Opportunities For Investment in Hydro Power

Opportunities
in
Hydropower Investment
in Nepal
NRNs for Socio-Economic Transformation of Nepal- Investment
Opportunities in Infrastruvture,16th Oct,2007 ,Kathmandu.
Anup Kumar Upadhyay

Joint Secretary,
Ministry of Water Resources
Objectives:
– To generate electricity at low cost by
utilizing the water resources available in
the country.
– Tie up electrification with the economic
activities
– To develop hydro power as an exportable
commodity.
1
Target:
2017:
– 2100 MW for Domestic consumption.
– 50 % Electrification from National Power Grid,
– 12 % Small Hydro,
– 3 % Alternative Energy Resources.
Target:
2027:
– 4000 MW for Domestic consumption.
– 75% electrification from National Power Grid,
– 20 % Small Hydro,
– 5% Alternative Energy Resources.
2
Policy:
– Implementation of hydropower based on the
concept of Build, Operate, Own and
Transfer (BOOT) shall be encouraged.
– In view of the concept of bilateral and regional
cooperation and taking into consideration the
abundant hydropower generation capacity in
the country, Export of Electricity shall be
encouraged.
Policy:
– Environmental Provision: Environmental
impact; Land acquisition, rehabilitation, etc.
– Water right: Legal provisions shall be made to
prevent adverse effects on the availability of
water or Water right of the projects for
which license is not required or being
operated after obtaining the license.
3
Provision for Investment:
– In cases where irrigation benefits may also
be availed form any storage project, GON
may be a joint venture partner with the private
sector in such project.
Provision relating to Visa:

– Non-tourist visa and Work Permit shall be
provided to the investor of hydropower
project, his/ her authorized representative and
necessary foreign experts, skilled manpower
and their families as provided for in the
agreement until the construction and
operation of the project.
4
Management of investment risk:
– Hydropower projects, transmission system and
distribution system established by the private sector
shall not be nationalized during the term of the
license
– Exchange facility shall be provided to the foreign
person, firm or company making investment for the
power project to be constructed by the private sector
to repatriate the amount form Nepal in foreign
currency at prevailing exchange rate:
a) Amount necessary for repayment of the principal
and interest of the approved loan borrowed in foreign
currency for the hydropower project.

b) If the electricity has been sold within the
country, the amount earned as profit or dividend
in lieu of the foreign investment,
c) In the case of an export- oriented power
project, all of the payment of principal and the
interest on the loan, profit and dividend may be
repatriated in the currency in which the income
has been received in the Nepal by selling the
electricity.
5
d) The amount received from the sale of the
share of foreign investment as a whole or part
thereof may be repatriated in the same
currency in which the share has been sold.
Provided, however, that if the share has been
sold in Nepalese currency, foreign currency
exchange facility shall be available only for
75% thereof.
Provision on internal electricity market:
• Provision on internal electricity market:

– For the private sector operated hydropower
projects with capacity up to one MW and not
linked to the Grid, the IPP may sell and
distribute the electricity by determining the
tariff rate of the electricity on its own.
6
Legal Provisions
z Hydropower Development Policy – 2001,1992
z Electricity Act - 1992 (Regulations - 1993)
z Water Resources Act - 1992 (Regulations-1993)
z Environment Protection Act - 1997 (Regulation-1997)
z Industrial Policy - 1992
z Industrial Enterprises Act - 1992
z Foreign Investment & One-Window Policy-1992
z Foreign Investment and Technology Transfer Act
– 1992
Department of Electricity Development
Department of Electricity Development (DOED) has

been established as “One Window” for :
¾Issuance of licenses
¾Providing concessions & incentives
¾Assistance in importing goods, obtaining land,
obtaining permits, approvals etc.
7
APPLICATION PROCEDURES FOR
POWER PROJECT DEVELOPMENT
IN
NEPAL
Application process
• Hydropower project with Installed Capacity
from 100 kW 1000 kW
• Hydropower project with Installed Capacity
more than 1000 kW
8
Application Process for Hydropower Projects
with Installed Capacity from 100 kW up to 1000
kW
• No license required
• Need to submit information related to the project
to MOWR through DOED
• Submit desk study report,[ topographic
map,area of distribution, number of beneficiary,
information of other water use, boundaries of
survey area, recommendation from
VDC/Municipality/;work schedule;LOI for PPA,
Financial evidence.]
Steps to be taken by the proponent after

obtaining an approval letter from the DOED:
• If the approval letter from the DOED is for survey

only- submit six monthly progress report and
Feasibility Study Report.
• If the approval letter from DOED is for
Generation, Transmission and Distribution, the
proponent:
– Completes survey, submits Feasibility Study to DOED
and starts construction
– Submits 6- monthly progress reports until construction
complete.
9
Application Process for
Generation Survey License
License Application Process for Hydropower

