NEPAL ELECTRICITY AUTHORITY

Fiscal Year 2007/08 - A Year in Review

Bhadra 2065 (August 2008), Durbar Marg, Kathmandu

Khimti Dhalkebar 220kV Tower Foundation

Access Road Under Construction Tamakoshi

Nepal Electricity Authority

Head Office
Phone

Fax

E-mail
Webpage

: Durbar Marg, Kathmandu, Nepal
 +977-1-4227725

: +977-1-4227035, 4266673
: neamd@mos.com.np

> WWW.nea.org.np

Contents

Board Of DireCtOrs .............. «२२२० २०२२ ०० ७० नन न नन नन पन पननननननजनजन नन ननननननननतननन तन नन।
Corporate Structure Of NEA..............:cccccsseeceseeeeseeeeeseeeeeaeeeeees il
NEA chief EX@Cutives............ccccccccceeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeaes lil
Directors & Department ९0166.................:....२.--7२7२4 77२4 77 तत 7 1४
Managing Director's R@poft .............ccccceececseeeeeeeeeseeseeseeeeseaees 1
Generation BUSINESS GrOUD.............ccceeceeeeeeeteeeeteeseeteeeeeeeseess 8
Middle Marsyangdi Hydroelectric शिएेु्ल.................... २२ २२२२० 12
Transmission and System Operation Business Group ....... 14
Distribution and Consumer Services Business Group........ 21
Electrification BUSINESS ८०0५? ...........::..::.- 7447 7444 7744 7 गनन न न नन न 25
Engineering Services Business Group .............:...-:----774२7777 31
NEA's Subsidary COMPANIES ...............:---- 5२२2-75-२7 7 7722 गन नत कन ककन 36
Central 411 ििििििििििििििििििििििििििििििििििििििीीीीीी 38
Planning, Monitoring & Information Technology .............---- 39
Administration 2.0.0... cece terete eee cee rere ee aa eee eeeeeaaanneeeeeeas 42
Internal कि 44
FINANCE 00... eee eee eee ener eater ee sean eee eee aaed 45
Highlights Of FY 2007/08 ...........:::sccsscccecececeeeeeesessesessnseseaees 49
Balance Sheet as of July 15, 20086...................::-...--------2- गनन 50
Income Statement for the FY ending July 15, 2008............ 51
ACCOUNTING POIICICS .............ccceeececeeeeeeeeeeeeeeeeeeeeeeesaeeeeeeaaeeeees 52
Tariff R&tes «0.2... e eee eee eae eee ee eee aaaaeeeeeeeeaaaaeeeeees 54
Statistics, Schematics ANd MADS...............cccccseeeeceeeeeeeeeeeeees 56

Front Cover Photo
छ Middle Marsyangdi HEP Diversion Weir

05 सा year in
Review

NEG

A year in
Review

FY 2007/08

Board Of Directors

_

Chairman

Member Member Member

Mr. Shankar Prasad Koirala Mr. Rameshwor Khanal Mr. Lekh Man Singh Bhandari
Secretary, Ministry of Water Resources Secretary, Ministry of Finance

bad

Member Member Member
Mr. Ananda Raj Batas Mr. Guru Prasad Neupane Mr. Mukesh Raj Kafle

Member Secretary
Mr. Arjun Kumar Karki
Managing Director, NEA

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

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——— ee SaaS eR Cee लि लन Electricity Authority, Fiscal Year 2007/08 - A Year in Review

NEA Chief Executives

Mr. Shyam Bahadur Shrestha Mr. Uttar Kumar Shrestha Mr. Dipak Prasad Upadhyay
GM, Electrification DMD, Finance GM, DCS

Dr. Jivendra Jha Mr. Bhojraj Regmi Mr. Yugal Kishor Shah
GM, Generation GM, Engineering Service GM, Transmission & SystemOperation

Mr. Shiv Chandra Jha Mr. Diwakar Poudel Mr. Binod Kumar Dhakal
DMD, Planning, Monitoring & IT Act. DMD, Internal Audit Act. DMD, Administration

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Directors & Department Chiefs

Mr. Shashi Raj Shrestha Mr. Chhatra 861. Bajracharya Mr. Upendra Dev Bhatta
Director, Corporate Planning Director, Monitoring Director, Information Technology

Mr. Tirtha Man Shakya Mr. Harihar Man Palikhe Mr. Birendra Kumar Pathak

Director, RE, Distribution & Director, TL/SS Construction Director, Generation Construction
Transmission Project

Mr. Rameshwar Yadav Mr. Mahendra Lal Shrestha Mr. Thakur Raj Pandey
Director, Community RE Dirctor, Mid-North Regional Office Director, Training Centre

