Call to raise investment in hydropower

Calling to raise investment in the hydropower sector, the two-day Power Summit 2019 concluded here today.
The seventh edition of the Power Summit – organised by the Independent Power Producers’ Association-Nepal (IPPAN) with the theme of ‘Powering the Asian Century’ – witnessed call from the government to raise investment in the hydropower sector and commitment from domestic and foreign investors to unleash hydropower potential.
The participants – on the occasion – also asked the government facilitates investment through friendly policies.
Addressing the summit, finance minister Dr Yuba Raj Khatiwada said that it is the appropriate time for investors to invest in Nepal’s hydropower sector. Citing that development works in Nepal are being carried in line with the Sustainable Development Goals (SDGs), he also urged investors to invest in renewable energy and reap the benefits. “The government wholeheartedly welcomes investors in the hydropower and other sectors and assures that investors will be facilitated by all means.”
Amid rumours that Nepal does not have enough market for the surplus energy that the country will produce in the near future, Khatiwada said that the government will make sure that the generated power will not have any problem to find market. “The domestic consumption of energy will be increased through different means including electric vehicles that the government is promoting, and encouraging people to increase electricity consumption in household activities.”
“The government is also focusing on external market for surplus energy to export,” Khatiwada added.
Likewise, transport minister Basanta Kumar Nembang – addressing the closing ceremony – said that bilateral and multilateral coordination in the power sector in the South Asian region is crucial to assure necessary market for energy produced in Nepal. “Nepal aims to produce 10,000 megawatts of electricity in the future, and the government is seeking a regional market for power export through political and government-to-government dialogues,” he said.
During the closing ceremony, Indian government-owned NHPC Ltd and Hydroelectricity and Investment Company Ltd (HIDCL) of Nepal reached two different agreements on investing in the power sector, according to the IPPAN. Likewise, Indian Energy Ltd and IPPAN also shared a memorandum of understanding (MoU) to invest in the hydropower sector of Nepal. On the occasion, various other agreements were inked between power producers of Nepal and from India, Bangladesh and Bhutan.

Utilisation of resources must to make electricity affordable

Minister for Energy, Water Resources and Irrigation Barshaman Pun said that the utilisation of available resources is a must to make electricity affordable.
Addressing Power Summit 2019 in Kathmandu today, he said that resources available in the region must be utilised to optimise power systems and reduce electricity tariff due to the varying supply and demand pattern of the individual countries in the South Asian region. He also stressed the need to upgrade bilateral cooperation to sub-regional cooperation in the form of Bangladesh-Bhutan-India-Nepal (BBIN). “We shall now be working together to establish an inter-regional electricity grid interconnection,” he said, adding that energy development is crucial for Nepal’s economic development. “Nepal government is committed to attract foreign investment in the energy sector.”
Nepal will generate 5000 megawatt electricity once some of the ongoing hydropower projects are completed in couple of years. Meanwhile, Nepal's current electricity demand is only 1320 megawatt and the rest could be exported through the regional grid. Pun said that Nepal's major electricity markets are India and Bangladesh.
Around 70 experts including representatives from governmental and private sector, from India, China, Bangladesh, Bhutan and Nepal are making their presentations during the two-day event – organised by Independent Power Producers’ Association, Nepal (IPPAN) – with the theme ‘Powering the Asian Century’. The summit is also expected to create the basis for formal and informal dialogues for propelling Nepal toward becoming an eminent producer of energy for South Asian region.
Speaking on the occasion IPPAN president Shailendra Guragain said that the future that power producers are seeking is about abundant, reliable, clean and affordable power that is traded across boundaries to help boost the local economies and the quality of life of the people.
Likewise, addressing the Power Summit, minister of State for Power, Energy and Mineral Resources of Bangladesh Nasrul Hamid said that South Asia region was now looking for affordability after ensuring availability and reliability of energy.
He said that tariffs, terms and conditions of Power Purchase Agreement (PPA) with GMR has been finalised for the import of 500 MW power to Bangladesh from 900 MW Upper Karnali Hydropower project.
Similarly, chief executive officer of GMR Energy S N Barde, on the occasion, said that his company faced hurdles in terms of regulations and other issues regarding transmission while signing the first trilateral agreement. “But they were eventually resolved,” he added.
Hydroelectricity Investment and Development Company Ltd (HIDCL), Nepal and NHPC Ltd, India, and Indian Energy Exchange and IPPAN signed separate memorandums of understanding (MoU) for development of energy sector, on the sidelines of the summit.
The event – that will close tomorrow – will feature panel discussions on regional trade and connectivity, electricity markets, necessary regulations, financing, attracting investments and sustainable practices, according to IPPAN.