Projects more than 1000 kW
A. Survey License (to study Generation,

transmission, distribution survey of project)
B. Operation License
• a. Production License (for construction and
operation of a production facility).
• b. Transmission License (for construction and
operation of a transmission)
• C. Distribution License (for construction and
operation of a distribution facility)
10
Supporting documents required to
obtain Generation Survey License
• Topographical map showing all the major
components of the project (1:25000 or 1:50000);
Desk study report as per “Guidelines for Study of HP
Projects, 2003”.
• Survey area in longitude and latitude including
related VDC / Municipalities.
• Estimated cost of project; Work schedule; Financial
evidence to support survey activities ; Company-
Certificate of registration, Memorandum of
Association, Memorandum of Articles, Permanent
Account Number (PAN);Individual - Citizenship
certificate.

obtain Generation Survey License
• Detail of other water uses in the requested
survey area like water supply, irrigation, water
mill, etc or details of licenses issued by DWRC
regarding such uses
• Details of in-house technical capability of
applicant to conduct survey or details of
technical capability of consultant in case
consultants to be hired
11
Application Procedure for Survey
license
• Proponent submits application package to
DOED
• If the area overlap with other project-DOED
reject the proposal and inform in writing-if not
and document is complete DOED forwards the
document with a license format to MOWR, ( if
document incomplete DOED asks Proponent to
submit required document with in 35 days and) -
MOWR issues the license to the proponent
through DOED.

obtain license Cont...
a. Feasibility Study Report including: Detailed

description of the project; Description of related
transmission line to evacuate power; Approved
IEE/EIA Report from concerned Ministry
b. Names of partners in the project and type of
their association, full name and address of the
person or corporate body and its directors with
whom the ownership of the project shall be
vested at last.
12
obtain license Cont....
c. Detail Financing Plan( Estimated cost of the

project;Financial capability of the investors of the
project; Commitment of the financial institutions
to be involved directly in the project; Percentage
of liability of investor; Equity and debt ratio.)

obtain license Cont...
d. Power Purchase Agreement (PPA)

e. Other requirements: Certificate of registration,
Memorandum of article, Memorandum of
Association, Industrial Registration Certificate,
PAN ( Permanent Account Number),Details of
in-house technical capability of applicant to
implement construction works or the technical
capability of contractor/construction company in
case contractor/construction company is to be
hired for construction works.
13
Application Procedure for Generation,
Transmission and Distribution license
• Proponent submits application package to
DOED-DOED reviews document- if document
adequate and complete-a public notice, stating
the particulars published (for 35 days) inviting
comments from the public-upon consideration of
public reactions, the condition that should be
followed by the applicant shall be mentioned in
the license format- DOED review document and
forwards the document with a license format to
MOWR, - MOWR issues the license to the
proponent through DOED with in 120 days.
Steps to be taken by the proponent

after obtaining License
• Starts construction work within 1 year

• Completes financial closure within 1 year of
license issued date
• Submits bi-annual progress report until
construction is completed
• Testing and Commissioning
• Starts commercial operation
• Pay Royalty
14
ROYALTY
His Majesty's Government shall levy a royalty on a corporate body Licensed to
generate more than 1 MW capacity of hydro-electricity on the basis of the
installed capacity and the energy produced.
(a) Internal consum ption project:

U p to 15 years A fter 15 years*
Electricity C apacity A nnual capacity Energy A nnual capacity Energy
R oyalty, per kW R oyalty, Royalty, per kW R oyalty, per
per kW h kW h
1 U p to 1 M W - - - -
2 From 1 M W to 10 M W R s. 100/- 1.75% R s. 1000/- 10%
3 From 10 M W to 100 M W R s. 150/- 1.85% R s. 1200/- 10%
4 A bove 100 M W R s 200/- 2.00% R s. 1500/- 10%
5 For captive use Rs. 1500/- - R s. 3000/- -
(b ) E x p o r t-o r ie n te d h y d r o p o w e r p ro je c t:
U p to 1 5 y e a rs A fter 1 5 y e a rs *
T ype A n n u a l c a p a c ity E n e rg y A n n u a l c a p ac ity E n e rg y
ro y a lty , p e r k W ro y a lty , p e r ro y a lty , p e r k W ro y a lty, p e r
kW h kW h
1. E x p o rt-o rien te d ru n -o f- R s . 4 0 0 /- 7 .5 % R s. 1 8 0 0 /- 12%
th e -rive r p ro je c t
2. E x p o rt-o rien te d sto ra g e R s . 5 0 0 /- 10% R s. 2 0 0 0 /- 15%
p ro je c t
* A fte r 1 5 y e ars fro m th e d a te o f c o m m e rc ia l o p e ra tio n .
Special Provision:
Exemption on energy royalty for the first fifteen
years of the commercial production for the rural
electrification.
15
NEA Policy On Power Purchases
from Small Projects
Project Size Total Capacity to be
accepted
100 Kw to 5 MW No Limit
NEA has fixed the buy-back rate for small projects:

