Investment climate in hydropower worsening

The investment climate in hydropower has worsened in the last one year, according to hydropower specialist.
"The investment environment in 2011 seems to be like it used to be in early 1990s," said Immediate Past President of Independent Power Producers Association, Nepal (IPPAN) Dr Sandip Shah.
The country experienced better investment environment in late 1990s and even after 2006 Constituent Assembly till 2008, the environment was better," he said, hoping that next year, the government will create better investment environment for the hydropower.
He pointed out legal stability, political and bureaucratic will, security, effective 'Single-window', market, cross-border transmission lines and finance - including CDM as absolute conditions for hydropower projects development. "For all this to happen, political stability is a must," Shah, one of the key persons to lobby for foreign investments in Nepal’s hydropower sector, said.
However, he stressed three key drivers -- Power Purchase Agreement (PPA), Power Development Act (PDA) and transmission lines -- for the better investment environment for hydropower development. "Cross-border transmission lines to India is a key to electricity market access," Shah added.
Reducing electricity costs, attracting private investment, maximising public revenues, creating energy security in an environmentally and socially sustainable manner and optimising power plants with possibilities of exports should be the objectives of Nepal’s Power-sector reform programme, according to him, as he has been a strong advocate of private investments in the hydropower sector in Nepal and for promotion of project finance and energy markets.
Nepal has a huge potential of hydropower development but the country is reeling under severe electricity crisis.
"There is a real danger of the whole economy grinding to a halt unless and until some emergency measures are carried out in the power sector to expedite the power projects," according to the IPPAN. "The government has taken some encouraging measures to end electricity crisis but they may not be enough given the gravity of the problem.”