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
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 MW
Private Sector
16 MW
Public Sector
7 MW
-20 % population have access to electricity
 Total generation by 2005:
660 MW
Scenario of Generation by 2002/03
•
Peaking Capacity
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•
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•
•
•
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
:
604 MW
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 Assessment
Guidelines - 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)
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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)
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Formulation policy and Strategy
Analyzing Bilateral and Multilateral Projects
Reviewing multipurpose large & medium projects
Coordinating national sectoral policies
Tariff Fixation Commission (TFC)
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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
Representative , Ministry of Water Resources
Economist nominated by His Majesty’s Government from non-government
sector
Person nominated by His Majesty’s Government among the licensee of the
electricity generation, transmission or distribution
Representative, Federation of Nepal Chamber of Commerce and Industry
Member
Person nominated by His majesty’s Government from among the
Consumers
Director General, Department of Electricity Development
Chairman
Member
Member
Member
Member
Member
Secretary
Major Players in Water and Energy
Sector
Department of Electricity Development (DoED)
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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
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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)
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An HMG/N undertaking established under NEA ACT 1984
Generation of Electricity
Transmission of Electricity
Distribution of Electricity
Market
 Domestic:
Nepal Electricity Authority
 Foreign:
India
Huge power demand
Under Power exchange arrangement
Present - 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
Up to 5 Amp
15 Amp
30 Amp
60 Amp
Three Phase
Minimum charge
Rs. 80.00
Rs. 299.00
Rs. 664.00
Rs. 1394.00
Rs. 3244.00
Street lamp
Rs. 2.00
Rs.10.00
Rs. 30.00
Rs. 100.00
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 on
Power 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 on
Power 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
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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 Policy
Major Deviation From Existing Legal Provision:
 Duration of Generation License
 Maximum of 35 years as against 50 years
Royalty
Rs. 100-200/kW/Year in capacity as against Rs.
100/kW/Year
1.75 - 2 % /kWh in energy as against 2%
New Hydropower Policy
 Income Tax
Corporate 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
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 Secretariat
Functions:
 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