NRs. 4.25 per kWh (Paush,Magh,Falgun,Chaitra)
NRs. 3.00 per kWh
Base year 2055/56, 6% escalation, up to 2060/61.
Transmission line Connections

with India
• 33 KV 14 No
• 132KV 2 No
• 400KV 3 No*
*Proposed:
Butwal- Anandnagar,
Duhabi- Purnia,
Dhalkebar- Muzaffarpur
16
Survey License Fee
• 1-5 Mega Watt -50,000 NRs/Year.

• 5-100 MW -10,000 NRs/MW/Year
• 100-500 MW -1,000,000 NRs/Year
• > 500 MW -2,000,000 NRs/year
Construction License Fee
• 1-5 M W -100,000 NRs

• 5-100 MW -500,000 NRs
• 100-500 MW -1,000,000 NRs
• 500-1000 MW -2,500,000 NRs
• >500 MW -5,000,000 NRs
17
Projects Inventory
• Master Plan Studies

• MHSP
• NEA
• DOED
• Identified by Promoters
Survey License Issued

• 1-5 M W -91
• 5-20 MW -28
• 21-100 MW -16
>100 MW -13
-------------------------------------
Total 148 No.
• Construction License -21 No.

• Source: DOED, May 2007
18
Rahughat Khola
Location Western Region
Type : Run-of-River
Installed Capacity : 27 MW
Gross Head : 249 m
Design Discharge : 13 m3/s
Weir Height : 10 m
Power House Type : Surface
Desander Type : Surface
Tunnel Length & Dia. : 5.8 km & 3.5 m
Average Annual Energy : 164.6 GWh
Firm Energy : 119.6 GWh
Access Road Length : 10 km
Transmission Length : 22 km (132 kv)
Project Cost : US$ 56.1 million (1998)
Status: Reconnaissance Study: 1996
Feasibility Study 1998
Kabeli ‘A’
Location Eastern Region
Type : Run-of-River
Gross Head : 110.2 m
Weir Height : 13 m
Average Annual Energy : 164 GWh
Firm Energy : 118 GWh
Status: Reconnaissance Study: 1996
Feasibility Study 1998
19
Upper Karnali
Location : Mid/Far Western Region
Type : Run-of-River (Pondage)
Gross Head : 141 m
Weir Height 27 m
Power House Type : Underground
Status: Feasibility Study 1998
Chameliya
Location Far-Western Development
Region : Darchula
District : Pondage Run-of-River
Type : 30 MW ( 3x10 MW )
Installed Capacity : 104 m
Gross Head : 35.5 m3/s
Design Discharge : 23 m
Dam Height : Surface
Power House Type : 4.075 km
Tunnel Length : 4.3 m* 4.3 m
Tunnel Cross Section 196.83 GWh
Average Annual Energy : 18.0 km
Access Road Length : 127 km (132 Kv)
Transmission Length : US$ 77.55 million (1998)
Project Cost :`
Status: Feasibility & EIA Study Completed
Detail Design on Going
20
Budhi Ganga
Location
Region : Far-Western Development
District : Achham
Type : Pondage Run-of-River
Installed Capacity : 20 MW ( 2 x 10 )
Gross Head : 90 m
Design Discharge : 27.63m3/s
Weir Height : 25 m
Tunnel Length & Dia : 5.6 km / (3.9-5.1)m
On peak Firm Energy : 36.139 GWh
Off peak Firm Energy : 44.58 GWh
Access Road Length : 2.76 km
Transmission Length : 88.6 km (132 kv)
Status: Feasibility & EIA Study,1998
Kabeli-A
Location Eastern Development
Region : Panchthar and Taplejung
District : Pondage Run-of-river
Type : 30 MW ( 3x10 MW)
Installed Capacity : 110.2 m
Gross Head : 34 m3/s
Design Discharge : )12.6 m
Dam Height : Surface
Desander Type : 4.43 Km/(4.2-5.0)m
Tunnel Length & Dia. : 164 GWh
On peak Firm Energy : 64 GWh
Off peak Firm Energy : 12.58 km
Access Road Length : 77 km (132 kv)
Transmission Length : US$ 65.3 million (1998)
Project Cost :
Status: Feasibility Study and EIA, 1998
21
Likhu-4
