Anup Kumar Upadhyay

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Regulatory Regime in Nepal POWERing
Nepal Connecting Markets November 3, 2006
Anup Kumar Upadhyay Joint Secretary Ministry of
Water Resources
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• Power Sector in Nepal

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Govt. of Nepal Ministry of Water Resources
Water Energy Commission (WEC)
NEA Board
WEC Secretariat
Nepal Electricty Authority
DOED
Dept of Irrigation
Dept of WIDP
Privatization
Inspection
Project Study
Pancheshwar Project
Sapta Koshi Project
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Facts about Nepal
Area 147,181 square kilometers Population 24,
797,059 (2004) Population Growth Rate 2.25 Per
capita GNP 245 US Literacy 54 (2004) Per
capita Energy consumption 14.23 GJ Per capita
Elec Consumption 106 kWh (in 2004) Forest
Cover 5.36 million ha Annual Runoff 225
Billion Cubic Meter Hydropower Potential 83,290
MW (Theoretical) 42,130 MW (Practical)
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Major River Basins of Nepal
MAHAKALI
KARNALI
KOSHI
GANDAKI
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Hydropower Potential of Nepal
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Present Status
Installed Capacity Hydro NEA 402 MW (grid
connected) Hydro IPP 148 MW Thermal 57
MW Total 607 MW Isolated small
6 MW Peak Demand on Jan 12, 2006 603.3
MW Energy Supply for Year 2006 NEA
Hydro 1565.1 GWh IPP Hydro 930.0
GWh Thermal 16.1 GWh Import from
India 266.2 GWh Total 2777.4 GWh
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Planned Major Power Projects in Nepal
Pancheshwar (6480)
Upper Karnali (300)
Dudh Koshi (300))
Budhi Gandaki (600)
Upper (335), Arun III (402) Lower Arun (308)
Upper Tamakoshi (309)
Karnali Chisapani(10800)
Kali Gandaki 2(660)
Sapta Koshi (3500)
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Load Forecast for Integrated Nepal Power System
(INPS)
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Electricity Market (Export)

• Export Market
• Northern Indian Power Region

There is a huge market in India,
Load Forecast
69178
80000
429480
480000
70000
420000
49674
60000
360000
308528
35540
Capacity (MW)
50000
300000
25307
220820
Energy (GWh)
40000
240000
157466
30000
180000
20000
120000
10000
60000
0
0
2001
2006
2011
2016
Years
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Institutional Framework

• MOWR Policy, Legislation
• WEC Water Resource Planning
• NEA - Utility
• DOED Currently regulator as well as promotional
  entity
• issuance of licenses on behalf of MOWR
• providing concessions and incentives
• assistance in importing equipment
• assistance in obtaining permits, approvals land

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Policy 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)

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Licensing (as per Electricity Act 1992
regulation 1993)

• License required for Survey, Generation,
  Transmission and Distribution for projects larger
  than 1 MW
• License granted by Secretary, MOWR
• DOED facilitates license procedure by receiving
  the application, processing application for
  compliance, issuing public notice and
  recommending to MOWR

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Legal Framework

• Survey license issued within 30 days
• Period of survey license up to 5 years
• Generation license within 120 days
• Exclusive water rights
• Public hearing before issuance of generation
  license

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Licenses issued June 2006

• Survey License 230
• Transmission Survey 57
• Distribution Survey 12
• Generation 19
• Transmission 19
• Distribution 1
• Generation, Transmission Distribution 18
• (including NEA Old Plants)

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Hydropower Development Policy 2001

• Approved on October 15, 2001
• Objectives
• to generate electricity at low cost
• to extend reliable and qualitative electric
  services
• to render support to the development of rural
  economy
• to develop hydropower as an exportable commodity
• Strategies
• to extend hydropower services to the rural
  economy
• to pursue investment friendly, clear, simple and
  transparent procedures
• to implement small, medium, large storage
  hydropower projects
• to develop hydropower projects by attracting
  private sector investment
• to pursue a strategy of bilateral and regional
  cooperation in hydropower development
• to minimize the potential risks

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MOWR Initiatives (contd)

• Institutional arrangement
• Electricity Tariff Fixation Commission to be
  replaced with Nepal Electricity Commission (NERC)
  as a regulatory body
• DOED to act as a study and promotional body
• WECS to conduct load forecast and policy research
  works
• Electric Energy Management Research Institute to
  be established
• Unbundling of NEA

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MOWR Initiatives

• Legislation of
• New Electricity Act (provide authority to HDP
  2001)
• Nepal Electricity Regulatory Commission (NERC)
  Act
• Power Export Agreement with SMEC-WEST SETI
• Power Exchange arrangements with India
• Committee set up to study and recommend action on
  competing license application for large projects

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Development Models

• All small hydro Projects ( lt5 MW / 10MW )
• - NEAs standard PPA based on
  system need
• ( NRs 3.50 wet months (4 months)
• NRs 4.25 dry months, PPA for 20 years )
• Criteria is being developed to select promoter
  for large project
• All other projects
• -Negotiated PPA

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Thank You
NAMASTE