Nepal

Source: Great Rivers of the World, National Geographic Society, 1984

 Average annual flow : 225 Billion m 3
 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

 Demand by 2005:
 Existing Capacity:
622 MW
535 MW
 Committed additions :
Private Sector
Public Sector
16 MW
7 MW
-20 % population have access to electricity
23 MW
 Total generation by 2005: 660 MW

•
Peaking Capacity : 604 MW
•
•
Expected Peak (annual)
Max. Surplus (wet season)
: 482 MW
: 154 MW
•
Surplus Capacity (dry season) : 41 MW
• Average Energy
•
Demand Energy
• Surplus Energy
: 3260 GWh
: 2110 GWh
: 1150 GWh

 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

 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
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Ministry of Water Resources (MOWR)
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)
Formulation policy and Strategy
Analyzing Bilateral and Multilateral Projects
Reviewing multipurpose large & medium projects
Coordinating national sectoral policies
Tariff Fixation Commission (TFC)
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
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Department of Electricity Development (DoED)
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
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Providing concessions & incentives
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Assistance in importing goods
 Assistance in obtaining land
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Assistance in obtaining permits, approvals
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Acts as a Regulatory and monitoring body

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Nepal Electricity Authority (NEA)
An HMG/N undertaking established under NEA ACT 1984
Generation of Electricity
Transmission of Electricity
Distribution of Electricity

 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.

Meter Capacity Minimum charge Street lamp
Up to 5 Amp Rs. 80.00
Rs. 2.00
15 Amp
30 Amp
Rs. 299.00
Rs. 664.00
Rs.10.00
Rs. 30.00
60 Amp
Three Phase
Rs. 1394.00
Rs. 3244.00
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.

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

- 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

- 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

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.

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

 Producing Cheap Power
 Increasing Accessibility
 Improving Efficiency
 Mobilization of Resources
 Affordability and Tariff Rationalization
 Improving the selection process of projects
 Addressing Environmental concerns
 Improving the policy and Regulatory framework
 Establishment of Institutional set up

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

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%

 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

 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 control

 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

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

 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.

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.

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

- 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.

- 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

- 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