public private partnership in hydro electricity in nepal
TRANSCRIPT
![Page 1: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/1.jpg)
Public Private Partnership in Hydropower Development:
Prospects for Nepal’s Development
Bikram Acharya [email protected]
![Page 2: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/2.jpg)
Contents
1. Introduction and Background
2. Hydropower Policy
3. The Case of Chilime Hydropower
4. Implication to Other Hydropower Projects
5. Conclusion
![Page 3: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/3.jpg)
1. Introduction and Background
![Page 4: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/4.jpg)
Objectives
• Review of Hydropower Policy in Nepal
• Review of Successful Project Practiced until date
• Possibility of implementation to other projects
![Page 5: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/5.jpg)
A brief on Nepal• Area 147,181 Sq. km
• Population: 26.67m (2011 census)
• GDP: 18.8 billion USD (2011 World Bank)
• Some 6000 rivers with annual discharge of 174 billion m3
• 83 GW theoretical potential of hydropower
• 45 GW economical potential of hydropower is from 114 surveyed projects
• 740MW of installed capacity
Hydro –electricity 92%
Thermal/Imports 8%
• Electrification Ratio 43.6%
![Page 6: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/6.jpg)
Current Energy Status of Nepal
Source: NEA,2011
Why firewood dominates fuel source?
Cheapest source of Energy and Easily available from forest
Lack of infrastructure, and electricity source
Around 10% growth rate
Plant Capacity
Year
Pharping 500KW 1911
Sundarijal
600KW 1936
Panauti 2.4MW 1965
Kulekhani
60MW 1982
Total 688 MW 2010
![Page 7: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/7.jpg)
Why is Nepal Behind?Constraints•Political:
Autocratic regimes and their effect on bureaucracy for a long time Political instability, frequent change of political regimes; (1950, 1962, 1989,
2006) Lack of political will Maoist insurgency from 1995 to 2006 Overall security situation
•Technical: Poor infrastructure high sedimentation Logistics Maintenance
•Economic: Low electricity tariff that do not match costs Poor financial health of Nepal electricity authority Local people’s unjustified demand and expectations
First Hydropower built in 1911
![Page 8: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/8.jpg)
Why Hydropower in Nepal?
• Perennial rivers originated from the Himalaya and steep gradient of the country’s topography
• One of the sustainable, clean, and renewable energy sources
• A most prominent base for direct job creation and long-term economic benefit
• The best solution to displace fuelwood which currently serves as the main source of energy
![Page 9: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/9.jpg)
2. Hydropower Policy
![Page 10: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/10.jpg)
Hydropower Policy of Nepal
• Acts and Policies:Hydropower Act 1992 Hydropower policy 2001 (amended in
2006)Interim policy 2010 (inclusion of Vision
2020)
![Page 11: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/11.jpg)
Policy contd…• Major Provisions
Government land to be available on lease throughout the license period
1% customs duty
No import licenses/sales tax
Energy Royalty:
1.85% (10-100 MW)
2% (above 100MW) until 15 years
10% after 15 years
License upto 35 years with exclusive right of water use
• Social Inclusion and empowerment Sharing of Hydro Royalty
10% of the royalty to the local government 10% share ownership to Project affected local people
Environmental and social management plans
![Page 12: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/12.jpg)
Vision 2020 Hydropower
Private Sector Promotion Program: Bright Nepal Campaign
No license up to 3 MW and waivers of EIA for up to 50 MW.
During construction, Tax exemption for companies that use > 50 % local raw materials in hydro electricity projects, until mid April, 2019.
VAT and customs duty exemption : construction materials, machinery, equipment, tools and spares
In operation, income tax is fully waived for the first 7 years and reduced by 50% for the next 3 years
Policies to address local demand for shares & social mitigation.
![Page 13: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/13.jpg)
Comparing policy with neighbor
Item Nepal India
Customs duty 1% 5% (exempt for mega projects
Excise Duty 1% 16%
Average Generation per MW
6-7GWh per MW 4-5GWh per MW
Repatriation Policy 100% allowed 100% not allowed
Cost of Licenses Govt. fees negligible
Govt. fees around 44k USD per MW is floor price
Roads & Transmission Lines
Network is poor Network is better
![Page 14: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/14.jpg)
3. The Case of Chilime Hydropower
![Page 15: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/15.jpg)
Chilime Hydro Power (CHP)• Constructed and owned by Chilime
Hydropower Company Limited
• Located at 133 km north of Kathmandu at the right bank of Bhotekoshi River in Rasuwa District
• The electricity generated from the power plant is purchased and distributed by NEA (PPA concluded on June 25, 1997)
• Delivers power via a 38 km long 66 kV single circuit transmission line to Trisuli Power House Switchyard
• The plant has started its commercial generation on 24th August 2003
• Annual availabe energy to NEA is 132 GWh
![Page 16: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/16.jpg)
People-Public-Private Partnership: 4P-Model
Source: Chilime,
![Page 17: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/17.jpg)
Equity Structure
Source: chilime.com.np
46 million USD raised from domestic population within 4 days
![Page 18: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/18.jpg)
Performance of the Plant
• The plant is able to generate more energy than contractually supplied to NEA, the excess energy is sold to NEA at higher prices.
• The plant load factor of the CHP Hydropower Station is calculated to be 77.5%. The plant outage was kept at minimum level with an availability of 96.8%.
• In 2011 the total revenue was approx 14 million USD, an increase of 8% over previous year figure 82% was from bulk electricity sales to NEA, 18% from other income sources.
![Page 19: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/19.jpg)
Corporate Social Responsibility
• The company sponsors local projects related to drinking water, education, health, employment generation, irrigation, roads and other areas
• Educational Collaboration with academia: established a turbine testing lab at Kathmandu University
• Opportunity for the local population to obtain 24% of the shares of any new projects under Chilime
• Promoting entrepreneurship: Technical and financial support to develop Bemdang Khola SHP (1 MW), promoted by the local population is one of such initiatives undertaken by the company
• Tree Plantation : More than 80 thousand planted per year
• Credit Facility to support local purchasing of the Chilime Shares
![Page 20: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/20.jpg)
What made Chilime successful
• Local investment: They encouraged local people to invest
• Participation: participation of public sector and citizensPeople act as White Knight for any kind of
hindranceProtect them in terms of security (vulnerabilities
from vested interest groups like political interference)
![Page 21: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/21.jpg)
4. Implications for the for other Hydropower projects
![Page 22: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/22.jpg)
Arun Valley: Where Upper Arun Project site is located
![Page 23: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/23.jpg)
Regional Hydropower Projects
• Koshi River and its tributaries
• Bagmati River and its tributaries
• Gandaki River and its tributaries
• Seti River and its tributaries
• Karnali River and its tributaries
• Mahakali and its tributaries
![Page 24: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/24.jpg)
Outcome
• People in the project affected area have more sense of matters and the sharing of ownership to project affected area.
• People acceptance and security of project• Empowerment of people (financial, infrastructure,
education, health)• Large power projects are possible from the local
investment
![Page 25: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/25.jpg)
Conclusion
• Favorable investment environment provided by Government with “Vision 2020” can meet the growing energy demand.
• People centric PPP: Empowering peoples along with countries economy
• Potentially feasible to be applied in other hydro projects both in Nepal and other developing countries.
![Page 26: Public private partnership in hydro electricity in nepal](https://reader038.vdocument.in/reader038/viewer/2022110118/554dc11db4c905c2488b4d23/html5/thumbnails/26.jpg)
THANK YOU