institutional Aspect contd…

Nepal Electricity Authority (NEA) An HMG/N undertaking established under NEA ACT 1984 Generation of Electricity Transmission of Electricity Distribution of Electricity

Market

Domestic: Nepal Electricity Authority

Foreign: IndiaHuge power demand

Under Power exchange arrangementPresent - 50 MW. Agreed - 150 MW

132 kV links available at two points, three additional identified

Under Power trade agreement signed in June

1997.

Regional: Under Growth quadrangle concept within

SAARC.

Present Tariff Structure

Meter Capacity Minimum charge Street lamp

Up to 5 Amp Rs. 80.00 Rs. 2.0015 Amp Rs. 299.00 Rs.10.0030 Amp Rs. 664.00 Rs. 30.0060 Amp Rs. 1394.00 Rs.

100.00Three Phase Rs. 3244.00 Rs.

100.00

Energy Charge per unit: up to 20 units Rs. 4.00 per unit; 21 to 250 units Rs. 7.30 per unit; above 250 units Rs. 9.90 per unit.

HMGN/NEA Policy onPower Purchases from Small

Projects

Rate: Rs 3 per unit during mid April-mid November

Rs 4.25 during mid December-mid April - an annual escalation of 6 percent per

annum for five years and will be reviewed thereafter. - PPA for 25 years

- 100KW to 1000KW will be purchased by NEA with - an immediate effect

Basis of Tariff Fixation

- Rate of Depreciation,- Reasonable profit- Mode of the operation of the plant- Change in the consumer’s price index,- Royalty and the policy adopted by His

Majesty’s Government to the development of electricity

- Marginal cost of electricity generation- The exchange rate of convertible foreign

currency- The cost of fuel to be used for the

production of electricity

Tariff Fixation contd.

- Review the financial agreement entered between the licensee and the financial institution providing loan or investing capital in the concerned electricity project

- Types of Consumers- Social Liability- Cross Subsidies- Potential for demand side management- Organizational Efficiency

Issues and Challenges: tariff

Affordability and Tariff Rationalization

Tariff design should give due considerations for the economic standards of people

Subsidy to the needy, effective mechanism to be devised and needs to be made transparent

Tariff should be based on only prudent investments and efficient operations

Independent Tariff Fixation Commission ( Consumer protection) Appeal provision on TFC decision.

HMGN/NEA Policy onPower Purchases from Small

Projects

Rate: Rs 3 per unit during mid April-mid November

Rs 4.25 during mid December-mid April - an annual escalation of 6 percent per

annum for five years and will be reviewed thereafter. - PPA for 25 years

- 100KW to 1000KW will be purchased by NEA with - an immediate effect

Issues and Challenges: hydropower

Producing Cheap Power

Increasing Accessibility

Improving Efficiency

Mobilization of Resources

Affordability and Tariff Rationalization

Improving the selection process of projects Addressing Environmental concerns Improving the policy and Regulatory framework Establishment of Institutional set up

New Hydropower Policy

Approved by HMG/N in October 2001 Emphasis on Expansion of Power System

and Rural Electrification

Develop Electricity as Export Commodity

Increased participation of private sector

Restructuring of power sector to create an enabling environment for private sector participation

New Hydropower PolicyMajor Deviation From Existing Legal Provision:

Duration of Generation License Maximum of 35 years as against 50

yearsRoyalty

Rs. 100-200/kW/Year in capacity as against Rs. 100/kW/Year1.75 - 2 % /kWh in energy as against 2%

New Hydropower Policy

Income TaxCorporate Tax max. 20% as per Income Tax Act

Institutional Arrangement Regulatory body Promotional body Electricity Energy Management Study

Institution Unbundling of Nepal Electricity Authority

New Hydropower Policy: Institutional

Regulatory body: The present TFC to be developed into a Regulatory body

Functions: To fix the electricity tariff and wheeling

tariff To monitor the safety of electricity system

and regularity in supply, to supervise and monitor the quality of electricity, to set standards for the safety of electricity system and regularity in supply,

To protect consumer’s interest To prepare a grid code To set standards and develop criteria for

quality control

New Hydropower Policy

To review the basis of electricity purchase as per understanding reached between buyers and sellers

To fix the electricity tariff rates to be sold to consumers

New Hydropower Policy

Promotional body: Department of Electricity Development

Functions: To organize competitive bidding in the

process of issuing license To provide facilities to be available under

One Window Policy and attract private sector investment for hydropower development

To encourage private sector participation in hydropower projects

To process and approve the hydropower projects above 1MW for its best use

New Hydropower Policy

To conduct feasibility study of hydropower projects and study of multipurpose projects

To perform activities pertaining to promotional measures and monitoring and also render assistance to the private sector in the implementation of projects.

New Hydropower Policy

Water and Energy Commission SecretariatFunctions: To conduct study pertaining to national

electricity demand forecast and system planning

To conduct the preliminary identification of the hydro projects

To conduct various policy research works for the development of electricity sector.

New Hydropower Policy

Electricity Energy Management Study Institution

To conduct research works pertaining to financial, legal, environmental and technical aspects in the field of electricity

To provide training in the above matters

Unbundling of Nepal Electricity Authority- A proper institutional arrangement shall be made after the gradual unbundling of generation, transmission and national grid system presently under the ownership of NEA

New Hydropower Policy

- The national grid system shall be handed over to an autonomous public entity

- Local agencies, communities/ cooperative institution and private sector shall be encouraged in the distribution of electricity.

Consumers Protection Act, 1997

- To protect the interest of consumers from illegal business activities

Consumers Protection Council of 13 members headed by Minister of supplies

-Provision of imprisonment along with fines in violation of the activities as mentioned in the Act

- His Majesty’s Government will be the plaintiff in the cases under this Act

- Cases to be filed in District Court

Consumers Protection Act, 1997

- Complaint can be filed for compensation for the loss suffered as a result of activities prohibited by this Act before the Compensation Committee

- Compensation Committee in each district headed by Chief District Officer

- Appeal can be filed before the Appellate Court against the decision of Compensation Committee