Mr. Ram Chandra Mandal Mr. Ram Chandra Pandey Mr. Govinda Sharma Pokharel

Director, Mid-South Regional Office Director, Nepal India Cross Director, SHP and Rural
Border 400 kV TLP Electrification

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Directors & Department Chiefs

Mr. Tika Ram B.C. Mr. Lava Bahadur Ghimire Mr. Sashi Sagar Rajbhandari

Director, Fianance Dept. DCS Director, Finance & Account Director, Generation, Operation
& Maintenance

Mr. Rajeswar Man Sulpya Mr. Pradeep Lal Shrestha Mr. Jayaiswer Man Pradhan
Director, Power Trade Director, DCS Director, System Planning

Mr. Ganesh Prasad Raj Mr. Chiranjibi Sharma Poudel Mr. Mohan Krishna Upreti
Director, Eastern Regional Office Director, Technical Service/Commercial Director, Grid Operation

Mr. Vishnu Bahadur Singh Mr. Anuj Ratna Shakya Mr. Keshab Raj Bhatta
Director, Project Development Director, Central Office Director, Chameliya HEP

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Directors & Department Chiefs

Mr. Subhash Dahal Chhetri Mr. Puspa Raj Khadka Mr. Sher Singh Bhat
Director, Western Regional Office Director, Central Office Director, System Operation

Mr. Sunil Kumar Dhungel Mr. Jaya Narayan Thakur Mr. Mrigendra Bdr. Shrestha
Project Director Act. Director, Mid & Far Act. Project Director, UTKHEP
Middle Marsyangdi HEP Western Regional Office

Mr. Radhesh Man Pradhananga Mr. Rishikesh Sharma Mr. Dev Sharma Poudel
Act. Director, Soil, Rock & Act. Director, Environment & Act. Director, MD's Secretariat
Concrete Laboratory Social Studies

Mr. Danda Pani Bashyal Mr. Ishwori Prasad Khatiwada Mr. Juju Kaji Ranjit

Act. Director, Public Relation & Act. Director, Human Resourses Act. Director, Kaligandaki % HE
Grievance Handling

Mr. Arjun Kumar Chauhan
Act. Director, Corporate Finance

Arjun Kumar Karki
Managing Director

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Managing

Director's Report। feel privileged to present this Annual
Report, my third report as the Managing
Director of Nepal Electricity Authority,
to this Annual Anniversary gathering.

Year 2007/08 has been an exceptionally
outstanding year for Nepal. Momentous
events have taken place in this year
changing the course of history of Nepal.
This year saw end of the monarchy in
Nepal and beginning of a new age of
hope and dignity for the Nepalese as
the proud citizen of a federal democratic
republic.। salute all and our especial
tribute goes to those who laid down their
life for bringing this change in Nepal.

This historic year 2007/08 also marks
the completion of twenty-three glorious
years of operation of Nepal Electricity
Authority as the foremost entity
overseeing the crucial functions of
providing more and more of Nepalese
homes, industries and businesses with
electricity. Besides the review of our
achievements of the past, this is also
an occasion to reaffirm our resolve to
do even better in the coming years. With
this note, now,। would like to present
before you a brief account of the past
year's activities, the achievements, the
challenges and the outlook for the future.

System Operation

The year 2007/08 registered new
records of power and energy demand,
thereby presenting before us greater

challenges in bridging the gap between
supply and demand of electricity. Our
endeavors to maximize the utilization
of available resources including import
through trading of power from Indian
short term market could not offset the
unbalance and we were compelled to
enforce long hours of distasteful load
shedding. A 11.31% growth in peak
power demand and 10.76% growth in
energy demand in the year further
aggravated the situation. In the dry
months, shrinking of snow-fed rivers
further worsen the situation and we were
left with no option but to impose 48
hours-a-week load curtailment for every
consumers. The amount of shedded
energy reached up to 2.2 million units
per day. This situation could be attributed
to combination of factors including our
overdependence on run-of-river type of
hydro projects.

Average load on the system remained
at 55.2% of the peak load, which
indicates that the system peak needs
to be flattened by employing various
measures under the Demand Side
Management. Few lessons we could
learn is that large volume of storage
capacity is urgently required to balance
the system against time of the day and
seasonal variations in demand and
supply, and that sustained campaign is
the need of the time to motivate the
consumers to use electricity efficiently
by maximizing the use of energy saving
lights and appliances.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Operational Performance

At the end of FY 2007/08, the number of customers
availing electricity service of NEA reached 1,524,610,
which is an increase of 9.07% over that of the
previous year. Of the total customers, 95.66%
belonged to the domestic category accounting for
40.52% of total energy sales and 40.66% of total
revenue earned in the reviewed period. Industrial
customers, though representing only 1.67% of the
total customers, have significant contribution
amounting to 38.81% of total energy sales and
35.93% of total revenue earned.

