Nepal has significant hydropower potential but has struggled to develop it due to political, technical, financial, and policy issues. While initial estimates placed Nepal's potential at 83,000 MW, more recent studies estimate 53,000 MW of technically and economically feasible potential. Currently, Nepal has only generated 733 MW of its potential. Storage-type projects and cross-border transmission lines are needed to increase reliability. Micro-hydropower, public-private partnerships, and addressing climate change impacts could help utilization. Environmental assessments must also be conducted for sustainable hydropower development.

1. HYDROPOWER DEVELOPMENT IN NEPAL :
MAJOR ISSUES, ENVIRONMENT CONSIDERATION
AND WAYS FORWARD
DR. MURALI GOPAL RANJITKAR (DIRECTOR, MTEEC)
MR. SAROJ UPADHYAY (ENV. PROGRAM MANAGER, MTEEC)

2. 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

3. 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

4. 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.

5. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (1)
 Presently, the total installed capacity of Nepal’s power plants is roughly
787 MW including thermal and solar plants (NEA, 2015).
Source Capacity (KW)
Total Small Hydro (NEA)-Isolated 4,536
Total Hydro (NEA) 477,930
Total Hydro (IPP) 255,647
Total Hydro (Nepal) 733,577
TotalThermal (NEA) 53,410
TotalThermal (NEA) 100
Total Installed Capacity (NEA and IPP) 787,087

6. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (1)
 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
 Peak demand for 2015 was estimated as 1291.80 MW
 Shortage of production during the dry season results in 14 hours’ of
load-shedding everyday in Kathmandu and other major cities in
Nepal

7. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (2)
• Nepal lag well behind other South Asian compatriots.

8. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (3)
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

9. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (4)
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)

10. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (5)
 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 FiveYear 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

11. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (6)
Tenth FiveYear 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

12. STATUS OF HYDROPOWER DEVELOPMENT IN NEPAL (7)
TenYears Hydro Development Plans
 10,000 MW in 10Years
 Reserving small hydropower
projects up to 50 MW for domestic
investors
 Building cost effective projects
under Public-Private Partnership
(PPP)
TwentyYears Hydro Development Plans
 25,000 MW in 25Years and projects
divided into 5, 10, 15 and 20 years time
frames
 Domestic consumption and export
oriented
 Also emphasized Public-Private
Partnership (PPP)

13. 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

14. 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

15. 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

16. ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL
Cauvery River dispute in India
 The Cauvery originates in Karnataka and flows throughTamil 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

17. ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL
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

18. ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL
3. Financial Constraints
 Hydropower projects are more capital intensive
 Nepal doesn’t 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

19. ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL
Agrawala, et. al., 2003
5. Climate Change
• Water resources and hydropower ranks among the most vulnerable resources

20. ISSUES IN HYDROPOWER DEVELOPMENT IN NEPAL
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

21. FUTURE FOR HYDROPOWER DEVELOPMENT IN NEPAL
1. Alternatives
2. Transmission lines
3. StorageType Projects
4. Policy
5. Environmental Considerations

22. 1. 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 Nepal’s vast hydroelectric potential.

23. 2. STORAGETYPE 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

24. 3. 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

25. 4. 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
Case Study:
 Chilime Hydropower Project
 Model project of Public-Private Partnership in hydropower development in Nepal

26. 4. 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

27. 5. 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

28. CONCLUSION AND RECOMMENDATION
 In depth study becomes very essential to identify the real potential of
hydro power projects in Nepal
 Need to develop hydro power projects according to plan program
 Nepal’s internal financial resources need to be attract in Hydro power
sector
 Major issues need to be address in time

29. CONCLUSION AND RECOMMENDATION
 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

30.  THANKYOU