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Economic impact of hydropower in Nepal

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This is a presentation explaining the economic impact on hydro power in Nepal and also includes present scenario of hydropower in Nepal

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Economic impact of hydropower in Nepal

  1. 1. Economic Impact of Hydropower in Nepal How hydropower is changing Nepalese Economy? By Group 6: • Anu Katwal • Esha Khokali • Sudeep Lama • Sushil Kumar Tripathi • Pratil Koju Tuesday, October 20, 2015 1
  2. 2. Introduction to the report • Why report? • Topic? • Objective of the report? Tuesday, October 20, 2015 2
  3. 3. Presentation of report • Introduction to Nepalese economy • Introduction to Hydropower • Hydropower and Nepalese economy • Opportunities/ threats • Economic impact of hydropower Tuesday, October 20, 2015 3
  4. 4. Nepalese Economy: Highlights • Small land locked country in South-East Asia, located in between two Asian giants • Heavily dependent on India • GDP(at basis price) stands at NRs. 690.3 billion • Per capita GDP USD 762 3.9 4.6 3.8 5.1 3 0 1 2 3 4 5 6 2010/11 2011/12 2012/13 2013/14 2014/15 GDP growth Source: Economic survey 2015 Tuesday, October 20, 2015 4
  5. 5. Nepalese Economy: Highlights conti… • Sector wise breakdown of the economic Agriculture 32% Industry 15% Service 53% CONTRIBUTION TO GDP Source: Asian Development Bank 4.5 4.6 1.1 2.9 1.9 4.3 3 2.7 6.2 2.6 3.4 5 5.7 6.3 3.9 0 1 2 3 4 5 6 7 2010/11 2011/12 2012/13 2013/14 2014/15 Growth of each sector Source: Economic survey 2015 Tuesday, October 20, 2015 5
  6. 6. Hydropower: Introduction • Use of water to generate electrical energy Tuesday, October 20, 2015 6
  7. 7. Introduction to the report Tuesday, October 20, 2015 7
  8. 8. Hydropower: Introduction conti… • Use of water to generate electrical energy • Types of Hydropower • RoR (Run of river) • Storage • Resources required • Theoretical resources • Technical resources • Economic resource Tuesday, October 20, 2015 8
  9. 9. Hydropower and Nepal • First hydropower is Pharping hydropower plant, 1911 AD • Inaugurated by His Majesty King Prithvi Bir Bikram Shah. • The plant was equipped with two turbine each of 250 KW. • A reservoir with 200ft. Diameter and 18ft. Depth with the capacity of 5,28,733 cum.ft. was built • The equipment of this plant was grant from the British Government and other expenditures were borne by Nepal Government. • The plant was constructed under the overall supervision and monitoring of General Padma Sumsher JBR. Tuesday, October 20, 2015 9
  10. 10. Hydropower and Nepal • Nepal is rich in hydro resources, with one of the highest per capital hydropower potential in the world. • Theoretical power/ Economically feasible potential is approximately 83,000MW/ 42,133MW • NEA has been responsible for generating and distributing electricity across the country • At present, the total hydroelectricity generation has reached 782.45MW which is 0.94% of total potential. • Independent Power Producers(IPPs) have been the ongoing institutional innovations in the power sector of Nepal. Tuesday, October 20, 2015 10
  11. 11. Hydropower and Nepal : Opportunities • Nepal possess 2.27% of world water resources (5% of total surface area of the country) • There are 6,000 rivers including rivulets and tributaries totaling about 45,000 km in length. • Theoretical potential of generating 83,000 MW of electricity of which only 42,133 MW is economically feasible. • In dry season power is expected to be insufficient to meet demand in the future. • Increase in manufacturing industries which leads to increase in hydropower • Export potential to India due to PTA. Tuesday, October 20, 2015 11
  12. 12. Hydropower and Nepal : Opportunities • As per of tis plan to electrify the entire country, the Government of Nepal plans to construct extensive transmission infrastructure. • Nepal is facing acute power shortage and huge opportunities exists in the hydropower sector for investors to meet this gap in demand Electricity demand and supply (MW) 2010/11 2011/12 2012/13 2013/14 2014/15 Production 697.85 705.57 746 746 782.45 High Demand 946.1 1026 1094 1200.98 1291.1 Demand supply gap 248.25 320.43 348 454.98 508.65 Unmet demand of electricity Source: Ministry of Energy Tuesday, October 20, 2015 12
  13. 13. Hydropower and Nepal : Opportunities Source: Ministry of Energy 0 200 400 600 800 1000 1200 1400 2010/11 2011/12 2012/13 2013/14 2014/15 Electricity: Production, demand and gap Production High Demand Demand supply gap Tuesday, October 20, 2015 13
  14. 14. Hydropower and Nepal: Threats • Problems of labor union • High demand of local peoples • Our capital market is not well established, so it is quite difficult to raise fund from capital market for mega projects. • Unstable government. • Unavailability of technical manpower and machineries . Tuesday, October 20, 2015 14
  15. 15. Hydro Development Policy, 2001 • To generate electricity at low cost. • To render support to the development of rural economy by extending the rural electrification. • To develop hydropower as an exportable commodity • Implementation of hydropower projects based on the concept of Build, Operate, Own and Transfer (BOOT) • Non- tourist visa and work permit shall be provided to the investor of a hydropower projects. Tuesday, October 20, 2015 15
