Electricity Trade in Existing Policy and Laws 2 nd Meeting of Task - PowerPoint PPT Presentation

Relevant Provisions of Cross Border Electricity Trade in Existing Policy and Laws 2 nd Meeting of Task Force-1 19-20 February, 2014, Colombo USAID SARI/EI Raju Maharjan Government of Nepal 1

Presentation Outline • Hydropower Potential of Nepal • Present Generation scenario • Scenario of Generation by 2018/19 • Scenario of Demand & Supply by 2018/19 • Policy & Laws in Power sector • Current Developments in Power sector • Needs for Cross Border Trade 2

Hydropower Potential of Nepal Major River Basins & Identified Hydropower Projects in Nepal 4160 MW 32010 MW 20650 MW 22350 MW 4110 MW Total 83280 MW 3

Present Generation Scenario Capacity Hydro Thermal Total in MW 30 Nepal 712 53.4 765.4 NEA NEA Subsidiary – RoR 381 3 66 IPPs Storage – NEA 92 53.4 526.4 473 NEA Subsidiary 22 ------ 22 IPPs 217 ------ 217 Composition of Hydro Name Details of Major IPPs Hydro Plants Khimti HEP 60 Himal Power Ltd. 2000 Bhotekoshi Power Co. 26 Khimti Bhotekoshi HEP 45 2001 Ltd. 49 Bhotekoshi Jhimruk Jhimruk HEP 12 Butwal Power Co. Ltd. 1994 Others 20 Sub Total 117 5 Others 113 Composition of IPP’s Hydro Total 230  Khimti, Jhimruk and Bhotekoshi which constitute 2/3 of IPPs capacity; was the result of direct funding from 4 foreign institutions

Scenario of Generation Particulars Hydro Thermal Total By 2018/19 NEA 667 53.4 720.4 NEA Subsidiaries 748 - 748.0 IPPs 446 446.0 PPA (x- border) 150 150.0 Total 2050.4 5

Scenario of Demand & Supply Electricity Demand in Nepal Year 10/11 11/12 12/13 13/14 Capacity demand (MW) 967 1060 1163 1272 4430.7 4851.3 5349.6 5859.9 Energy demand/day (dry) GWh Capacity Demand (MW) Energy Demand/day (GWh) 1400 7000 1200 6000 1000 5000 800 4000 600 3000 400 2000 200 1000 0 0 6 2010/11 2011/12 2012/13 2013/14 2010/11 2011/12 2012/13 2013/14

Scenario of Demand (Contd …) By 2018/19 • Wet Season average load : 1050 (20 hrs. a day) • Wet Season surplus : at least 950 MW • Surplus Energy per Wet Season : >3 billion units worth Rs.15 billion • Dry Season deficit : 500 MW or 1,05,00,000 KWh/day (approx.) • Challenges in 2018/19:  to market wet Season surplus domestically or export.  to meet dry season domestic demand. 7

Policy and Laws in Power sector Existing • Hydropower Development Policy, 2001 • Electricity Act, 1992 • Water Resources Act, 1992 • The Foreign Investment & Technology Transfer Act, 1992 • The Industrial Enterprises Act, 1992 • Environment Protection Act, 1992 8

Policy and Laws (Contd …) Hydropower Development Policy, 2001 From the perspective of export point of view Objectives:  to develop hydropower as an exportable commodity. Strategies:  to purse a strategy of bilateral or regional cooperation in hydropower development taking into consideration of the demands of electricity in neighboring countries. Policies:  To attract foreign investment.  To encourage the export of electricity. 9

Policy & Laws (Contd …) Hydropower Development Policy, 2001 Other Provisions  License to export electricity for projects of capacity more than 100 MW.  License to Transmission & Distribution projects as well.  Investment in Generation, Transmission & Distribution project through solo or JV.  No nationalization of projects during the term of license period. 10

Existing Policy (Contd …) Hydropower Development Policy, 2001 Other Provisions  Foreign Currency Exchange facility and repatriation  Cent per cent of the payment of principal and the interest of foreign loan.  Profit and dividend of an export oriented project.  Amount received from the sale of share of foreign investment.  75% of amount received from the sale of share in local currency. 11

Existing Policy (Contd )… Hydropower Development Policy, 2001 Institutional Arrangements  Electricity Tariff Fixation Commission to be replaced by Nepal Electricity Regulation Commission (NERC) as a regulator body.  DOED to act as a study and promotion body.  WECS to conduct load forecast and policy research works.  Electric Energy Management Research institute to be established to carry out study and research  Unbundling of NEA 12

