Country Presentation on Power System of Nepal Arun Kumar Jha, Sr. - PowerPoint PPT Presentation

April 29 and 30, 2015 Country Presentation on Power System of Nepal Arun Kumar Jha, Sr. Divisional Engineer Ministry of Energy Kedar Raj Silwal, Deputy Manager Nepal Electricity Authority

Outline of Presentation  Location and total potential  Institutional arrangements for power sector development  Initiatives of Power Sector Reform  Overview of Nepal Power System 2 05/16/18

Nepal at a Glance The Mount Everest 8848 m Roof Top of the World Birth Place of Buddha • Federal Democratic Nepal since 2008 • Landlocked country • Capital: Kathmandu a valley of 360 km 2 dwelling place of 0.7 million people •

Location Map - Nepal Nepal 4 05/16/18

5 05/16/18 Source: Great Rivers of the World, National Geographic Society, 1984

Nepal at a Glance 28 0 22’N To 30 0 26’N Location :Lat :Long 80 0 04’E To 88 0 12’E Population :28.3 Million (83% urban, 17% rural) > 10 religion & >93 ethnic groups :147,181 Km 2 (landlocked) Area Length : 885 Km, Width :193 Km, Elev. : 60 m - 8848 Temp. : UPTO 45 0 C, Heavy rainfall in monsoon season Climate (June-Sept). Ave. Rainfall : 1530 mm, Physiographic region :Terai Plain (< 1000 m Elv. Land Coverage 47%) (1000 m – 1500 m Elv. Land Coverage 46%.) Hills Mountain (>1500 m Elv. Land Coverage 7%)

Hydropower Potential of Nepal • Total theoretical potential: >83,000 MW • Economically feasible: 42,000 MW • Storage capacity plants: 21,400 MW • Existing installed capacity: 787.087 MW • Projects under construction: ⚫ NEA and subsidiary companies = 1044.1 MW ⚫ IPPs = 297.506 MW 7 05/16/18

Institutions for Power Sector  Investment Board Nepal ⚫ The Investment board is entrusted to promote economic development of the country by creating an investment-friendly environment by means of mobilizing and managing public-private partnership, cooperative and domestic and foreign private investments. ⚫ The IBN is headed by the Prime Minister, while the office of the IBN is headed by the CEO who is also member secretary of the IBN. ⚫ Have concluded PDA for large hydropower projects like Arun-III (900 MW) and Upper Karnali (900 MW). PDA of few other projects are on the process. 8 05/16/18

Institutions for Power Sector  Ministry of Energy ⚫ Development of plan and policies ⚫ Co-ordinate activities of institutions related to hydropower development ⚫ Survey, feasibility study ⚫ Construction, operation and maintenance of multipurpose electricity projects ⚫ Promotion of private parties for hydropower development ⚫ Matters related to bilateral agreements, dialogues etc . 9 05/16/18

Ministry of Energy 10 05/16/18

Institutions for Power Sector  Department of Electricity Development ⚫ Develop and promote electricity sector ⚫ Attract private sector for hydropower development ⚫ Provide one window service to private developers ⚫ Main tasks are: • Issue license for generation, transmission and distribution (Survey and Construction License) • Regulation of Licensees • Royalty Management 11 05/16/18

Divisions under DOED and their functions  Project Study ⚫ Screening and ranking study of hydropower projects ⚫ Master plan of river basins, Pre-feasibility and Feasibility study of new projects, Multipurpose projects ⚫ Preparation of Guidelines for feasibility studies ⚫ Initial review of environmental studies  Privatization Processing license applications ⚫ ⚫ Evaluating technical proposals for issuance of license ⚫ Monitoring of projects developed by public and private sectors  Inspection ⚫ Collection of royalties and distribution to concerned agencies ⚫ Inspection of projects for compliance and recommend for tax exemption, and land acquisitions etc. ⚫ Preparation of safety standards 12 05/16/18

