Mr Bhanu Pokharel, General Secretary, Nepal Hydropower Association For more information about this event, visit: http://ihacongress.org

1. Bhanu Pokharel
Nepal Hydropower Association
Hydropower Development in Nepal
Presented at the
IHA 2013 World Congress

2. HYDROPOWER DEVELOPMENT IN NEPAL
CURRENT INITIATIVES AND TAKE HOME
THEMES
• BACKGROUND
• PRESENT SCENARIO
• OPPORTUNITIES
• CURRENT INITIATIVES
• CHALLENGES
• SOME TAKE HOME THEMES
Nepal Hydropower Association
Bhanu Pokharel
General Secretary
Nepal Hydropower Association

4. Background
• Nepal, situated in the foothills of Central Himalayas, is a country
having extreme physiographic and climatic contrasts compared
to its small area of 147,181 sq. km.
• The steep topography and the high run-off (225 B M3/yr.) offer
opportunities of generating hydropower in the corridors of
Nepal Himalayas.
• Young Republic with a Population of 27 M
• Total estimate Potential for Development of Hydropower
83,000 MW; 43,000 MW is economically viable
• First Hydopower Project was built in 1911 (500 kW)

5. MAJOR RIVER BASINS AND PROPOSED PROJECTS
KOSHI BASIN
GANDAKI BASIN
KARNALI/MAHAKALI BASIN
Karnali Chisapani 10,800MW
Pancheshor 6480MW
Upper Karnali 900MW
West Seti 750MW
Kali Gandaki-2 600MW
Buri Gandaki 600MW
U/ Marsyangdi 600MW
U/Tamakoshi 456MW
Tamakoshi -3 650MW
Saptakoshi 3000MW
Arun-3 900MW

6. Present Scenario
• 693 MW HP Developed in 101 years, < 2% of economically viable potential
• Nepal Electricity Authority (NEA) - a state owned utility responsible for
Generation, Transmission and Distribution of electricity in Nepal
Indicators Now In Yr. 2017
Installed Capacity
Energy
Hydro
746 MW (Hydro/Thermal 693/53 MW)
4200 GWh
693 MW
2500 MW
7604 GWh
2450
Peak Demand 1163 MW 1770 MW
Total PPA Signed by NEA 1650 MW / 1450 MW under
various stage of Development
~ 2650 MW (incl. 150
MW import from India)
Demand / Supply Match Huge un-served demand/
load shedding upto 16hrs/day
Surplus for seasonal
export / still deficit in
dry season

7. Opportunities
• > 98 % of The Viable Hydropower Potential (43,000 MW) Available For
Development. Portfolio of Project Ranging from Few Hundred Kw to
10,800 MW
• Domestic Demand In Nepal By 2030 : 5000 MW
• Huge Potential Available For Development to Cater the Regional
Demand of South Asia
• Geographic Proximity of Hydropower Sites In Nepal With Major
Load Centers In India – Low Transmission Cost
• Regional Cooperation For Long Term Energy Security – India’s
Thermal Dominated System, B’desh Natural Gas Resources and
Nepal and Bhutan’s Hydro Potential to Ensure Optimal Generation
Mix

8. Nepal’s Initiatives for Development of The Sector
• Govt. of Nepal (GoN) has given high priority for private sector investment
in the electricity sector
• National Plan has identified export of power along with the expansion of
national and cross border/regional grids as a national priority projects.
• HP sector open for development to Private sector in 1990. Investment
friendly policy and regulatory frameworks are in place
Hydropower Policy - 1992
Electricity Act - 1992
Electricity Regulation - 1993
Foreign Investment and Technology Transfer Act - 1992
Foreign Investment and One Window Policy - 1992
Environmental Protection Act (1996) and Regulation (1997)
National Environmental Impact Assessment Guidelines - 1993
Industrial Policy – 1992
Industrial Enterprises Act - 1992
Land Acquisition Act
Company Law ETC