Policy & Laws (Contd …) New Acts to come • Electricity Act (New)  Time bound and transparent license procedures.  Provisions of Trading license. • Nepal Electricity Regulator Commission Act  to develop competition in the electricity market.  to balance supply & demand.  to fix electricity tariff. 13

Current Developments in Power Sector Cross Border Interconnections  Construction of 400 kV D/C TL from Dhalkebar (Nepal) to Mujaffarpur (India) has been started.  Contract signed with M/s TATA Projects Ltd., India on 19 th December, 2013.  The commissioning date is on June, 2015. NIETTP (Nepal-India Electricity Transmission & Trade Project)  400 kV D/C TL from Hetauda-Dhalkebar – Inaruwa (285 km) is under construction.  220 kV D/C TL from Hetauda-Bharatpur (73 km) & Bharatpur – Bardaghat (75 km) are under construction.

Current Developments (Contd …) POWER DEVELOPMENT MAP OF NEPAL 15

Current Developments (Contd ….) 16

Current Developments (Contd …) Proposed  Feasibility study of second 400 kV Cross Border TL from Bardghat (Nepal) to Gorakhpur (India) is being conducted.  Many other interconnections at 400 kV have been under consideration and study. Open Access  GON is ready to invite private investment in transmission line projects under BOOT model.  NEA has already drafted the TSA and presented it to the Board for approval.  The draft TSA has the provisions of return of investment in 17 transmission line within 15 years and the wheeling charge to be fixed by NEA.

Current Developments (Contd …) Foreign Direct Investments In last 6 years (2008-2013), Total FDI = NRs. 39.86 billion (USD 403.87 Million)  NRs.22.2 billion (USD 224.90 Million) from Chinese investors in 4 projects of total capacity 167 MW.  NRs.12.07 billion (USD 122.3 Million) from Indian investors in 17 projects of total capacity 2339 MW.  NRs.4.28 billion (USD 43.35 Million) from South Korean investors in 4 projects of total capacity 257 MW.  NRs.1.84 billion (USD 18.64 Million) from Canadian investors in 3 projects of total capacity 265 MW. 18

Current Developments (Contd …) Foreign Direct Investments Capacity S.N. Project name Developer Status (MW) 1 Arun III 900 SJVNL Ready for construction 2 Upper Karnali 900 GMR Ready for construction 3 Tamakoshi 3 6 SN Power Ready for construction 4 Upper Marsyangdi 600 GMR Ready for construction 5 Lower Arun 400 Braspower Ready for construction 6 Likhu- IV 120 Bhilwara Ready for construction 7 Balephi 50 Bhilwara Ready for construction Upper Marsyangdi ‘A’ 8 50 Sino Hydro JV Under construction 9 Upper Madi 22 CWE JV Under construction 10 Upper Trishuli-1 230 SKEPC JV Under construction ……….. 11 West Seti 750 TGCC, GoN 19

Current Developments (Contd …) Call for Proposals  NEA has decided to purchase winter & dry season (Mid December to Mid May) energy generated from export oriented hydropower projects.  Maximum purchase price is Nepalese Rs. 10.60  Priority for the proposals offering to deliver winter dry energy before the end of year 2020.  Called request for proposal on 11 th January 2014.  Four developers have submitted proposals for supplying 2000 GWh (approx.) energy in dry season.  KSK Energy Ventures Ltd. -Tila-I (440 MW) & Tila-II (420 MW)  GMR Energy Limited (India) - Upper Marsyangdi (600 MW)  Raajratra Energy Holdings Pvt. Ltd. (India)-MMG (282 MW)  Brass Power International (Brazil)-Lower Arun (400 MW) 20

Needs for Cross Border Trade From Nepal’s perspective  New Electricity Act, Nepal Electricity Regulatory Commission Act & other acts to be enacted for enhancing power trade.  Timely completion of Dalkebar (Nepal)-Muzaffarpur (India) 400 kV transmission line by June 2015.  Restructuring of Generation, Transmission & Distribution system.  To open access on transmission line.  To fix wheeling tariff. 21

Needs for Cross Border Trade From Regional perspective  First bilateral Power Trade Agreement among neighboring countries which governs all the policy aspects of trade including market access.  Adequate high capacity cross border transmission lines.  Grid synchronization.  Notion of complementaries of demand & supply among the neighboring countries.  Move towards deregulated electricity market. 22

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