The document outlines the role of the Alternative Energy Promotion Center (AEPC) in Nepal's new federal structure and proposes activities and programs to promote renewable energy. At the federal level, AEPC would focus on national planning, policymaking, resource mobilization and international engagement. Provincial governments would implement province-level projects and local governments would oversee local projects and plans. AEPC would provide technical support, guidelines, training and oversight across all levels to help coordinate renewable energy development under the new structure. The document also discusses establishing the Clean Renewable Energy Fund (CREF) to efficiently channel subsidies and credit for renewable energy projects.

1. Alternative Energy Promotion Center
in
Federal Structure and CREF
Ram Prasad Dhital
Executive Director
Alternative Energy Promotion Centre

2. Outline of the Presentation
• Relevance of RE and RE Functions in the Constitution
(Local, State and Federal)
• Potential RE Activities/Programs in New Structure
• Common Entities Amongst Different Levels of New Structure
• Scope of AEPC
• Proposed Activities and Programs of AEPC in Federal Structure
• AEPC-CREF: Safeguarding Funds and Guaranteeing Efficient
Mobilization
• Scope- Short & Long Term
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3. Renewable Energy in The Constitution
“The state shall pursue a policy of developing and producing
renewable energy, ensuring cheap, easily available and dependable
supply of energy, and making an appropriate use of it to meet the basic
needs of the citizens.”
- 51. Policies of the State (g)(3) Policy Regarding the Conservation, Management and Use of Natural Resources, The
Constitution of Nepal
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4. Local Level
SN Matters Relevance
3. Operation of F.M. Off-Grid Electricity Supply,
Productive End Uses
4. Local taxes (wealth tax, house rent tax, land and building registration
fee, motor vehicle tax), service charge, fee, tourism fee, advertisement
tax, business tax, land tax (land revenue), penalty, entertainment tax, land
revenue collection
Revenue from RE Projects and
Incentives for Green Programs
5. Management of the Local services Energy Services
7. Local level development plans and projects Municipal Climate and Energy
Plan (MCEP), Ward Climate
and Energy Plan (WCEP),
And RE Projects
9. Basic health and sanitation Reduction of Indoor Air
Pollution, Water Supply
Note: The above is the extract from the Constitution of Nepal 2015. Some of the contents which have low relevance to RE Sector and AEPC has been removed intentionally.
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5. Local Level
SN Matters Relevance
10. Local market management, environment protection and bio-
diversity
Fuel-Switching (Reduce
Dependence of Traditional
Biomass)
11. Local roads, rural roads, agro-roads, irrigation Lift Irrigation
15. Agriculture and animal husbandry, agro-products management, animal
health, cooperatives
Productive End-Uses
19. Water supply, small hydropower projects, alternative energy Overall Support
20. Disaster management Food Security- Productive End
Uses (Food Storage, Chiller,
etc.)
Note: The above is the extract from the Constitution of Nepal 2015. Some of the contents which have low relevance to RE Sector and AEPC has been removed intentionally.
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6. State Level
SN Matters Relevance
2. Operation of banks and financial institutions in accordance with the
policies of Nepal Rastra Bank, cooperative institutions, foreign grants and
assistance with the consent of the Centre
CREF, Grant/Fund/Credit
Mobilization, Technical
Assistance
4. House and land registration fee, motor vehicle tax, entertainment tax,
advertisement tax, tourism, agro-income tax, service charge, fee,
penalty
Environment Taxes, Green
Energy Tax, Tax Incentives
7. State level electricity, irrigation and water supply services, navigation Collaboration, Preparation,
Implementation
8. State universities, higher education, libraries, museums Knowledge Sharing,
Technology Transfer
19. Use of forests and waters and management of environment within the
wildlife State
Provincial & Regional Energy
and Climate
Note: The above is the extract from the Constitution of Nepal 2015. Some of the contents which have low relevance to RE Sector and AEPC has been removed intentionally.
