Nepal Purbadhar

शुक्रबार, माघ १३, २०७९
Friday, January 27, 2023

शुक्रबार, माघ १३, २०७९
Friday, January 27, 2023

Private Sector Leads Leapfrogging in Electricity Generation

KATHMANDU: Up until 1990 when multiparty democracy was restored in Nepal, total electricity generation was hardly 176 MW with private sector contribution of only 9.4 MW. Almost a decade later, the budget for the fiscal year 2000/01 announced that electricity generation in the country would be increased to 352 MW. Electricity Act 1992 and the Power Purchase Agreement (PPA) in 2000 were brought a significant mode to promote the participation of the private sector in electricity generation.

During the last 110 years, 561 MW has been generated through the government initiative while the private sector managed to produce 1500 MW of electricity only after 2000. Of the total generation from the private sector, subsidiary companies of Nepal Electricity Authority (NEA) generated 500 MW.

Before the Electricity Act, 1992 was introduced, the Tinau hydropower project of one megawatt was built by the private sector. However, the then rules did not allow the private sector to operate hydropower projects. Hence, the project was nationalized and handed over to the NEA.   On August 17, Kulman Ghising submitted a report and announced that the private sector has produced a total of 1,532 MW, including about 30 MW of solar and bagasse electricity.

“During the last fiscal year 2021, the private sector has produced 717 MW from 24 hydropower projects, of which 478 MW is owned by the NEA’s subsidiary companies” 

Kulman Ghising, Executive Director, Electricity Authority.

Director General of the Department of Electricity Development (DoED) Sandeep Dev also says that there are currently 19,000 MW projects, for which 14,000 survey permits have been issued and 5,000 MW applied for production permits, which belong to the private sector.

The interest of the private sector has also started to be seen in reservoir projects in recent years. Recently, the private sector has applied for a survey permit for the 300 MW Bheri-4 reservoir project, and the process of issuing the permit has started.

“It is also a positive thing that the private sector is willing to build a storage project” 

Sandeep Dev,Director General of the Department of Electricity Development (DoED)

The biggest project is the 456 MW hydropower project, which is also considered a private sector project. Similarly, the largest project built with the participation of the private sector in foreign investment is Khimti of 60 MW and Likhu-4 of 52.4 MW built with domestic investment.

According to the Nepal Electricity Authority (NEA), among the 3131 MW  projects under construction, the 216 MW Upper Trishuli-1 project is being built by the private sector with foreign investment, while the 99.4 MW Lapchekhola project is being built by the domestic private sector.

The private sector has produced almost two-thirds of the total production since the government took the path of liberalization in power generation.

Krishna Acharya, Chairman of the Independent Power Producer’s Association (IPPAN), says that the private sector accounts for two-thirds of the country’s total energy production. ” Even now, the private sector is making hydropower projects with great difficulty frequenting seven ministries and 22 departments.  However, the private sector is leading this sector,” says Acharya.

“Even now, the private sector is making hydropower projects with great difficulty frequenting seven ministries and 22 departments.  However, the private sector is leading this sector” 

Krishna Acharya, Chairman, Independent Power Producer’s Association Nepal (IPPAN)

It is considered that the liberal policy adopted by the then government after the multi-party democracy is behind the fact that the private sector was able to produce the electricity that the government could not produce in 110 years.

Priorities after multiparty democracy

In the budget presented by the then Finance Minister Dr. Devendra Raj Pandey in the year 1990, the budget for the financial year 1990/91 did not accord priority to the promotion of hydropower by the private sector. But the budget of the year 1991/92 presented by the then Minister of State for Finance Mahesh Acharya in 1991, mentioned that the policy of encouraging the private sector will also be adopted in the program of small hydropower generation.

While presenting the budget 1994 for the year 1993/94, Minister of State for Finance Acharya said that the government’s attention will be focused on the development of hydropower in the coming days and stated that projects like Khimti, Modi Khola, Bhotekoshi, and West Seti will be promoted by the private sector. It was also mentioned in the budget that as a result of the policy of promoting the investment of the private sector for the proper development of water resources, an agreement has been reached for the construction of the Khimti hydropower project in joint investment.