Location
Region : Central/Eastern Development
District : Ramechhap and Okhaldunga
Installed Capacity : 51 MW ( 3x17 MW )
Gross Head : 240 m
Design Discharge : 25.5 m3/s
Dam Height : 43 m
Tunnel Length &Dia : 4.5 km /(3.6-4.37)m
Status: Feasibility and EIA Study,1998
Tamur-Mewa
Tamur Mewa
Location
Eastern Development Eastern Development
Region :
Taplejung Taplejung
District :
Run-of-River Run-of-River
Type :
83 MW 18 MW
Installed Capacity :
110.7 m 132 m
Net Rated Head :
85 m3/s 15.4 m3/s
Design Discharge :
5.0 m 5.0 m
Weir Height :
Underground Surface
Power House Type :
Surface Surface
Desander Type :
4.74 km/(5.4-7.2)m 4.2 km/(2.75-3.6)m
Tunnel Length & Dia :
484 GWh 117 GWh
Avg. Annual Energy :
98.5 GWh 23.5 GWh
On Peak Firm Energy :
89.7 GWh 70.1 GWh
Off Peak Firm Energy :
14 km 4.8 km
Access Road Length :
132 km (132 kv) 8 km (132 kv)
Transmission Length :
double circuit single circuit
US$ 158.3 million (1998) US$ 33.7 million (1998)
Project Cost :
(including transmission)
Status: Feasibility & EIA Study, 1998
22
Rahughat
Location
Western Development
Region :
Myagdi
District :
Pondage Run-of-River
Type :
27 MW (3 x 9 MW)
249 m
Gross Head :
13.0 m3/s
Design Discharge :
25 m
Dam Height
Power House Type : aSurface
Surface
Desander Type :
5.81 km (2.65-3.5)m
Tunnel Length & Dia :
164.6 GWh
Average Annual Energy :
58 GWh
On-peak Firm Energy :
61.6 GWh
Off-peak Firm Energy :
10 km
22 km (132 kv)
US$ 59.3 million (1998)
Project Cost :
Status: Feasibility and EIA Study, 1998
Andhi Khola
Location
Region : Central/Western Region
District : Shyanga
Type : Storage
Installed Capacity : 176 MW (4 x 44)
Dam Height : 162 m
Project Cost : US$ 463.4 million(1997)
Status: Feasibility and EIA study on going
23
Arun III
Location
Eastern Development
Region :
Sankhuwasabha
District :
Pondage Run-of-River
Type :
402 MW ( 6 x 67 MW )
303.8 m
Gross Head :
320 m3/sec
Design Discharge :
68 m
Dam Height :
Underground
Power House Type :
Underground
Desander Type :
11.5 km/7.5 m
Tunnel Length & Dia. :
2891 GWh
Average Annual Energy :
1558 Gwh
Firm Energy :
116.8 km
432.2 km(220 kv double crt.)
US$ 859.09 million (1995)
Project Cost :
Status: Detailed Design Study, 1991
Dudh Koshi
Location
Region : Eastern Development
District : Okhaldunga, Khotang
Type : Storage
Installed Capacity : 300 MW (5x60 MW)
Net Rated Head : 249.3 m
Dam Height : 180 m
Live Storage : 442.1 million cubic metre
Tunnel Length& Dia : 13.26 km & (7.3 -9.0) m
On Peak Firm Energy : 552 GWh
Off Peak Firm Energy : 920 GWh
Transmission Length : 93 km (220kv Duble crt.)
135 km (220 kv Single crt.)
`
Status: Feasibility Study, 1998
24
Upper Arun
Location
District : Sankhuwasabha
Type : Run-of-River (Daily Pondage)
Installed Capacity : 335 MW ( 4 x 83.75 )
Net rated Head : 492 m
Dam Height : 37 m
Design Discharge : 78 m3/Sec
Tunnel Length & Size : 7.84 km & 5.5 m
Access Road Length : 45 km from Arun-3 damsite
Kankai
Location
District : Ilam, Jhapa
Type : Storage
Maximum Head : 79 m
Rated Head : 59 m
Design Discharge : 121m3/s
Tunnel Length & Dia. : 0.43 km/4.5 m
Transmission Length : 15 km
Project Cost : US$ 285 million (1984)

