IEEJ: April 2010

A COUNTRY REPORT OF NEPAL
Presented by:Pralhad Prasad Sapkota

Under Scretary
Government of Nepal,Ministry of Energy,
Kathmandu, Nepal

IEEJ: April 2010

ContentIntroduction
 Institutional Arrangement
 Energy Policy Documents
 Energy Statistics
 Legal and Policy Efforts for HydropowerDevelopment
 Problems and Challenges
 Interest Areas ReferencesIEEJ: April 2010

Beginning
Nepal possesses abundant hydropower
potential with big rivers from perennial
source the Himalaya. Nepal has formulated
and implemented various measures toharness her hydropower potential. Thispresentation is more concentrated onhydropower energy.

IEEJ: April 2010

IEEJ: April 2010

Location: 26 22' East - 30 27' East Longitude
80 04' North - 88 12' North

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Landlocked country- India in the east, south and west and China inthe northArea- 147181 sq km
Population: 23,214,681 (2001 Census). Currently estimated as 27
millions
Divided into three geographical regions viz. mountains, hills andterai
Administrative divisions:- Divided into 5 development regions, 14zones, 75 districts5
River system consists of three main river basins namely Koshi,Karnali and Mahakali

Highest Peak- Mount Everest 8848 mt.

More than 6000 rivers originated from Nepal flowing to India.

IEEJ: April 2010

Functions of Ministry of Energy
The Ministry of Energy has been entrusted with the following
responsibilities and tasks:
 Formulation, implementation, and monitoring and evaluationof policies, plan and programmes for production,conservation, regulation and utilization of energy.
 Development of Human Resources related to energy andelectricity.
 Study, research, feasibility study, construction, operation,maintenance and development of energy development andelectricity development projects.
 Promotion of private parties in electricity development.
 Matters related to bilateral and multilateral dialogues,agreements and understandings regarding energy andelectricity.

IEEJ: April 2010

Institutional Arrangements
A number of institutions exist in the energy sector.
 Six different ministries - Ministry of Energy, Ministryof Forests and Soil Conservation, Ministry ofAgriculture and Co-operatives, Ministry of Commerceand Supplies, Ministry of Environment and Ministry ofIndustry
 Commissions:a) National Planning Commissionb) Water and Energy Commission
Corporation and Others d) Alternative Energy Promotion Centre (AEPC),
Timber Corporation of Nepal, Nepal Oil Corporation,Nepal Electricity Authority

IEEJ: April 2010

Policy Documents
The following have been major policy documents guiding energy
production, development, utilization and regulation

Periodic Development Plan
 Industrial Policy - 1992
 Foreign Investment & One-Window Policy-1992
 Hydropower Development Policies 1992 and 2001, Water
Resources Act 1992, and Electricity Act 1992
 Water Resources Strategy 2002 and National Water Plan 2005
 National Electricity Crisis Resolution Action Plan 2008
 Report of the Task Force for Hydropower Development 2008
 Rural Energy Policy 2006
 Forest Sector policies and Forest Act, 1992
 Industrial Enterprises Act - 1992
 Foreign Investment and Technology Transfer Act - 1992
 Environment Protection Act - 1996 (Regulation-1997)IEEJ: April 2010

Policy Documents (contd….)
Nepal National Energy Strategy is currently being drafted andplanned to be approved by the end of current fiscal year. Thedraft paper has suggested following National Energy Policy
Principles.
Vision To meet the demand for energy services of the people of Nepal byensuring security, sufficiency, and sustainability for its poverty
reduction and economic development through the efficient use of
the indigenous energy resources.
 The major strategic objectives are:

◦ To make consumption of biomass energy resources sustainable◦ To make hydropower resources as the main energy resources◦ To reduce dependence on imported fossil fuels◦ To develop alternative energy technologies such as biogas, solar,wind and etc.

