Presentation by Mr. Sagar Raj Gautam, SDE of Ministry of Energy, Water Resources and Irrigation

1. ENERGY: GENERATING
POWER FOR ECONOMIC
TRANSFORMATION
Sagar Raj Goutam
Senior Divisional Engineer
Ministry of Energy, Water Resources and Irrigation

2. BACKGROUND: ENERGY MIX (IN %)
65.7
22
6.7
12
5.2
13
16.2
20
6.2
33
Fuel Wood Biomass Coal Petroleum Products Electricity /Renewable
12.87 MTOE 16.93 MTOE1
Data Source : Economic Survey, Ministry of Finance; Energy Sector Vision 2050 AD, WECS
1
With GDP growth rate of 5.6% and certain policy intervention
20502016

3. BACKGROUND
520
412
92
53
5
off Grid
Thermal
Storage
NEA _ P/ROR
IPP _ P/ROR
55 742500
2600
5600
IPP (PPA
Processing)
IPP ( PPA
Concluded)
IPP (Under
Construction)
Public Sector
Hydro Projects in
development (MW)
TOTALINSTALLEDCAPACITY:1082MW
Current Electricity Mix (MW)
Micro/Renewables

4. BACKGROUND: GENERATION REQUIRED (GW)
[7.2 GDP Growth]
3.61
6.62
11.11
18.12
29.43
6.62
9.99
15.73
23.05
36.49
2020 2025 2030 2035 2040
Reference Policy Intervention
Data Source : Electricity Demand Forecast, Jan 2017, Water and Energy Commission Secretariat

5. BACKGROUND: RIVER SYSTEM AND POTENTIAL
Sapta Koshi: 10.86 GW
Sapta Gandaki: 5.27 GW
Karnali Mahakali: 25.1 GW
Southern Rivers: 880 MW
Techno Economical
Potential : 42.11 GW

6. BACKGROUND: KEY ELECTRICITY FIGURES
• Electricity Access: 87%
(Grid: 69%; Off-grid: 18%)
• Consumption: 200 kWh/capita
• Installed Capacity: 1082 MW
• Peak Demand : ~1,500 MW
• System Loss: 19%
• Electrical energy generation:
4,476 GWh
• Electrical energy import:
2,582 GWh
Data Source : Annual Report, August 2018, Nepal Electricity Authority; White Paper, May 2018, Ministry of Energy, Water Resources and Irrigation.

7. BACKGROUND: SECTORAL TARGETS
Data Source : Annual Report, August 2018, Nepal Electricity Authority; White Paper, May 2018, Ministry of Energy, Water Resources and Irrigation.
 Per capita electricity consumption:
 700 kWhr (5 years)
 1,500 kWhr (10 years)
 Electricity Generation:
• 3,000 MW (3 years)
• 5,000 MW (5 years)
• 15,000 MW (10 years): 10,000 MW for domestic consumption; 5000
MW for trade
 System loss: Reduce to 15 % from 20.45 % (5 years)
 Access to electricity: 100 % (5 years)

8. POLICY: GUIDING POLICIES
Constitution of Nepal:
Article 51 (g) (4) says, "To ensure reliable supply of
energy in an affordable and easy manner, and make
proper use of energy, for the fulfillment of the basic
needs of citizens, by generating and developing
renewable energy sources.”
Hydropower development Policy, 2001:
• To develop hydropower also as an exportable
commodity.
• Implementation of hydro projects based on Build,
Operate, Own and Transfer (BOOT) model.
• Risk Coverage Arrangements.
• Electricity Act, 1992
• Electricity Regulation, 1993
• Environment Protection Act, 1995
• Environment Protection
Regulation, 1996

9. POLICY: ELECTRICITY MARKET
Internal:
• Nepal Electricity Authority to
buy generated electricity
• Transmission System
Development Plan, 2018
• Distribution Master Plan
• Aggressive Transmission /
Distribution Infrastructure
reinforcement and expansion
throughout the country
External:
• Nepal – India Agreement
Electric Power Trade, Cross
Border Transmission
Interconnection and Grid
Connectivity, 2014
• Nepal – Bangladesh MOU on
Power Sector cooperation,
2018
• Nepal – China MOU on Energy
Cooperation, 2018