In 1995, while presenting the budget for the year 1996/97, the then Finance Minister Bharat Mohan Adhikari stated that energy should be the second priority sector after agriculture in the context of Nepal. However, the budget did not speak about the involvement of the private sector.  Then Finance Minister Dr. Ramsharan Mahat said since the private sector is enthusiastically involved in the implementation of the Khimti and Bhote Koshi hydropower projects, it will be officially involved in the implementation of other potential projects as well. In the same budget, the government had announced that considering the demand for electricity in the border areas of the neighboring country India, there are many possibilities to export electricity.

Presenting the budget for the year 1997/98 in 1997, the then finance minister Rabindranath Sharma mentioned that the private sector was going ahead with the operation of the 750 MW West Seti hydropower project to export electricity abroad.

That initiative of Odd Hofton

Odd Hofton, Hydro Power Engineer, Norway

In 1958, Norway’s hydroelectric engineer Odd Hofton came to Nepal to build Tansen’s hospital. According to Hydropower Nepal written by the former president of IPPAN, Khadga Bahadur Bisht, he tried to start a hydropower project by the private sector for the first time in Nepal by building a one megawatt Tinau project for the Butwal Technical Institute, which was operating with diesel.

However, the rules did not allow the private sector to build a hydroelectric project. Hence the NEA was given the responsibility of its operation. After that, he not only helped in the construction of Jhimruk and Andhi Khola projects but also contributed greatly to the Khimti project.”Wad Hofton showed that it is possible to generate electricity from the private sector in Nepal before the multi-party democracy.

After democracy, the government’s liberal policy with the involvement of the private sector has shown it in a big way in the field of hydropower,” Bisht says. It is such that the production of the private sector has not only supported ending load shedding but has also made a great contribution to energy security.’

Historic June 28, 1998

June 28, 1998, was the day when the PPA rate was fixed for the first time in the history of Nepal. The credit goes to the then Deputy Prime Minister and Water Resources Minister Shailaja Acharya.

“Before the rate of PPA was fixed, we had done PPA in some projects but there was confusion when the rate was not decided”

Krishna Prasad Bhandari, Hydropower Promoter

Although the Electricity Act 2049 opened up the entry of the private sector, the hydropower project could not proceed because the government did not guarantee the purchase of electricity. Till then, the PPA of 60 MW Khimti, 45 MW Upper Bhotekoshi, and 7.5 MW Indravati III already had PPA, but the rate of PPA was not fixed.”We had done PPA for some projects before the rate of PPA was fixed, but there was confusion when the rate was not decided,” says Krishna Prasad Bhandari, a hydropower promoter who is also active in the construction of Indravati-3.

As the PPA rates were not finalized, there were problems such as loans from banks, and the promoters of the private sector were pressing the Ministry for PPA. The then Energy Minister Acharya, who was positive about the demand of the private sector, directed the NEA’s board of directors to set the PPA rate for the first time for 1 to 10 megawatts Q90 at Rs 2.76 per unit during the rainy season and Rs 4.03 per unit during the winter. After the complaint from the private sector that the project could not be made in Q90, Acharya again reduced it to Q65 and the PPA rate was fixed at Rs 4.25 per unit for winter and Rs 3 per unit for the rainy season. This decision became a game-changer for the entry of the private sector into hydropower.

“That decision of the then Minister Acharya opened the door for private hydropower promoters in Nepal. Initially, it was said that only up to 10 MW would be given because the private sector could not build it, now the private sector has been forced to build large projects” 

Kumar Pandey, Advisor, Independent Power Producer’s Association Nepal (IPPAN)

After this decision, the first PPA of 0.183 MW in Lamjung was done by Sange Khola on 16 January 2002 with Pradhirkaran. “That decision of the then Minister Acharya opened the door for private hydropower promoters in Nepal. At first, it was said that only up to 10 MW would be given because the private sector could not build it, now the private sector is restricted even to building big projects” – says Kumar Pandey, advisor of the IPPAN, “The authority will buy electricity. The assurance encouraged both the lending banks and investors.”

Liberal government policies, private sector capacity building

The open policy adopted by the government became the biggest opportunity for private promoters to invest in hydropower. Initially, the private sector could only build up to 10 MW, the government gave the private sector the opportunity to build any scale of the project.

In the high-risk, high-cost, and time-consuming hydropower sector, the government’s rescue policy towards the private sector not only transfers risks to the private sector but also increases its  ability to invest” 

Ashish Garg, Chairman, Infrastructure Committee, Confederation of Nepalese Industries

Ashish Garg, Chairman of the Infrastructure Committee of Confederation of Nepalese Industries and Vice Chairman of IPPAN, says that the private sector has made an unexpected leapfrogging in production.