Updated by Edf(France) in 1984
25
Khimti-II
Location
Region : Central Development
District : Ramechhap and Dolkha
Installed Capacity : 27.2 MW
Rated Head : 275 m
Dam Height : 14 m
Tunnel Length : 3.9 km
Tunnel Cross Section : 12.0 m2
Project Cost (Nov. 1999) : US$ 93 million
(to be confirmed)
Status: Pre-Feasibility Study, 1997
Lower Arun
Location
District : Sankhuwasabha
Type : Run-of-River (Daily Pondage)
Installed Capacity : 308 MW ( 4x77 MW )
Design discharge : 171.5 m3/Sec
Weir Height : 10.5 m
Power Tunnel Length & Dia : 15.2 km / 8.4m
Firm Energy : 1436.5 GWh
Access Road Length : 25 km from Arun-3 damsite
26
Kali Gandaki-2
Location
Region : Western Region
District : Nawalparsi and Tanahu
Type : Storage
Installed Capacity : 660 MW (6 x 110 MW)
Dam Height : 177 m
Tunnel Length & Dia : 322 m /6 m
Budhi Gandaki
Location
Region : Central/Western Development
District : Dhadhing/Gorkha
Type : Storage
Installed Capacity : 600 MW ( 4 x150 MW )
Net Head : 185 m
Dam Height : 225 m
Live storage : 2755 million cubic meter
Dam Type : Rockfill with inclined core
Tunnel Length & Dia : 276 m /12m
27
Upper Trisuli -2
Location
District : Rasuwa
Type : Run-Of-River
Gross Head : 298 m
Design Discharge : 119.7 m3/Sec
Dam/weir Height 13 m
Desander Type : Underground
Tunnel Length & Dia : 8.2 km /8.6m
Average Annual Energy : 1747 Gwh
Firm Energy : 1391 Gwh
Transmission Length : 50 Km (132kv)
Status: Reconnaissance, 1996
Mai Loop
Location
Region : Eastern Develpoment
District : Ilam
Type : Storage
Gross Head : 104 m
Dam/Weir Height 125 m
Tunnel Length & Dia : 0.6 km/6.4 m
28
Tama Koshi-2
Location
District : Dolkha
Type : Run-Of-River (Regulated)
Gross Head : 141 m
Design Discharge : 174.6 m3/S
Transmission Length : 85 km(132kv)
Upper Marsyangdi-3
Location
Region : Western Development
District : Lamjung
Type : ROR
Gross Head : 244 m
Dam/Weir Height : 6m
Average Annual Energy : 692.6 Gwh
Firm Energy : 549.4 Gwh
Transmission Length : 57 km
Status: Reconnaissance 1996
29
Tila River -2
Location
Region : Mid Western
District : Kalikot
Type : ROR
Gross Head : 500 m
Tunnel Length & Dia : 6.6 km/6 m
Status: Desk Study, 1996
Naumare
Location
Region : Mid Western Development
District : Argakhachi/ Pyuthan
Type : Storage
Installed Capacity : 245 MW (3*81.7 MW)
Net Head : 154.5 m
Dam : Rockfill
Live Storage : 580 million cubic metre
Tunnel Length & Dia : 0.125 km/7 m
Status: Pre-feasibility Study, 1990
30
Tama Koshi-3
Location
District : Dolkha
Type : Storage
Gross Head : 208 m
Dam Height : 120 m
Project Cost : US$ 414million (1996)
Thank You
31

Opportunities For Investment in Hydro Power

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Opportunities For Investment in Hydro Power

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Opportunities

Anup Kumar Upadhyay

Provision relating to Visa:

Management of investment risk:

Provision on internal electricity market:

• Provision on internal electricity market:

Department of Electricity Development

Department of Electricity Development (DOED) has

Steps to be taken by the proponent after

• If the approval letter from the DOED is for survey

Generation Survey License

License Application Process for Hydropower

A. Survey License (to study Generation,

Supporting documents required to

Supporting documents required to

a. Feasibility Study Report including: Detailed

c. Detail Financing Plan( Estimated cost of the

Supporting documents required to

d. Power Purchase Agreement (PPA)

Steps to be taken by the proponent

• Starts construction work within 1 year

(a) Internal consum ption project:

NEA has fixed the buy-back rate for small projects:

Transmission line Connections

• 1-5 Mega Watt -50,000 NRs/Year.

Construction License Fee

• 1-5 M W -100,000 NRs

• Master Plan Studies

Survey License Issued

• Construction License -21 No.

Status: Feasibility and EIA Study,1998

Status: Feasibility and EIA study on going

Status: Feasibility Study, 1978

Status: Pre-Feasibility Study, 1985

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