10. POLICY: ELECTRICITY MARKET
Internal:
• Province wide Distribution
Company
• Take or Pay PPA
• Generation Mix:
• Storage 30-35%
• Peaking 25-30%
• ROR 30-35%
• Alternate 5-10 %
External:
• SAARC Framework Agreement for
Energy Cooperation (Electricity), 2014
• MOU for establishment of the BIMSTEC
Grid Interconnection, 2018
• BBIN Forum

11. POLICY: FACILITIES
• BOOT model for private
investment
• Sole or JV investment
• Nominal Royalty to be paid to
the Government
• Guaranteed water rights
• Lease arrangement for public
land
• FC exchange facility and
repatriation
• Dollar PPAs for the projects with
installed capacity over 100 MW
• Progressive PPA rates for PROR /
Storage Projects
• Fiscal Incentives:
• VAT exemption and 1%
custom duty on the import of
construction equipment &
spare parts
• Exemption of 100% Income
tax for first 10 years from
COD and 50 % for next 5
years.

12. POLICY: RISK SHARING ARRANGEMENTS &
CONCESSION AGREEMENT
• Backstopping against Non
Payment by the off taker
• Sharing of hydrological risk
and benefit
• Use of International
standards on environmental
and social sustainability
• Protection from change in law
• Parallel Compensatory
mechanisms in case of event of
default
• Project Handover mechanism
• Transfer Price Determination

13. INVESTMENT OPPORTUNITIES:
PUBLIC SECTOR PROJECTS
• The Government through its
agencies are conducting studies
of several hydropower projects
• Development of storage projects
is a priority
Some of the projects being
showcased are as follows:
• Nalsing Gad HEP: 410 MW
• SR 6 HEP: 652 MW
• Sunkosi II HEP: 1,110 MW
• Sunkosi III HEP: 536 MW
• Tamor HEP Project: 756 MW
• West Seti and SR 6 Combined HEP:
1200 MW (750 MW and 450 MW)
• West Seti HEP: 750 MW
• Lower Arun HEP: 679 MW

14. INVESTMENT OPPORTUNITIES:
PRIVATE SECTOR PROJECTS
• Private Sector Sponsors have been
studying /developing numerous
projects under the Licensing
framework
• A range of projects at different
level of development are available
for prospective Investors.
Private Sector Projects: Survey License:
• 1-25 MW: 201 Projects with combined
installed capacity of 2 GW
• >25 – 100 MW: 51 Projects with
combined installed capacity of 2.7 GW
• > 100 MW: 27 Projects with combined
installed capacity of 13.2 GW
Generation License Application:
27 Projects: 1.5 GW
Data Source : doed.gov.np [ Updated data as of March 24, 2019], Department of Electricity Development
Generation License:
201 Projects : 7.7 GW

15. INITIATIVES
• Institutional Arrangement
• Formulation of overarching water resources policy and Act
• Electricity Act
• Hydropower development master plan
• Electricity Regulatory Commission
• PPP and Investment Act
• Foreign Investment and Technology Transfer Act

16. To Conclude…….
The potential to harness water resources for hydroelectricity; with the
evolving electricity market – Domestic and Cross Border - AND positive
reforms in our policy framework , have created investment friendly
environment in the energy sector.
We request you to consider the avenues for the investment that have
been offered and Ministry is committed to extend all the necessary
support and assistance.

17. Contact Agencies
1. Projects license, study guidelines
and regulatory and legal
information can be downloaded
from http://doed.gov.np/
2. It also has a list of licensed
Projects (and their status) and a
list of Government owned
Projects.
3. Information about investment on
large PPP Hydropower projects
can be downloaded from
http://ibn.gov.np

18. Thank You