“All over the world energy production is mostly done by government bodies, but in Nepal, more than 50 percent of the production is done by the private sector. This is not only a great achievement; it is a leap forward in the energy sector.

There is no such progress in any other infrastructure sector in Nepal. He says that the government’s rescue policy towards the private sector in the hydropower sector, which has more risks and takes more time and cost, not only increased the risk-bearing capacity of the private sector but also increased the ability to invest.

“The production has not only given light to the country, but the hydropower sector has also been established as the only industry to maintain fiscal balance in the country,” –

Shailendra Guragai, Former Chairman, IPPAN

Shailendra Guragai, former president of IPPAN, said the private sector has been able to make great progress due to the environment of open competition worldwide. He said, “Production has not only given light to the country but the hydropower sector has also been established as the only industry to maintain financial balance.

“To produce so much in such a short period of time is the success of the private sector, the government should provide a proper environment and facilitation for the investors” 

Guru Neupane, Hydro Power Promoter

The hydroelectric power sector is really attractive for investment.  The private sector has moved forward and now it has barely moved to the left, according to the analysis of hydropower promoter Guru Neupane.

“In Nepal, it has been recognized that hydropower is a suitable area for investment, the interest of investors has increased, and everyone is interested in it,” he says. It is through this sector that the country’s economy takes a leap forward through a proper environment and facilitation.

In other infrastructure sectors including roads, there is no guarantee of market and returns, but in the hydropower generation sector, the government has made a guarantee of purchase.

“We have always been facilitating the private sector for hydropower production, the government has also given a guarantee to buy electricity. This is a great help from the government”

Madhu Bhetuwal, Joint Secretary, Ministry of Energy, Water Resources and Irrigation

Madhu Bhetuwal, Joint Secretary and Spokesperson of the Ministry of Energy, Water Resources and Irrigation, says that the government is facilitating the private sector. “We have always been facilitating the private sector for hydropower production, the government has also given a guarantee to buy electricity. This is a great help from the government,” says Bhetuwal.

Some of the events have made their special marks in Nepal’s hydropower development.

First event:

After the construction of 144 MW Kaligandaki, the Nepal government sent a team to India to sell electricity, but the mission could not succeed. Immediately after this, there was an extreme problem of load shedding. During load shedding around 2004, private sector investors were clamoring to get permits, while the NEA remained silent after Kaligandaki’s case. The situation of load shedding has become a great opportunity for the private sector to build hydropower projects. During this period, various packages were announced to give concessions to the private sector by the government.

Second event:

5 years ago, the energy crisis in Nepal increased after the blockade by the Indian government. After this, the issue of energy security and self-reliance was raised vigorously. Nepal Oil Corporation, which does not have storage capacity even for two weeks, proceeded with the construction of a structure for storage capacity of up to 90 days. It was decided that there would be no energy security until hydroelectricity generation is promoted.  During this period, Nepal Rastra Bank also brought a plan to increase hydropower investment. This is also the reason why the private sector’s hydroelectricity production was boosted.

Third event:

Last year, Nepal got the opportunity to export electricity to the Indian market. Although the Power Trade Agreement (PTA) was signed between Nepal and India 8 years ago, it took shape only last year. The electricity business in the Indian market, which started with an export of 39 MW, has now reached 364 MW. The private sector is asking for permission for electricity trade, while the NEA has been stating that it can export up to 1,000 MW next year. This event is also encouraging private sector power generation. In the meantime, Covid-19 has made the use of information technology and the importance of electricity even more urgent.

“Incidents like blockade and load shedding gave a message that the private sector should be encouraged and facilitated for production, and the private sector also moved forward accordingly” 

Khadga Bahadur Bisht, former chairman, IPPAN

Some of these developments have encouraged the private sector. The former president of IPPAN believes that the changes in politics and the developments of the time have also promoted the private sector. “Incidents like blockade and load shedding gave the message that the private sector should be encouraged and facilitated for production. The private sector also moved ahead accordingly,” he says.

The success achieved by the private sector in the hydropower sector in three decades is something to be proud of. Nepal’s private sector should not stop at this. Many people expect that if they can cooperate with the government to create a favorable environment for electricity export, it will contribute significantly to reducing the country’s growing trade deficit and increasing foreign exchange reserves.