IPPAN to organise 7th Power Summit in November

Independent Power Producers' Association Nepal (IPPAN) is organising the 7th Power Summit 2019 in Kathmandu on November 21-22.
The association – issuing a press note – said that the summit will focus on cross border electricity trading, energy markets, regional electricity market regulation, financing, inclusive and sustainable development of power projects, governing and facilitating energy projects, and attracting investments.
It will also feature project showcase to highlight current activities in the sector within and outside the nation, the press note reads, adding that the two-day summit is being organised under the patronage of Ministry of Energy, Water Resources and Irrigation with a tag-line 'Powering the Asian Century'. “Nepal Electricity Authority (NEA) is an associate partner for the event.”
Likewise, Nepal Planning Commission (NPC) and Hydroelectric Investment and Development Company (HIDCL) are also partnering with IPPAN for the event. “The summit will focus on taking stock of the present situation and to look ahead to future possibilities of export and regional integration,” the IPPAN press note reads. “The summit will witness brainstorming on cross-border electricity trading, energy markets, regional electricity market regulation, financing, inclusive and sustainable development of power projects, governing and facilitating energy projects, attracting investments.”
More than 750 participants from India, China, Bhutan, Norway, Korea, Canada, the Netherlands, the United Kingdom, the USA, and Japan are expected to take part in the event, which will be inaugurated by Prime Minister KP Sharma Oli.
Besides the technical session, the summit will also facilitate business-to-business (B2B) meeting allowing different parties to engage in business promotion.
The summit will be instrumental in developing appropriate and far reaching policies for the development of energy sector, president of IPPAN Shailendra Guragain claimed, adding that the summit with the theme of ‘Powering the Asian Century’, the association will be signing 18 agreements – including on power trade, environment and social best practices, and women in energy – with different government and private firms during the summit.
Saying that neighbouring countries are important to regional energy connectivity and export, Guragain said that the summit is being organised in association with the Embassy of India in Kathmandu and Embassy of Bangladesh in Kathmandu. Likewise, minister of Water Resources of India Gajendra Singh Shekhawat, and minister of State for Power, Energy and Mineral Resources of Bangladesh Nasrul Hamid will be participating in the summit.

