Hydropower Project Development and Licensing Process In Nepal

River waters flowing downhill from a higher altitude provide potential energy or kinetic energy. This electricity energy and overall power is referred to as hydropower. Private companies in Nepal have been granted the right to generate hydropower. To obtain a license, the private sector must follow the steps outlined by the government.

1. What is the process of obtaining a hydropower license in Nepal?

The Department of Electricity Development (DOED) grants permission to survey, build, and operate dams and power plants specified in the license. The Department of Electricity Development (DOED) has outlined procedures for granting licenses, which include license conditions (terms) and operating rules.

Hydropower project classifications

1. Micro hydroelectric power project
2. A small hydroelectric project
3. Massive hydropower project
4. Government Initiative

1. Micro hydroelectric power project

A micro hydroelectric power project is one with a capacity of less than one megawatt (MW). The rural municipality and the local ward office have been granted monitoring rights under Section 11 of the Local Governance Act 2074 for the purpose of granting operational licenses. The Department of Electricity Development must grant permission for this.

Despite the grant of a license to the local government/stakeholder, no laws or policies are formulated at the local level. As a result, permission from the Department of Electricity Development is required for licensing purposes.

2. A small hydroelectric project

Hydropower projects ranging from 1 MW to 10 MW are classified as small hydropower projects. Small-scale hydropower is defined as hydropower installations with an installed capacity of less than 10 MW. The definition of small-scale hydropower varies by country and is made for administrative and legislative reasons, typically with the goal of prioritizing small-scale hydropower development. The idea of categorizing hydropower as small-scale versus large-scale has been critiqued since it does not appear to pertain to their environmental effects.

3. Massive hydropower project

Hydropower projects of 10 MW and above are classified as large hydropower projects.

Nepal’s hydropower licensing procedure.

I. Preliminary License (Survey License): A survey license is the initial license required for a hydropower development project. The applicant must illustrate that the proposed project is both financially viable and achievable. Preliminary permits ensure a committee’s priority to file a license application while it collects data and studies the feasibility of developing a proposed project at a specific site. Permits expire after two years, but the Department of Electricity Development (DOED) may extend them for an additional three years.

II. Installation Permit

Following the Preliminary License (Survey License), the applicant must obtain the (Installation License), which allows the project to be implemented. At this point in the process, the applicant must submit a Basic Environmental Plan outlining how it intends to address potential impacts identified in the EIA. The applicant must report on the implementation of the mitigation measures detailed in the Basic Environmental Plan in order to obtain a (Operating License). Even if an applicant receives project approval, the license can be annulled for a variety of reasons, including deception or misrepresentation of relevant data, serious risks to health or the environment, or a violation of relevant legal conditions.

III. Construction and operating permits are required.

The developer must apply for a separate construction and operating license for each installation before constructing power stations, transformer stations, and transmission lines that are not covered by a local area license as outlined above. It applies to all electrical installations required for hydropower stations that are larger than the size limits specified in Energy Act regulations. This licensing system’s primary goal is to ensure that electrical installations are built and operated to uniform standards. The construction of high-tension transmission lines and transformers has a significant environmental impact.

IV. Procedure for obtaining a preliminary license (survey license).

• Submission of an application to the Department of Electricity Development (DOED)
  An application must be submitted to the Department of Electricity in order to obtain a Preliminary License (DOED). The application must include the items listed below.
  • Project specifics.
  • The map clearly shows the key areas, as well as vital structures.
  • Water sources and the outcomes of water usage.
  • Water distribution areas and the number of people who benefit from them.
  • A description of the uses of water that are, if at all, used by others.
  • Other pertinent issues that must be listed.

• Site visit

Following the submission of the application, Department of Electricity Development (DOED) personnel will conduct a field visit. It gives a clear picture of the project and allows for potential mitigation. The interactions and participation of stakeholders, as well as the discourse of user disputes, during a site visit, highlight the importance of understanding the project area.

• Report Submission

The report must be submitted within 30 days of receiving the Survey license. The report should include the following information: The flow of the environment Objects: Keep biological diversity intact. Keep the landscape’s quality. Maintain adequate flow for other water users. Recipient, please help to reduce pollution. Maintain the level of groundwater. It should also include all management provisions.

• Notice to the Public

Following the submission of the report, the licensee should publish the report for the general public’s knowledge.

• Time for examination

After the notice is made public, the Department of Electricity Development (DOED) will conduct a review of the proposed hydropower development project and its potential consequences. Following that, anyone can file a response with the Department of Electricity within 35 days of receiving the notice.

• Letter of Authorization

Permission is granted once all procedures have been completed. The Department of Electricity Development (DOED) grants licenses to selected companies, granting them the right to construct and operate power installations and accessories as specified in the license. The license also specifies the terms and conditions of operation. This is then followed by supervision (DOED).

Many variables influence licensing procedures, the most important of that are project size and expected impact. All license applications must include a thorough description of the project’s environmental impact, among other things. An environmental impact assessment is frequently used for this (EIA).

• Department of Electricity Development (DOED).

The Department of Electricity Development (DOED) is a steering committee within the Ministry of Energy that is in charge of managing the nation’s water and energy resources. The licensing division of (DOED) is primarily in charge of processing license applications for the construction of power plants, dams, and other installations in our waterways, as well as major power lines and other energy installations that require permission under the Electricity Act 2049.

• Electricity Act 2049 (1992)

The Act was written in a way that adequately protected the interests of the state and the general public when it was passed in 1992. Pre-emption rights, limited-duration licenses, and the right of reversion to the state when a license expires were all included. When a license expires, the state takes over hydropower installations free of charge under the right of reversion. Pre-emption means that the central government has the right to enter into the purchase agreement in place of the purchaser, with the same rights and obligations as the latter. The Act regulates through various licensing schemes, including: The development and implementation of electrical installations, the physical market for energy trade, structure collaboration, price controls, and the quality of electricity supply, energy planning, and power supply risk assessment.

Nepal’s Hydropower Investment: Current Status, Challenges, and Potentials

The private sector is arguably the most critical and influential hydropower generator in the country.

Run-off river hydropower projects account for the vast majority of privately developed hydropower. The development and completion costs are higher.

I. Challenges to Government

• The absence of a single window system.
• Embezzlement
• Inadequate Incentive

II. Issues of technology

• A lack of locally appropriate equipment (for example, a lack of turbine manufacturers in Nepal).
• Workforce in Technology
• Problems with sand and gravel

III. Economic Challenges

• Credit Score
• Loan from a bank
• Dhito Patra Board of Directors
• Equity
• Stock market

IV. Nepal Electricity Authority (NEA) Nepal’s Electricity Issues

• Power Transmission Line
• Power Purchase Agreement and Related Matters

V. Problems and Issues in Society

• Unrealistic expectations
• Personal interest and Thugs in the areas

VI. Developers

• Inept IPPAN due to a lack of cohesion
• Inadequacy of Professionalism
• Immoral behavior

VII. Possibilities

• Consistent long term revenue when expectations are achieved (completion date, expenses and IRR)
• The positive impact in communities that comes from “doing it.”
• There is no significant risk until 10,000 MW, but the return will be lower.
• Prospects for Picking and Waterways are better.
• Other sectors have more attractive returns than hydropower under current government policy.
• The government may permit developers to continue operations after 30 years.
• The government may recognize that if energy is a “export good,” it should provide an incentive for hydropower.
• Developers become a real’ developer
• Bankers become more professional and supportive of their customers.
• The Electricity Corporation Commission will act as a facilitator with regulatory authority rather than as an additional “challenge.

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