Name of project completed so far, district, capacity and year

 

2057

 

Project District Capacity(MW)
Khimti River  Dolkha 60
Upper Bhotekoshi  Sindhupalchowk 45
  Total   105

 

2058

Project District Capacity(MW)
Sange river Lamjung 0.183
Jhrimuk river Pyuthan 12 (pre construction, post PPA only)
AadhiKhola Syangja 9.4 12 (pre-build, post PPA only)
  Total 21.583

2059

Project District Capacity(MW)
Indrawati third Sindhupalhowk 7.5
  Total 7.5

2060

Project District Capacity(MW)
Chilime Rasuwa 22.100
Piluwakhola Sana Sankhuwasabha 3
  Total 25.1

2062

Project District Capacity(MW)
Rairang river Dhading 0.5
Sunkoshi Sana Sindhupalchowk 2.5
  Total 3

2062

Project District Capacity(MW)
Chaku Khola Sindhupalchowk 3
     
  Total 3

2063

Project District Capacity(MW)
Khudi Khola Lamjung  4
Baramchi Khola Sindhupalchowk 2.5
     
  Total 6.5

2064

Project District Capacity(MW)
Thople Khola Dhading 1.650
Sisre Khola Sana Palpa 0.750
Salinadi Kathmandu 0.250
Feme Khola Pachthar 0.995
  Total 3.645

2065

Project District Capacity(MW)
PatIKhola Sana Parwat 0.996 
Seti 2 Kaski 0.979
  Total 1.975

2066

Project District Capacity(MW)
Ridi Khola Gulmi 2.4
Upper HadiKhola Sindhupalchowk 0.991
Mardi Khola Kaski 4.8 
  Total 8.191

2067

Project District Capacity(MW)
Mai Khola ilam 4.5
  Total 4.5

2068

Project District Capacity(MW)
Lower Piluwa Khola Sankhuwasabha 0.990
Hewa Khola Sankhuwasabha 4.455 
  Total 5.445

2069

Project District Capacity(MW)
Bijayapur Kaski 4.410
Siure Khola Lamjung 4.950
Lower Modi 1 Parwat 10
Spring Khola Dolakha 1.658
Middle Chaku Sindupalchowk 1.800
Tadi Khola Nuwakot 5
  Total 35.818

2070

Project District Capacity(MW)
Aakhukhola-1 Dhading 8.4
Charnawati Dolakha 3.520
Lower Chaku Khola Sindupalchowk 1.800
  Total 13.720

2071

Project District Capacity(MW)
Bheruwa Kunda Sindupalchowk 3
Radi Khola Lamjung 4.400
Mailung Khola Rasuwa 5
Chote Khola Gorkha 0.993
Upper Puwa -1 ilam 3
Mai Khola ilam 22
JireKhola Sana Dolakha 2.200
Upper Hugdi Khola Gulmi 5
Belkhu Dhading 0.528
  Total 46.111

2072

Project District Capacity(MW)
Naugadh Khola Darchula 8.5
Susma Bukhri ilam 0.998
Mai Cashket ilam 7
Chandi Lamjung 2
  Total 18.498

2073

Project District Capacity(MW)
Upper Mai Khola ilam 9.980
Daram Khola A Baglung 2.5
Jyamdi Khola Sindhupalchowk 2
Tungun Thosre Lalitpur 4.360
Daraudi Khola A Gorkha 6
Khani Khola Lalitpur 2
Miya Khola Khotang 0.996
Upper Marsyangdi A Lamjung 50
Upper Madi Kaski 25
Hewa Khola A Pachthar 14.900 
  Total 47.26

2074

Project District Capacity(MW)
Jomai ilam 7.6
Dwarikhola Dailekh 3.750
Trapur Mai Si ilam 5.1
Dhunge Jire Dolakha 0.6
Sabhakhola Sankhuwasabha 4
Puwa Khola 1 ilam 4
Fawa Khola Tapljung 4.950
Thapa Khola Myagdi 13.600
Sardi Khola Kaski 4
Chake Khola Ramechhap 2.830
Midim Karpu Lamjung 3
Syari Bhumai Nuwakot 0.23
Melungkhola Okhaldhunga 7
Markhukhola Kaski 13
Mai Sana Cashcate ilam 8
  Total 83.660

