Nepal – Removing Barriers to Hydro power Development – WB


Funding Agency: Detailed Design and Preparation of Tender Documents for Upper-Tama Koshi Hydroelectric Project
Client: Nepal Electricity Authority, Nepal
Date:  Nov 2008 – Dec 2009

The Government of Nepal is interested in assessing the factors that have constrained the development of the country’s hydropower potential and wanted to understand the longer-term strategic options and attendant risks of developing this important national natural resource.

As a consequence, the World Bank had commissioned this study and had appointed the Consultant to carry out an assessment of the barriers to hydropower development in Nepal and to propose recommendations to overcome these barriers.

This study forms part of a major initiative by the Government of Nepal (GoN) and the WB (together with other funding agencies) that was designed to provide for the long-term energy requirements of the country and thereby facilitate the relief of poverty in Nepal.

Overall Services provided by firm:

Analyzed the reasons for the apparent high cost of power from hydropower development to date and considered ways of reducing the cost structure for future projects; considered also the impact of the cost of transmission and whether it was appropriate to group plants for infrastructure optimisation.

Reviewed the domestic tariff implications and other risks and benefits of various funding options (public/private/multi-lateral/bi-lateral) for hydropower projects

Reviewed the available data on proposed large hydropower projects in order to determine their relative competitiveness domestically and for export to India, and their chances to be developed under a non-subsidized or private finance environment.

Considered whether environmental and social requirements were clear and whether environmental costs and benefits were generally well identified in project documentation.

Reviewed and understood the framework for the existing agreements between India and Nepal on financing the development of hydropower, considered any constraints of this framework and actions necessary.

Reviewed the international experience of hydropower development, including the processes for transparent allocation of projects to private developers and consider any implications for policy and practice in this respect in Nepal.

Considered the current system of licensing for hydropower generation, including the status of licenses already issued, and

assess policy tools for encouraging developers either to develop projects or surrender the licenses for same.

Prepared a report on the findings of the above-described tasks, with recommendations to reform policy or practice in hydropower with the goal of reducing the barriers to hydropower development in Nepal.