HIDCL, Power China to build 762-MW Tamor hydropower project

The government has awarded the 762-megawatt (MW) Tamor hydropower project to a joint venture between a Nepali and Chinese firm.
Hydroelectricity Investment and Development Company Ltd (HIDCL) of Nepal and state-owned Power China Corporation (PCC) will construct the reservoir project on government-to-government (G2G) basis, according to a press note issued by the Ministry of Energy, Water Resources and Irrigation (MoEWRI).
Construction of the Tamor project – that will cover Panchthar, Taplejung, Terhathum and Sankhuwasabha districts – is expected to start from next fiscal and be completed by 2025, it reads, adding that the Investment Board Nepal (IBN) and Ministry of Energy, Water Resources and Irrigation (MoEWRI) – during Chinese President Xi Jinping’s two-day state visit to Nepal – awarded the contract to HIDCL-Power China to build the project under the public-private-partnership (PPP) model.
After receiving the letter from the board, Power China signed a memorandum of understanding (MoU) on project implementation agreement with HIDCL. The chief executive officer of HIDCL Chhabi Raj Pokharel and vice chairman of Power China Pan Deng Yu today signed the MoU on behalf of their respective organisations.
According to minister for Energy, Water Resources and Irrigation Barsha Man Pun, the government has also signed an agreement with Power China to build the 156-MW Madi multipurpose hydropower project – located in Rolpa district – that is estimated to cost around $39 million, according to an initial study.
The HIDCL and Power China had jointly submitted a project development proposal at the investment board to build both the projects with a share structure of 46:54 per cent, with the Nepali firm investing 46 per cent and Power China investing 54 per cent of the project cost, for the Tamor hydel project. “Likewise, in Madi multipurpose hydropower project, HIDCL will manage 26 per cent and Power China will manage 74 per cent of the total investment.”
On August 1, the board meeting chaired by Prime Minister KP Sharma Oli had shortlisted three companies including Power China, Nebras Power Holding of Qatar and Fuji Electric Company Ltd of Japan and sought proposals from them. However, only HIDCL-Power China submitted a proposal – jointly with Nepali firm – to develop the Tamor reservoir project till the final date on September 15.
Earlier, the board had formed a committee – led by minister Pun – to conduct necessary assessment of the proposal. After studying details of the project, the HIDCL-Power China’s proposal was forwarded to the board, which is finalised today.
The government will acquire necessary land and provide it to the developer, according to the board. “The government will also provide project security,” it informed, adding that the board will also facilitate in legal approvals, permits, review and monitoring of the project. “But, the developer will plan, design, build, finance and operate the facilities during the concession period of 30 years.”
Likewise, the project developer will also be responsible for collecting revenue from the project during the concession period. After the concession period is over, the developer will have to hand over the project to the government.
According to an earlier study, the construction cost of the Tamor hydel project has been estimated at $1.21 billion, including interest during construction, finance cost and the 75-km-long 400 kVA double-circuit transmission line from the project site to Inaruwa in Sunsari district.
According to the Nepal Electricity Authority (NEA) study, if the project builds a dam that is 205 metres high then it will generate 762-MW of electricity. But, if the height of the dam is increased to 300 metres the project can generate 2,565-MW of electricity.
The government had also showcased Tamor at the second Investment Summit held on March 29 and 30.

HIDCL, Power China to construct 762-MW Tamor reservoir project

The Hydroelectricity Investment and Development Company Ltd (HIDCL) and state-owned Power China Corporation have jointly submitted a project development proposal at the Investment Board Nepal (IBN) to construct the 762-megawatt (MW) Tamor reservoir project.
The construction cost of the project has been estimated at $1.21 billion, including interest during construction, finance cost and the 75-km-long 400 kVA double-circuit transmission line to Inaruwa, according to initial study.
Prime Minister KP Sharma Oli-led meeting of the board had shortlisted three companies – Power China, Nebras Power Holding, Qatar and Fuji Electric Company Ltd, Japan – and sought proposals from them on August 1. However, till the deadline of September 15 – yesterday – to submit the power development proposal, only HIDCL-Power China has jointly submitted a proposal. As only one company has submitted its proposal, it is highly likely to be awarded the development licence, IBN chief executive Maha Prasad Adhikari said, adding that that the board had given the three shortlisted companies until September 15 to submit their proposals but only one has submitted the project development proposal.
“The government has, however, formed a committee led by minister for Energy, Water Resource and Irrigation, Barsha Man Pun, to conduct necessary assessment of the proposal and submit it to the IBN,” Adhikari said, adding that the committee will study the HIDCL-Power China proposal and forward it to the board to finalise the further process.
According to the board, the government will acquire necessary land and provide it to the developer. “The government will also provide project security,” he said, adding that it will also facilitate in legal approvals, permits, review and monitoring of the project.
Likewise, the developer will plan, design, build, finance and operate the facilities during the concession period. “The project developer will also be responsible for collecting revenue from the project during the concession period,” Adhikari added.
After the concession period is over, the developer will have to hand over the project to the government as others will also do.
The government had showcased the project at the second Investment Summit held on March 29 and 30 in Kathmandu. However, the IBN meeting has yet to formally award the project licence to HIDCL-Power China. During the summit, five companies from China, India, Japan and Qatar had expressed their interest to build the project under PPP model. The project – that lies in Panchthar, Taplejung, Terhathum and Sankhuwasabha districts – will be developed under Public-Private-Partnership (PPP) model.