IEEJ: April 2010

Energy Statistics
Energy Consumption (2005) (in 000 GJ) is as follows:
Traditional energy- 322105 (87.7%)
 Firewood- 286960 (78.1%)
 Biomass13964 (3.8%)
 Animal Dung 21181 (5.8%)

Commercial energy - 43195 (11.8%)


Petroleum- 30,063 (8.2%)
Electricity- 6673(1.8%)
Coal- 6459 (1.8%)

Renewable- 1955 (0.5%)
TOTAL

100%

IEEJ: April 2010

 Contribution to total energy use: 1.8%
 689 MW of installed capacity

 Run of river hydro dominated generation
 Only one storage plant of 92 MW

 High demand in winter and less demand inmonsoon
 High generation in monsoon and lessgeneration in winterIEEJ: April 2010

 For seasonal balance, we need to focus inlarge size storage plants.
 Heavy power deficit with load shedding.
 130 MW being imported from India

Presented by: Prahlad Sapkota,
Ministry of Energy, Kathmandu, Nepal

IEEJ: April 2010

Hydropower Potential, Demandand Supply in Nepal
Hydropower potential (MW)Theoretical Hydropower
potential-

83290

Technical Hydropower
potential-

45160

Economic Hydropower
potential-42133

IEEJ: April 2010

Present Status
Installed Capacity: 692.4 MW

In Grid 688.9 MW

Off Grid 4.5 MW

Hydro 635.5 MW

Thermal 53.4 MW

ROR 542.5 MW

Storage 92 MW

IPP 161.5 MW

NEA 381 MW

IEEJ: April 2010

Present Status
Supply Demand Scenario (National Grid)
Installed Capacity
ROR
Storage
Thermal689 MW
543 MW
92 MW
53 MW

DRY Season Scenario

IMPORT

Dry Season Capacity307 MW
ROR
190 MW
Storage
92 MW
Thermal
25 MW

Total Capacity
Power Exchange
TreatyDEMANDWET Season
DRY Season

780 MW
893 MW

DEFICITDRY Season
WET Season

80 MW
50 MW
30 MW

440 MW
160 MWIEEJ: April 2010

Electrical Energy Demand and Supply Forecasting (in Medium
Growth Rate)(2010-2020)

Year

Production Capacity (MW)Load Forecast(MW)

Surplus/Deficit

Rainy Season

Dry Season

2011651321

957-306/-636

2014

2063

958

1531

532/-573

2017

5342

2745

2110

3232/635

2020

10107

5486

2882

7225/2604

source: Report of task force

IEEJ: April 2010

Hydropower development target

NATIONAL WATER PLAN
by 2017

Domestic demand to be met
Per capita consumption

2100 MW160 kWhby 2027

Domestic demand to be met
Per capita consumption
Export4000 MW
400 kWh
Extensive

TYIP
Under construction by FY end 66/67

2215 MW

Visions of governments
Within 10 Years
Within 20 Years

10000 MW
25000 MWIEEJ: April 2010

Petroleum Products
Nepal oil Corporation has monopoly ofimporting and selling petroleum products.
The growth of petroleum products inconsumption is overwhelming. Motor spirit
sales grew 300% in 2008/09 compared to1993/94. HS Diesel rose more than 200% in
2008/09 than in 1993/94. LPG sales growthis twelve times. Nepal has to spend its 53%
for importing petroleum products (NES draft
report, 2009).

IEEJ: April 2010

Petroleum Products
Sales of Petroleum Products [in KL except LPG]

Fiscal Year

MSHSD

ATF

FO

LPG in MT1

2009/2010 From July toFebruary 2010

88741

308891

48304

1199

77219

2

2008/2009

124169446468689352171

115813

3

2004/2005

75989

315368

66825

2696

77594

4

2001/2002

63271

286233

47453

18255

48757

5

1997/1998

46939

300604

51412

27776

22961

6

1993/1994

31061

195689

30650

27319

9308

SN

Source: Nepal Oil Corporation

IEEJ: April 2010

Issues on petroleum products
 The country is becoming dangerously

dependent on petroleum products for its
energy requirement.
 Lack of competitive market price in petroleum
sector due to monopoly of Nepal OilCorporation

IEEJ: April 2010

Consumption of Coal (TJ)
Consumption of Coal (in TJ) in Nepal is as follows.
YearConsumption

1990/911758

994/952805

1998/992847

2002/035610

2007/08

9257

Source: National Energy Strategy Draft Report

IEEJ: April 2010

Legal and Policy Efforts for HydropowerDevelopment
 Electricity Act, 1992

-Competitive environment in power sector-Invites IPPs in Power Sector-BOOT as a basis of IPP participation-One window policy for IPPs
-Legal reforms to encourage privatesectors

IEEJ: April 2010

Legal and Policy Efforts for Hydropower Development(contd….)

