WSHPDR_2013_Final_Report-updated_version

Table 2
Hydropower potential in Nepal
(Megawatts)
Name of basin Theoretical potential Technically feasible
Sapta Koshi 22 350 10 860
Sapta Gandaki 20 650 5 270
Karnali-Mahakali 36 180 25 100
Southern Rivers 4 110 880
Total 83 290 42 110
Keeping in mind increasing competency,
effectiveness, managerial capacity and financial
resources of the private sector and the country’s
urgency to divert financial resources to other noncommercial
sectors (e.g. health, education, social,
security etc.), the Government of Nepal has adopted a
liberal economic policy. As a consequence,
Hydropower Development Policy (HDP), 1992 was
approved and accordingly Electricity Act (EA), 1992
and Electricity Rules (ER), 1993 were enacted to
motivate national and foreign private sector
investment for the development of hydropower.
Consequently, the private sector has become
interested in the development of small hydropower
and the previously active role of the public sector in
the construction of small hydropower has been
reduced. 22 small hydropower projects with a total
installed capacity of 98.344 MW are currently being
built by private developers. 6 Similarly, in various parts
of the country, several private companies currently
are investigating and preparing feasibility studies of
155 small hydropower projects with a total estimated
installed capacity of about 878.992 MW. 6 With the
expansion of infrastructure facilities (road and
transmission lines), emergence of domestic
developers as well as commercial banks in the power
sector and a conducive environment to small
hydropower development, the number of small
hydropower projects is expected to increase in the
near future.
Renewable energy policy
The Government of Nepal approved a new
Hydropower Development Policy in 2001. 5 Some of its
objectives are:
To develop hydropower projects on a competitive
basis with the BOOT scheme (e.g. provision for
generation license for 35 years for domestic
project);
To follow a transparent process in attracting
national and foreign investment (e.g. Guidelines
and directives have been prepared and
published);
To provide appropriate incentives (e.g.
exemption of Value Added Tax (VAT) for
machines, equipment, spare parts and penstock
pipe, custom duty reductions for imported small
hydropower related machinery or equipment,
income tax holidays for first 10 years from project
commissioning date and thereafter 50 per cent
for next five years);
To mitigate or avoid possible adverse
environmental impacts and to make appropriate
provisions to resettle the displaced families (for
instance enactment of Environmental Act, Land
Acquisition Act);
To encourage local level participation in small and
mini hydropower projects for electrification of
remote rural areas;
To establish a Rural Electrification Fund (REF) in
order to make electric service available to many
people;
To control unauthorized leakage of electricity
with necessary technical measures and
appropriate legal provisions;
To encourage the utilization of electric power
during low demand hours;
To provide appropriate benefits at the local level
while operating hydropower projects;
To make proper provisions to cover risks likely
occurring in hydropower projects;
To restructure the existing institutions in the
public sector to create a competitive
environment, by encouraging the involvement of
community/cooperative institutions, local bodies
and the private sector in the generation,
transmission and distribution of hydropower in
order to extend a reliable and qualitative
electricity service throughout the country at a
reasonable price;
To safeguard the consumers' interests by
providing reliable and qualitative electricity
service to the consumers at a reasonable price;
To make rational and transparent process for
electricity tariff fixation for reasonable electricity
price;
To give more priority to utilize national labour
and skills in the implementation of hydropower
projects.
To establish an institution to impart training
within the country to produce skilled human
resources for the development of hydropower, to
enhance the capability of those involved in this
sector and to carry out studies and research
works related to hydropower development.
Legislation on small hydropower
The Electricity Act (EA) and Electricity Rules (ER) are
the prime Acts and regulations. There is a two-stage
licensing system in the power sector. In the beginning
an applicant gets Survey License for Electricity
Generation (SLEG) on the basis of first come first
served basis, provided the applicant submits all the
requirements in the stipulated time and carries out
field investigation to prepare feasibility and
environment study reports. After completing
necessary studies, the applicant then applies for a
Generation License within the valid SLEG period.
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