  16. 16. Hydro Development Policy, 2001 • VAT is not levied on the electricity tariff, VAT shall not be imposed on the industrial machineries, equipment and spare parts imported, after obtaining permission, by a project so as to use them in the construction of hydropower project • Only one percent customs duty shall be imposed on the devices, equipment, machineries and spare parts related therewith to be imported with permission by the project during the construction phase. Tuesday, October 20, 2015 16
  17. 17. Economic Impact of Hydropower Hydropower Projects Economy Construction industries Industries sector Government revenue and infrastructure development Bank and financial institution Employment Capital markets Tuesday, October 20, 2015 17
  18. 18. Economic Impact of Hydropower conti… • Construction industries • First sector to be affected by hydropower • Construction of dams, tunnel, roads, power plant etc • Av cost NRs. 1 billion for 7MW power plant • Plants of 1000s MW are in construction Tuesday, October 20, 2015 18
  19. 19. Economic Impact of Hydropower conti… • Construction industries 6% 94% GDP contribution Construction industries 0 10000 20000 30000 40000 50000 60000 70000 80000 2010/11 20111/12 2012/13 2013/14 2014/15 Construction with compare to GDP Construction GDP (at basis price) Source: Economic survey 2015 Tuesday, October 20, 2015 19
  20. 20. Economic Impact of Hydropower conti… • Employment • Two way effect • Direct employment power plant construction and operation (lasts up to 100 yrs.) • employment by increasing consumption and income of people Direct effect Indirect effect Employment Tuesday, October 20, 2015 20
  21. 21. Economic Impact of Hydropower conti… Economic growth Unemployment rate Tuesday, October 20, 2015 21
  22. 22. Economic Impact of Hydropower conti… • Industrial sector • Provide cheap electricity for running heavy machinery • As compare to hydro electricity, other energy is far more expensive • Helps to avoid the effect of Load shedding • The productivity loss of whopping NRs. 59 Billion in 2008 • Encourage entrepreneur • Direct impact on cement and iron rod industries Tuesday, October 20, 2015 22
  23. 23. Economic Impact of Hydropower conti… • Industrial sector 0 1 2 3 4 5 6 7 2010/11 2011/12 2012/13 2013/14 2014/15* Trend of Industrial growth and GDP growth Real GDP (in basis price) Industry sector Tuesday, October 20, 2015 23
  24. 24. Economic Impact of Hydropower conti… • Capital markets Public issue Strong and diversified capital market Tuesday, October 20, 2015 24
  25. 25. Economic Impact of Hydropower conti… • Capital markets Hydropower Companies listed in NEPSE Market capitalization (in Rs) Arun Valley Hydropower Development Co. Ltd. 2,189,880,264 Butwal Power Company Limited 10,711,306,335 Chilime Hydropower Company Limited 40,475,635,200 National Hydro Power Company Limited 1,676,075,302 Ridi Hydropower Development Company Ltd. 1,452,000,000 Sanima Mai Hydropower Ltd. 8,418,900,000 TOTAL 64,923,797,101 Source: Nepal Stock exchange (2015-09-17) • Barun hydropower • Api power company • Upper tamakoshi • HIDCL Tuesday, October 20, 2015 25
  26. 26. Economic Impact of Hydropower conti… • Capital markets Public issue Strong and diversified capital market Tuesday, October 20, 2015 26
  27. 27. Economic Impact of Hydropower conti… • Capital markets Fiscal Year 2014/15 Total Market Capitalization 100,403.48 Market Cap of Hydro Companies 6,921.18 Contribution of hydro sector to NEPSE 6.89 % Hydropower 7% others 93% Market capitalization Tuesday, October 20, 2015 27
  28. 28. Economic Impact of Hydropower conti… • Government revenue and infrastructure development • Along the project different infrastructure are built • Roads, bridge, dams, transmission lines etc. • Government revenue increases through the tax and royalty received from hydropower plants • Many hydropower are government owned Tuesday, October 20, 2015 28
  29. 29. Economic Impact of Hydropower conti… • Bank and Financial Institution • Mostly hydropower capital structure is 70:30 • Credit flow in BFIs • Loans in these sector is relatively less risky • Can get the benefit of refinancing service(4%) provided by NRB Tuesday, October 20, 2015 29
  30. 30. Economic Impact of Hydropower conti… Other impacts Significantly decrease import of electricity from India Construction of dam can provide good irrigation facilities to locale Increase in the degree of electrification in the nation Tuesday, October 20, 2015 30
  31. 31. Conclusion Tuesday, October 20, 2015 31
  32. 32. • Economically poor country with GDP only 690.3 billion this FY 2014/15 • Nepal has huge water resources with one of the highest per capital hydropower potential • The hydropower sector is growing • Economic impact of Hydropower • Construction industries • Employment • Industry sector • Capital market • Government revenue and infrastructure development • BFIs Tuesday, October 20, 2015 32
  33. 33. Have a gorgeous day!

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