Water and Energy commission  Objectives >> To formulate and assist in developing policies and strategies in the water resources and energy sector. >> To provide suggestions, recommendations and guidance in the development of irrigation, hydropower, and drinking water projects. >> To provide assistance to the concerned ministries in formulating policies and objectives to be included in the perspective/periodic plan relating to the water resources and energy sector. >> To render opinion, advice and recommendations on bilateral and multilateral issues relating to water resources and energy. >> To act as a documentation center for all regional water resources and energy related issues. 13 05/16/18

Nepal Electricity Authority Objectives of NEA:  ⚫ The primary objective of NEA is to generate, transmit and distribute adequate, reliable and affordable power by planning, constructing, operating and maintaining all generation, transmission and distribution facilities in Nepal's power system both interconnected and isolated. Responsibilities:  ⚫ a. to recommend to Government of Nepal, long and short- term plans and policies in the power sector. b. to recommend, determine and realize tariff structure for electricity consumption with prior approval of Government of Nepal. c. to arrange for training and study so as to produce skilled manpower in generation, transmission, distribution and other sectors. 14 05/16/18

Hydroelectricity Investment and Development Company Limited (HIDCL) Government of Nepal on 6 July 2011 decided to set up a special  purpose vehicle (SPV) in the form of Hydroelectricity Investment and Development Company Limited (HIDCL). Established as a public investment company, 80% equity belongs to  Government of Nepal (50%) and three state owned companies (30%). 20% has been set aside for general public . The broader objective of the Company is be to mobilize funds for  investment in generating, transmitting and distributing hydroelectricity to free the country from the chronic power shortage. It can borrow loans and receive grants from foreign and international  financial institutions so as to invest in projects It can issue financial instruments such as bonds, debentures, and  certificate of deposit for long term capital mobilization 15 05/16/18

Electricity Tariff Fixation Commission (ETFC) Composition: Person nominated by Nepal Government from non-governmental Sector -  Chairman Representative , Ministry of Energy-Member  Economist nominated by Nepal Government from non-government Sector  -Member Person nominated by Nepal Government among the licensee of the  electricity generation, transmission or distribution-Member Representative, Federation of Nepal Chamber of Commerce and Industry-  Member Person nominated by Nepal Government from among the Consumers-  Member Director General, Department of Electricity Development-Member-  Secretary 16 05/16/18

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 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  17 05/16/18

Policy and Legal Framework Hydropower Development Policy - 1992, 2001  Industrial Policy - 1992  Foreign Investment & One-Window Policy-1992  Electricity Act - 1992 (Regulations - 1993)  Industrial Enterprises Act - 1992  Foreign Investment and Technology Transfer Act - 1992  Environment Protection Act - 1996 (Regulation-1997)  Nepal Electricity Authority Act 1984  Proposed Electricity Act 2008 (2065 BS)  Proposed Nepal Electricity Regulatory Commission Act 2008  (2065) 18 05/16/18

Features of hydropower Development Policy 2058  Develop Large storage type multi-pu rpose projects under PPP model maximizing downstream benefits (flood control, irrigation and water supply)  Contribute environment protection by developing hydropower as an alternative to biomass and thermal energy.  Focus on mitigation of adverse environmental impacts and resettle the displaced families likely to result from the development and operation of hydropower projects 19 05/16/18

Features of hydropower Development Policy 2058  Emphasis on mobilization of internal capital market and rural electrification through people’s participation  Emphasis on Unauthorized leakage of electricity and provide appropriate benefits at the local level while operating (Royalty sharing 50% central, 12 affected districts, 38% district in the development region)  Provide Attention to safeguard the consumers' interests providing reliable and qualitative electricity service to the electricity tariff consumers at a reasonable price making fixation rational and transparent 20 05/16/18

Features of Proposed Electricity Act 2008  Hydropower Development through participation of private sector, PPP and Foreign Investment.  License procedure and issuance of License for Generation, Transmission and Distribution.  Issuance of License through competition  Provision for export and import License  Provision for land acquisition, compensation, resettlement etc.  Provision for tax exemption  Provision for foreign investment  Provision for development of multipurpose project through bilateral and multilateral agreement. 21 05/16/18