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7. Federal (central) Level
SN Matters Relevance
5. Central planning, central bank, finance policies, monetary and banking,
monetary policies, foreign grants, aid and loans
Overall RE Development
Planning
9. Customs, excise-duty, value-added tax, corporate income tax, individual,
income tax, remuneration tax, passport fee, visa fee, tourism fee, service
charge and fee, penalty
Incentive/Tax Exemption/
Green Credit/Subsidy
Formulation
11. Policies relating to conservation and multiple uses of water resources Planning, Collaboration,
Strategies, Standards, Project
and Process
14. Central level large electricity, irrigation and other projects Collaboration, Technical
Assistance, Technical Standard
and Guideline
27. National and international environment management, national parks,
wildlife reserves and wetlands, national forest policies, carbon services
Local and Global Initiatives and
Targets, National Environment
and Climate Adaptation and
Mitigation
29. Land use policies, human settlement development policies, tourism
policies, environment adaptation
Adaptation Projects, Strategies,
Planning and Policy Support7

8. Potential RE Activities/Programs in New
Structure
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9. Federal
• Central Planning, Policy, Targets related to RE and Multiple Uses of
Water, national level resource mapping and database management
• Priority Settings, Strategies in meeting National and International
Commitments
• National Climate and Energy Plan (NCEP)
• Quality Assurance (Technical and Process Standards, Guidelines,
Testing, Measurement)
• Short-term and Long term planning for Integrated provincial and
local level planning with institutional and procedural structure
• Resource mobilization; engagement with bilateral and multilateral
DPs and financing agencies (e.g., GCF)
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10. Federal
• Climate Change Adaptation and Mitigation and Carbon Services: developing and executing the
carbon/CDM projects
• Technical Assistance for renewable energy project development: capacity building of provincial
and local level governments
• Centre of Excellence- (International/National knowledge sharing, technology transfer and adaptation)
• National level cost estimate and price recommendation
• Piloting/Action Research/ Demonstration Projects
• Monitoring and evaluation (of project activities, outcomes and impact)
• Recommendations for Tax Exemption and Custom Clearance of RE Goods & Services
• Recommendations on RE Funds requirement through any or combination of:
• Federal Consolidated Fund
• Equalization Grants
• Conditional Grants
• Provincial Consolidated Fund
• Internal Loans
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11. Provincial Level
• Establish Province level energy target, program, budgeting strategies
and implementation of new initiatives
• Provincial Climate and Energy Plan (PCEP) based on Best Available
Technology
• Develop program and incentive mechanism to establish province level
service center and training centers for Local Level entities and
entrepreneurs
• Coordinate with Provincial level agencies to support
intra-development projects such as drinking water, irrigation, MSMEs,
health and education services etc.
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12. Provincial Level
• Cost Estimate for Regional Grid Connected/Standalone renewable
energy based projects
• Technical Design, Cost Estimate and Procurement of Province Level
Project
• Provincial cost estimate and price recommendation for goods and
services
• Monitoring, Evaluation and Validation of Project (Process &
Equipment)
• Support Local Level Projects
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13. Local Level
• Municipal/Village Climate and Energy Plan (M/VCEP) and Ward Climate
and Energy Plan (WCEP) based on Best Available Technology
• Approval of Projects and Budgeting
• Local level estimate and procurement
• Local Level staffing and implementation of local level projects
• Safeguarding, Monitoring and Auditing of local level projects
• Planning and coordination of external and internal loans and account
contribution from revenue
• Promotion of Local level public/private partnerships
• Supervision and monitoring
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14. Task of AEPC in the New Structure
To Support
RE Activities & Programs
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15. Task of AEPC in the New Structure
• RE Policy, and Policies related to Subsidy, Grant, Earmarked Fund,
Credit, etc., and channel through CREF
• Planning Guidelines
• Capacity Building of Provincial & Local Bodies for Planning, Resource
Mobilization, Project Identification, Implementation, Monitoring &
Supervision
• Technical Standards & Guidelines
• Testing, Measurement, Approval and Certification of Products &
Services
• Recommendations for duties and tax exemption
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16. Task of AEPC in the New Structure
• Technical Assistance for RE Project Development
(NEA/ DoED/ Provincial and Municipal Governments)
• Donor/International Engagement related to RE & Climate
• Research, Analysis, Collaboration, Forecasting, Projections &
Publication
• Recommendations on technology, services, costing, QA
• Demonstration Projects and New Initiatives
• A regional Centre of Excellence
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17. AEPC-CREF
Safeguarding Funds and Guarantee of Efficient
Mobilization
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18. CREF: In NRREP
• Initial Idea: CREF as a separate entity (AEPC would be under RE Act)
• NRREP Program Document: CREF as one of the component of NRREP
will act as financial intermediary mechanism
• Overall Design of CREF: a basket fund (approx 110 million NPR) will be
available for CREF and this fund will be mobilized in the form of
subsidy and soft loan (with low interest rate as seed fund will help
partner banks to mobilize the fund on lower interest rate)
• CREF: Will be on arm length of AEPC, IC (Approve subsidy and
investment decision), Secretariat: Coordinate with HB and AEPC,
capacity building support for FIs
• HB: Support CREF Secretariat for approving subsidy
• PB: Mobilize Credit
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19. CREF: In NRREP
• CREF is mandated by Government of Nepal for Channeling Subsidy &
Credit
• CREF offers an Rural RE Specific Fund with reduced Fiduciary Risks with
multiple layers of safeguarding of funds
• Subsidy Payments done by Handling Bank and Lending by Private Banks
• Major role in Coordination between AEPC and Banks, and between Banks
and Beneficiaries, MFIs and LFIs
• Capacity Building of Local Banks and Local MFIs/LFIs
• Provides Insurance Coverage and Access to Rural Financial Services
• Significant Contributor towards RE Policy, Knowledge Management and
Service delivery to the Rural Community
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20. Why CREF Could not function efficiently and effectively ?
