HYDROPOWER DEVELOPMENT IN NEPAL : MAJOR ISSUES,

ENVIRONMENT CONSIDERATION AND WAY FORWARDS

DR. MURALI GOPAL RANJITKAR
MR. SAROJ UPADHAYA
 OUTLINE OF THE PRESENTATION

1. History and current status of hydropower development in

Nepal
2. Consequences of failure to develop hydropower
3. Issues in hydropower development in Nepal
4. Environmental consideration in hydropower projects
5. Ways forward for hydropower development
 WATER RESOURCES IN NEPAL

Claims of Nepal as "second richest country" in the world after Brazil in hydropower potential has
never been validated
Students and general public have been inundated with the 83,000 MW potential rhetoric- based on a
1966 PhD of Dr. Hari Man Shrestha
However, another more scientific study lead by Prof. Narendra Man Shakya has shown that Nepal has
a total potential to generate 53,000 megawatts of hydropower
Another study revels 43,000 MW of economically and technically feasible hydroelectricity (NPC,
1985)
Despite these discrepancies, the general consensus is that hydropower has the potential for uplifting
the lives of the Nepalese people
 HISTORY OF HYDROPOWER DEVELOPMENT IN NEPAL

Pharping Hydropower Plant is one of the oldest hydropower plants of Asia and the
first hydropower plant of Nepal.
Established in the year 1911 while the first hydropower plant in China was
established in 1912.
Ironically, we have lagged behind in hydropower generation ever since and have faced
seemingly perpetual load shedding hours in the recent years
This is despite the fact that Nepal is among the richest country in the world in terms
of water resources.
 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (1)

Presently, the total installed capacity of Nepals power plants is 705.56 MW including
two thermal plants which produce 53.41 MW (NEA, 2016).
Except 92 MW Kulekhani reservoir project, all of the hydropower projects in Nepal
are of run-of-river (ROR) type
Huge power generation difference between rainy and dry season
Shortage of 467 MW during the dry season which results in 14 hours of load-
shedding everyday
STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (1)

Nepal lag well behind other South Asian compatriots.

 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (2)

3 distinct stages of Hydropower development in Nepal

Donor assisted till 1995
Independent Power Producers (IPPs) oriented till 1995-
2001
Open and Liberal policy since than
 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (3)

First Five-Year Plan (1956-1961)

Electricity development highly prioritized
Main objective was to generate 20 MW of electricity

In 1962, Nepal Electricity Corporation (NEC) was established and in

1985 it was restructured to Nepal Electricity Authority (NEA)
 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (3)

Nepal embarked on a market led liberalized economy after the restoration of

democracy in 1990.
Since then a number of hydropower development policies have been formulated.
Eighth Five Year Plan (1992- 1997)
First plan by the democratic government formed after JanaAndolan of 1990.
Hydropower Development Policy 1992, Water Resources Act 1992, Electricity Act
1992 and Foreign Investment and One Window Policy 1992 were formulated to
attract foreign as well as domestic investment from private sectors
 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (4)

Tenth Five Year Plan Period (2002-2007)

Laid emphasis on construction of small, medium, large and reservoir type
hydropower projects
To promote integrated development of water resources involving private
and public sector with emphasis on rural electrification and control of
unauthorized leakage of electricity
 STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (5)
Ten Years Hydro Development Plans
10,000 MW in 10 Years
Reserving small hydropower
projects up to 50 MW for domestic
investors
Building cost effective projects
under Public-Private Partnership
(PPP)
Twenty Years Hydro Development Plans
25,000 MW in 25 Years and projects
divided into 5, 10, 15 and 20 years time
frames
Domestic consumption and export
oriented
Also emphasized Public-Private
Partnership (PPP)
COSTS AND CONCERNS ARISING FROM INSUFFICIENT ELECTRICITY
SUPPLY

Environment and Health Impacts

Deforestation and indoor air pollution

Economic Impacts
Cost of importing petroleum products

Implications for development

Missing out on revenue generation

Equity
Access to electricity, national grid among rural population
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL

1. Political constraints including the state reconstruction

2. Technical constraints
3. Financial constraints
4. Policy constraints
5. Climate change
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL

1. Political constraints
Lack of Political Will
Persistent political instability
Aspiration of local people
State Reconstruction
Case study from Cauvery River dispute in India
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL

Cauvery River dispute in India

The Cauvery originates in Karnataka and flows through Tamil Nadu before joining the
Bay of Bengal.
Both parties argued that they need the water for millions of farmers in the region.
Conflict has persisted for decades now often marred by violent protests.