Nepal profitable investment destination

While investors keep saying that investing in infrastructure in Nepal is challenging, the central bank governor says that the country is profitable to invest in as there aren’t enough and stringent laws and regulations here.
Not only does Nepal lack mega infrastructure projects, it also doesn’t have stringent laws, which gives enough space for investors, central bank governor Dr Chiranjivi Nepal said at a workshop on ‘Infrastructure Financing: Challenges and Opportunities’ organised jointly by the Confederation of Nepalese Industries (CNI) and Hydroelectric Investment and Development Company Ltd (HIDCL) in Kathmandu today.
Even though the reform process slowdown in the recent years has left some roadblocks for investors interested in mega infrastructure projects, there have been some positive initiatives too, he said, citing the example of the formation of Investment Board Nepal (IBN) which has been following every project closely to facilitate them.
“Investors look for five indicators before putting up their money,” the governor said, naming five indicators as political stability, policy consistency, flexible labour policy, tax policy and inflation rate. The formation of IBN has ensured some sort of policy consistency for foreign investors, he said, adding that Nepal was learning by doing and this could prove to be the best opportunity for investors.
IBN chief executive officer (CEO) Radhesh Pant, on the occasion, said that law alone cannot attract investment. “The laws should be there to gain trust from investors, but the government has to ensure that there is some profit for investors to come to invest in Nepal,” he said, adding that along with the implementation of the projects, policies should also go on improving. “But the government’s commitment and fulfillment of those commitments are a must to build trust on the government.”
Pant said the government must join hands with the private sector for the implementation of the projects as the private sector alone cannot complete the land acquisition and compensation process without the government’s participation.
Likewise, Nabil Bank chief executive officer Sashin Joshi also reiterated that without a guarantee of profit, no investor would ever invest anywhere. “Our neighbouring countries have been courting investors with incentives,” he said, asking why the investors should come to Nepal.
Nepal, he said, needed foreign investment as domestic investment was not enough to fund the infrastructure investment gap that the country faces. “Nepal needs $3 billion every year to develop hydropower alone according to the Millennium Challenge Corporation (MCC report,” he said, adding that Nepal needed $7 billion to achieve the double-digit growth which ensures Nepal’s graduation to the developing country status from the current Least Developed Country (LDC) status. “Thus, Nepal needs foreign investment in infrastructure.”
However, there are various challenges in attracting foreign investment in infrastructure.
According to member of the Infrastructure Cell of CNI Ashish Garg, Nepal needs to be in the investment radar with better credit ratings and investment protection. “Nepal also needs to develop a sustainable foreign-exchange management regime apart from simplifying the approval process by delivering a one-desk policy,” he said, adding that an enabling environment, establishment of a dedicated banking system, and building trust between the government and the private sectors are some of the way forward.
Likewise, advocate Gandhi Pandit urged the government to amend the laws to help promote project financing and attract institutional investors to Nepal.
Participants, on the occasion, also dwelt on various legal and procedural problems in project financing and how to simplify them.

London Stock Exchange listed British company keen to invest in hydropower

A British company – listed in London Stock Exchange (LSE) – is interested to invest $10 million in hydropower sector.

OPG Power and Infrastructure – that has already taken up middle sized power projects in Chennai of India – said it is keen to invest as equity partnership in Hydroelectric Investment and Development Company Ltd (HIDCL)

The government has 50 per cent equity in the investment company –HIDCL with Rs 50 billion authorised capital – and 30 per cent is owned by three public limited companies, whereas the remaining 20 per cent share is for private investors and the general public.

 The OPG had sent a letter on first week of August expressing its interest in investing in Nepal's hydropower sector, but the national hydropower company will meet with the investor and decide.

This is the first time any foreign investor has offered to to invest in equity partner with government-owned HIDCL that was established aiming at developing storage type mega power projects that is expected to help reduce scheduled load-shedding hours even during dry season.

The largest public limited hydropower company has recently organised a hydropower investment meeting inviting foreign power developers,  including the OPG.