9. Key Agencies Involved
Ministry of Energy Policy / Planning and Approvals
Department of Electricity Development Government Interface with Private Sector
Water and Energy Commission Policy, Monitoring and Coordination
Nepal Electricity Authority Monopoly vertically Integrated Power
utility, Sole Power Purchaser, Grid
Owner/Operator
Tariff Fixation Commission Fixes the tariff
Ministry of Environment ESIA Approvals/Clearances and Monitoring
Investment Board Promote HP Projects > 500MW
Private – Sector Financers Banks , Financial Institutions (Fis)
Private Developer Mainly Generation

10. Current Initiatives
• Up to 100 % FDI
• One Window System For Environmental Clearance And Licensing
• Establishment Of Nepal Electricity Regulatory Commission To Regulate The
System And Create Level Playing Field For All – Awaiting Legislative
Approval
• Proposed Open Access To Transmission System
• Legal Provision w.r.t. Acquisition Of Land For Construction
• Fiscal incentives
 Repatriation of profit and investment
 Guarantee for non-nationalization of property
 Concession in import duties
 Rebate on government royalty amount for first 15 yrs
 Full Income Tax holiday for first 10 yrs. of CoD and at 50% for next 5 yrs. (for
domestic supply projects)

11. Current Initiatives
• GoN has already allocated>300 Licenses, total capacity over 18,000 MW
• Key International Players in Nepal Power Sector
• Various projects with total capacity > 5000 MW are ready for embark in
construction: Bankable documents are in place
BRASSPOWER
KWater

12. Current Initiatives
• Development of 1st Indo-Nepal 400 kV Cross Border Transmission Line (D-
M) in advance stage : SAARC Regional Grid
• Upgrading/new construction of domestic transmission grids (to 220 kV and
400 kV level)
• Formation of Nepal Investment Board to facilitate development of large
infrastructure projects, including hydropower project > 500 MW capacity
• Establishment of Hydropower Investment and DevelopemntCompany to
fund small/medium hydropower projects
• Indo-Nepal Mutual interest on:
Karnali Chisapani MP Project (10,800 MW)
Mahakali Treaty (6,800 MW)
Koshi High Dam (3000 MW – preparation of DPR ongoing
In April 2013, Major Political Forces Inked a Strong Joint
Commitment for the Development of Hydropower Sector

13. Challenges
Despite high priority for the development of hydropower sector by
recent Governments; meaningful development of the sector is yet to
realize:
• Sudden Demise of Arun 3 (402MW) Project in 1990 ensued a prolonged set
back to the sector
• Subsequent decade long insurgency and Political Transition post 2007
• Consolidation and Fine Tuning of Existing Policies, Acts and Regulations –
Learning Phase
• Insufficient Local Fund and Low Tune of Foreign Investment
• Increasing ESIA Scrutiny
• High Seasonal generation variation due to domination of RoR type projects
in NEA Grid
• Transmission Bottlenecks in National Grid
• Delays in Cross Border / Regional Interconnection and Cooperation

14. Some Take Home Themes from The Congress
• Nepal ranks no 1 across the globe among the “Small Countries with
Big Hydro Potential”
• Sustainable Hydropower for Regional Development
- Eliminate “Energy Poverty” of your own people
- Bring Market to the Resources (already in place)
- Regional Interconnections (drivers in places)
- Bring Power to the Market for Fuel Replacement
- Energy Security with better energy mix
- “Landlocked” vs “Landlinked”
- “Unbundling of the bilateral legacy”
• National Energy Policy addressing sale as:
- a raw material
- or Final Product, linking generation with low carbon energy
supply industry (Iceland, SCORE)

15. Some Take Home Themes from The Congress
• De-structure the conventional mindset that political stability is
a pre-requisite for Hydropower Development in Nepal
• “Sustainable Hydropower” Development can be the catalyst
for building political consensus in Nepal; Regional cooperation
can go hand in hand
Unbundling the issues and focusing on the Hydro sector
Recent political commitment was a private sector initiative
• What is Sustainable for Nepal ?
• How can the international community, particularly WB, ADB,
IFC support us to establish the definition of “Sustainable
Hydropower” for Nepal
• NHA will be honored to take this initiative in collaboration
with IHA and other stakeholders

16. Thank You!