Natural Resources and Revenue Sharing in the New Federal System of Nepal must
be thoroughly studied to avoid these kinds of situations
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL (2)

2. Technical Constraints
Technical constrains for the development of hydropower related to geological,
hydrological and topographical settings of the country.
Also, lack of manpower specialized in hydropower development and lack of long term
hydrological and sediment logical data are other technical constraints
Lack of adequate transmission lines and insufficient capacity of existing and planned
cross-border transmission lines
Absence of Storage-type Projects
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL

3. Financial Constraints
Hydropower projects are more capital intensive
Nepal doesnt have the necessary financial resources to develop the hydropower in its own and have
to be reliant upon investment form international financial institution and donor agencies
Pricing Issue of electricity
4. Policy Constraints
Issue of License and institutional constraints
Monopoly of NEA over transmission and distribution of power
Overlapping responsibilities among governmental ministries and departments
Inconsistency among various hydropower policies
 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL (3)

5. Climate Change
Water resources and hydropower ranks among the most vulnerable resources

Agrawala, et. al., 2003

 ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL (3)

5. Climate Change (Cont)

With only 1-2% of its potential currently developed, it will be quite some time before the
opportunities to expand hydropower energy are constrained by climate change in Nepal.
This does not mean that the existing facilities might not be seriously affected by Climate change. The
ways in which climate change can affect hydropower resources include:
Run off variability
Glacial retreat
Glacial Lake Outburst Flood (GLOF)
Sediment load and Evaporation losses
Financial constraints and disincentives
 FUTURE FOR HYDROPOWER DEVELOPMENT IN NEPAL

Alternatives
Transmission lines
Storage Type Projects
Policy
 ALTERNATIVES FOR INCREASING HYDROELECTRIC CAPACITY

1. Letting present trends continue

2. Developing micro-hydropower projects (100 MW)
3. Expand capacity using mid-range dams (1-100 MW)
4. Pursuing large-scale hydroelectric projects (>100 MW)

Pursue micro-hydropower projects as the current political and regulatory environment in Nepal is not
conducive to medium and large-scale project development***.
The economic, social and environmental benefits of pursuing micro-hydropower is immense but
ultimately large projects especially storage type projects should be pursued to fully capture Nepals
vast hydroelectric potential.
 STORAGE TYPE PROJECTS

Except 92 MW Kulekhani reservoir project, all of the hydropower projects in Nepal are of
run-of-river (ROR) type
Total electricity generation during dry season drops drastically resulting in nearly 14 hours of
load-shedding everyday
Storage type hydroelectric projects are must for Nepal
Increases the reliability of the electricity supply as ROR (Run-off-river) projects are
subjected to variability in river flows
Multipurpose: irrigation, water supply
Water available for generations even during times of drought
Though need more investment and have socio-economic impacts
 TRANSMISSION LINES

Inadequate transmission lines and its insufficient capacity

Short term: Important to curb the current load shedding rate by importing electricity
from India during dry season
Long term: New cross-border transmission lines for commercial viability of mega
projects and power sale to India
Many projects in limbo due to lack of transmission lines
Impractical environmental and forest guidelines also hindering construction of
transmission lines
 POLICY

Public Private Partnership best suited for Nepal

Lack of business environment for FDI (Foreign Direct Investment)
Government and private sector alone cannot undertake huge projects

Chilime Hydropower Project

Model project of Public-Private Partnership in hydropower development in Nepal
 POLICY (CONT..)

Chilime Hydropower Company Limited (CHPCL), a subsidiary company of NEA.

The majority of shares, i.e. 51% belong to the NEA, 14% has been distributed to the general
public, 10% to the locals of the project region and the remaining 25% is owned by the staffs
of the company
Located in Rasuwa district with installed capacity of 22.1 MW.
First project to mobilize local capital, local skill and local labor for electricity generation
Best suited for the country as it shares risks as well as profit between private and public
sector
General and local people can also become partners
ENVIRONMENT CONSIDERATIONS
Legal Requirement and environmental screening
Areas requiring Environment Impact Assessment(EIA)
Environment Impact assessment study
Screening
Environmental scoping
Preparation of terms of reference
Environmental monitoring
Environmental auditing
Preparation of EIA report
CONCLUSION AND RECOMMENDATION
In depth study becomes very essential to identify the real potential of
hydro power projects in Nepal
Need to develop hydo power projects according to plan program
Nepals internal financial resources need to be attract in Hydro power
sector
Major issues need to be address in time
Environment consideration need to be strongly applied in all aspects
Effective management team need to be develop for hydro power
development projects.
Public private Partnership modules need to be strongly applied in
medium scale hydro power projects.