Areas Implications How it can be improved further ?
Committed Fund in CREF
basket (110 MUSD vs 30
MUSD from GoN only)
Smooth operation of HB
Credit Mobilization from PB (low
interest rates ??)
A Significant amount of fund should be committed for
CREF from DPs and GoN (for subsidy and Credit)
Investment Committee
Role and Structure
IC acted only for approving subsidy
Investment decisions were not made
Meeting could not organize frequently
New structure of IC (including more private and civil
society) can facilitate for efficient functioning of IC
Limited no of banks and
their outreach
RE sector’s banking limited to only 7
BFIs
New RE Subsidy delivery mechanism opens all class A
and B banks, no of partner banks should be increased
and even has to extend upto class D bank
Fund Freezing and stop of
NRREP activities at AEPC
Severe impact on field level activities
and timely project approval
Compliance issues should be solved on time
A clear
Dedicated HR team at
CREF
CREF Secretariat was under staffing
CREF Head is vacant most of the time
A dedicated CREF team is required
Lack of Dedicated credit
policy/mechanism
Stakeholders are not fully aware Credit
policy and delivery procedures
A dedicated credit policy/mechanism should be
approved and make aware to all stakeholders
Operation of CREF
Secretariat
Issues of logistics
Data management
Sufficient resource should be allocated for CREF
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21. CREF in Transition Phase (Beyond July 2017)
• CREF Contribution for Federalization through
• Localization of Fund Availability and Accessibility for Rural Energy
• Identification of Need and Provide Framework for Accessing Fund through
• Federal Consolidated Fund
• Equalization Grants
• Conditional Grants
• Provincial Consolidated Fund
• Internal Loans
• Strategies to Reduce Subsidy and Increase Loan/Credit/Incentive through
tailored Market Design Instrument for Provincial and Local Level
• Support Provincial Level and Local Level Law related to Budgeting to
provide Equitable Access to Energy through Strategic Local level policy
intervention for distribution of Subsidy during and after Transitory Phase
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22. Different Options for CREF
• Recent GoN Decision and impact of federal structure: reduce central level
institution and resources and gradually shift towards provincial and local
level
• RE act is on hold since three years because of new federal model
• Many central level institutions under Act, development board, etc will not
be in center, GoN has already sent circular to all line ministries
• Short Term: Continue existing structure of CREF (with improved model till
transition phase)
• Medium Term: Once federal structure and role of three level federal
structure clear (Continue lobby for CREF as dedicated institution and lobby
for separate RE Act)
• Long Term: Separate RE Umbrella Act. AEPC and CREF will be under the
same umbrella RE Act but has separate board for functioning AEPC and
CREF
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23. Scope of AEPC
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24. Short Term
• Capacity Development-
• Strengthening Institution, Organization, Human Resources
• Adaptation, Planning, Budgeting, Targets and Decision Making
• Orientation on RE Technology, Services, Challenges
• Preliminary Trainings- Technical, Legal, Management, Audit
• Readiness for Accountability, Transparency and Responsiveness
• Regional Energy Hubs for Transitory Support-
• Support Public Administration for Managing State level Affairs
• Support strategies to develop Resource Management, Monitoring and Correcting Measures
• Support Adjustment of public servants to deliver the services without disrupting what it has
been doing now, in accordance with Article 302
• Preparation of Action Plan for replacing/making new adjustments in existing institutional
arrangements
• Development of Mechanisms to address conflicts, competing and shared interest on power
and resources
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25. Long Term
• Broader Strategic Approach for Reframing/ Restructuring and Strengthening Capacity of Local and
Provincial Level to ensure continuity and expansion of RE Related Policies, Planning,
Implementation and Services Received by the Locals
• Strategic Communication and Collaboration with National Natural Resource and Fiscal
Commission
• Channel for Easy-Access to RE Fund through established institutional arrangement of CREF under
RE umbrella act
• Regional Partnership for Local and International Knowledge and Technology Transfer through
establishment of Centre of Excellence
• And, Full Realization of the function as mentioned in “Proposed Task of AEPC in the New
Structure”
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26. Expected Roles of AEPC and CREF
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27. Thank You
For further communication:
Ram Prasad Dhital
Executive Director
Alternative Energy Promotion Centre
Khumaltar, Lalitpur
P.O. Box 14364, Kathmandu, Nepal
Tel. No.: +977-1-5539390, 5539237 Extn. 235
E-mail: ram.dhital@aepc.gov.np
www.aepc.gov.np
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