 Hydro Power Development Policy, 2001

-Maximizing use of resources for affordableand quality electricity-Tying up electricity with economic activity-Developing electricity as export commodity- Access to electricity through rural
electrification

Presented by: Prahlad Sapkota,
Ministry of Energy, Kathmandu, Nepal

IEEJ: April 2010 National Water Plan:-Fixes electricity targets for short term, midterm and long term frame work
-Basin approach for water resources
utilization-Integrated water resources management-Greater contribution of hydropower inoverall energy scene

IEEJ: April 2010

 Energy Strategy:-Currently being drafted and planned to beapproved by end of current fiscal year-Focuses on increasing contribution ofelectrical energy in the overall energy use-Fore casts 12000 MW in the next 20 years toreplace all traditional sources of energy

IEEJ: April 2010 Demand side management

 Increased import from India through 400 KVlines Speedy execution of current projects
 Focus on large size storage power plant (e.g.
Budhigandaki 600MW)IEEJ: April 2010

New Acts
 New Acts to come;Electricity Act (new)

Nepal Electricity Regulatory Commission

IEEJ: April 2010

New Acts
New Electricity Act; (presently under consideration ofthe parliament) Time bound and transparent license procedure De licensing up to 3 MW
 Trading of electricity allowed Company required Unbundling of the power sector
 Clear financial incentives
◦ Exemption of corporate tax for 7 years and 50 % fornext 3 years◦ Exemption of VAT on machines, equipments

Provision for competitionIEEJ: April 2010

New Acts
New Electricity Act; (presently under consideration ofthe parliament)
Rights and privileges of the local people upto 10 %equity share for local people
Electrification in the area of ½ km radius of headworks
and powerhouse
Re-structuring of the royalty provisions
Different royalty for domestic and export projects
92 % of the royalty goes to the local government
High level "one window" service committee and taskforces
Defined provisions for Export oriented projects
Power Trading through private sector will be opened

IEEJ: April 2010

New Acts
Nepal Electricity Regulatory Commission;
 Will be an independent commission

 will create Investment friendly environment
 Will protect the consumers (and otherstakeholders) interest
 Will monitor, regulate the sector
 Will fix the tariff at various stages oftransactionIEEJ: April 2010

Problems and challenges
Problems and challenges in the formulation and implementationof energy policy in Nepal can be outlined as follows.
 Heavy dependent on traditional source of energy.
 Integrative energy policy still does not exist.
 Investment in hydropower is financially beneficial but there islack of investment friendly environment to attract the privateand foreign investors to invest and boost up the hydropower
development.
 The tendency of acquiring license for hydropower
development and not undertaking the production anddistribution.
 Forest rules only focus on conservation and no clear policy onsustainable use of biomass for energy.

IEEJ: April 2010

Problems and challenges
Inadequate emphasis in the exploration,
production, and development of potential oil andcoal reserves.
 Lack efficient coordination between government
agencies, e.g. between ministries and departments.
 There is delay on power sector restructuring
programs.
 Lack of an effective policy for developing
alternative fuels within the country.
 Lacks of technology know how, manpower and data
about renewable energy (NPC, NES draft report,
Report of task force).
IEEJ: April 2010

Interest Areas
Policy trends in energy production, conservation, regulation
and utilization in developed and developing countries.
 Promotion of private and foreign investment inhydroelectricity projects.
 Development of human resource in the energy field.
 Efficient selection, implementation and administration ofsustainable hydropower projects.
 Community participation in hydroelectricity and energy
projects.
 Energy, environment and clean development mechanisms.
 Energy efficiency.
IEEJ: April 2010

Reference:National Planning Commission, Three Year InterimPlan(2007/08 – 2009/10), 2007.
Ministry of Energy, Report of Task Force on 10 Year
Hydropower Development Plan, 2009.
Ministry of Energy, Hydropower Development Policy 1992,
Hydropower Development Policy 2001(www.moen.gov.np).
Ministry of Energy, Water Resources Act 1992 and Electricity Act
1992 2001(www.moen.gov.np).
Water and Energy Commission, Water Resources Strategy 2002
and National Water Plan 2005.
National Electricity Crisis Resolution Action Plan 2008 andProcedures for PPA for projects up to 25 MW Capacity 2065
Ministry of Energy, Power Crisis Mitigation Plan, 2008.
National Energy Strategy Draft Report, 2010.

IEEJ: April 2010

Contact:report@tky.ieej.or.jp