2075

Project District Capacity(MW)
Theulekhola Baglung 1.500
Leguwakhola Dhankuta 0.40
Super Mai ilam 7.8
Sebuba Khola 2 Taplejung 0.90
Midim Khola Lamjung 0.100
Rudikhola A Lamjung and Kaski 8.8
Bagmati khola sana Makwanpur/Lalitpur 22 
  Total 49.500

2076

Project District Capacity(MW)
Khaptad Gada Doti 3.33
Pikhuwa Khola Bhojpur 5
Lower Hewakhola Pachthar 22.1
Layer Short River Gorkha 0.997
Upper Mardi Kaski 7
Ewa Khola Taplejung 9.9
Upper Nalgad Darchula 8
Kabeli B 1 Taplejung/ Pachthar 25
Jelyugada Bajhang 0.996
Padamkhola Dailekh 4.80
Rudi Khola B Lamjung/Kaski 6.6
Ghalendo khola Myagdi 5
Upper Khorunga Terhathum 7.5
Solukhola Solukhumbu 23.5
  Total 129.723
     

2077

Project District Capacity(MW)
Super mai A ilam 9.6
Super mai Cascate ilam 3.8
Hadikhola Sunkoshi A Sinhupalchowk 0.997
Upper Rawa Khotang 3
Namarjun Mardi Kaski 11.88
Ghattekhola Dolakha 5
Bijayapur 2 Kaski 4.5
  Total 39.677

2078

Project District Capacity(MW)
Taksar Piluwa Pikhuwa Bhojpur 8
Upper Chaku A Sindhupalchowk 22.2
Mistrikhola Myagdi 42
Singti Dolakha 25
Richet Khola Gorkha 4.98
Upper Tamakoshi Dolakha 456
Maibeni ilam 9.41
Lower Modi Parwat 20
Lower Jogmai ilam 6.2
Likhu 4 Ramechhap 52.4
Upper Chyangdi Lamjung 4
Lower Khare Dolakha 11
Sapsup river Khotang 6.60
Linkhu Khola A Solu/Ramechhap 24.2
Upper Syage River Lamjung 2.4
Lear Tadi Nuwakot 4.993
Cabelli B 1  Pahthar 9.94
Upper Hewa Khola Sana Sankhuwasabha 8.5
  Total 717.423

2079 (until now)

Project District Capacity(MW)
SuriKhola Dolakha 6.4
Nyadi Lamjung 30
Upper Khimti Ramechhap 12
Upper Khimti 2 Ramechhap 7
  Total 55.4

Source: Nepal Electricity Authority

 Official

Project Year District Capacity(MW)
Pharping 9th June 1968 Kathmandu 0.5
Sundarijal 1992 Kathmandu 0.640
Panauti 2022 Kavre 2.4
Trishuli 2024 Nuwakot 24
Fewa 2026 Kaski 1
Sunkoshi 2029 Sipa 10.050
Gandaki 2035 Nawalparasi 15
Tinahu 2038 Palpa 1.024
Kulekhani first 2039 Makwanpur  60
Devghat 2041 Nuwakot 14.100
seti 2042 Kaski 1.5
Kulekhani second 2043 Makwanpur 32
Tatopani 2045 Sipa 2
    Total 167.474

After 2046 years

Project Year District Capacity(MW)
Masyangdi 2046 Tanahun 6.9
Modi Khola 2057 Parwat 14.800
Kaligandaki A 2059 Syangja 144
Poowa 2060 ilam 6.2
Madhyamsyangdi 2064 Lamjung 70
Chamelia river 2074 Darchula 30
Kulekhani third 2076 Makwanpur 14
Upper Trishuli 3A 2076 Nuwakot 60
    Total 408

Source: Department of Power Development

 Private sector licensing conditions

Permit Capacity (MW) Body
Survey 8573 Private
  5216 (Government, Authority and Subsidiary Company)
Survey application 702 Private
  0 (Government, Authority and Subsidiary Company)
Construction

 

 

7723 Private
Construction application 461 (Government, Authority and Subsidiary Company)
Total 3035 Private
Private 2697 (Government, Authority, and Subsidiary Company)
28407  
20033  
(Government, Authority, and Subsidiary Companies) 8374  

Source: Department of Power Development

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