Power and energy demand grew by 11.31% and
10.76% respectively in the reviewed period. The
system demand of 721.73 MW recorded on
December 31, 2007, happened to the peak power
demand observed in FY 2007/08. Likewise, energy
demand over the FY totaled 3,490.12 GWh. As this
amount of energy was not available with the system,
the deficit amounting to 309.46 GWh, had to be
shedded to keep the electricity service running. Of
the total energy served, hydro source accounted
for 86.75%, which includes a contribution of 30.2%
from the IPPs. Imports accounted for 12.97% and
the balance was met from thermal plants.

Major overhauling and maintenance works were
carried out on number of power stations in the year
under review. Turbine runners of Marsyangdi,
Trishuli, Sunkoshi and Puwa Khola hydropower
stations were overhauled. Repair of the damaged
generator of Unit no. 1 of Kulekhani-Il Hydropower
Station was completed successfully under the
supervision of experts from Fuji Electric Systems
Co. Ltd. (Japan) and brought into operation from
the last week of March, 2008. Similarly, major
overhauling of Unit No. 2 of Kaligandaki, the biggest
power station of Nepal, was also completed
successfully by our engineering staff. Our efforts to
boost generation from the existing NEA hydropower
stations were reflected in the rise of generation by
2.93% over that of the preceding year.

We continued to exert diligent efforts in the upkeep
of transmission system. In the reviewed period,
reinforcement works were carried out in the
overloaded grid substations, which have helped
reduce outages of the transmission lines. The
capacities of Birgunj, Damauli and Bardaghat
Substations were reinforced by upgrading the
transformers. Reinforcement works were also
executed in Sunkosi Substation to facilitate power
evacuation of IPP projects in Sindhupalchok district.
It gives us immense satisfaction to report that overall
availability of our transmission system remained
above 99% in the reviewed period.

To do justice to the appraisal,। must admit with
regret that our efforts to control system loss did not
fare well in FY 2007/08. Our provisional analysis
shows that NEA power system endured a loss of
25.15% in FY 2007/08. Though not a comforting
news, there is no reason to despair also. In the
preceding year, the final loss figure stood at 26.71%
(provisioned as 24.94%). If the loss estimate is
verified after final audit, we would have made
headway, though small, in loss reduction mission.
Given the disturbances prevailing in Terai and other
parts of the country, and given the degrading effect
on staff morale caused by manhandling and
intimidation meted out to NEA staff involved in loss
control activities, it is no less a miracle even to
maintain a status quo. Having said that, we are not
shirking away from our responsibility to bring the
loss down to acceptable level. Let me take this
opportunity to reaffirm our commitment to control
system loss with support from all quarters.

Financial Performance

NEA's financial performance has not remained up
to the level of expectation, largely because of the
reasons beyond our control. The insecurity situation
prevailing in the Terai, recurring fuel crisis, frequent
strikes and work stoppages presented an
atmosphere, which was hardly conducive for normal
operation of the business. The transition phase of
the country was exploited to the hilt by the

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

unscrupulous elements and goons as our properties
were vandalized; our staff were subjected to physical
threats, extortions and manhandling. It is rather
saddening that one of our staff posted in Birgunj
has to lose life because of the senseless act of
violence. The atmosphere permeated with security
concerns deprived us the opportunity to show better
performance in the fronts like loss reduction, meter
reading, cash collection and so forth. Furthermore,
opportunity presented by the growth in demand
could not be translated into sales due to limitation
of supply sources. Apart from this, increased
operating cost caused by unprecedented hike in
fuel price and other commodities, increased volume
of energy import and regular increase in salary also
pushed the operating cost up. One significant factor
that adversely affected NEA's financial position was
the upward fluctuation of Japanese Yen- Nepalese
Rupee exchange rate costing more Rupees for the
Japanese loan. The effect of this exchange
fluctuation was a loss amounting to NRs 480.61
million.

Despite the increase in price of commodities and
cost of service, NEA is yet to be allowed to adjust
the tariff to make up for the increased cost of
operation. Analysis shows that NEA cost of service
per kWh stands at NRs 7.40 against revenue rate
per kWh of NRs 6.70. After adjustment of contribution
of NRs 0.28 per kWh from miscellaneous incomes,
NEA suffered a loss of NRs 0.42 for every kWh of
energy served by it.

NEA earned NRs 15,405.03 million from sale of
electricity in FY 2007/08, which is 6.61% higher
than last year's figure. Similarly, NEA earned NRs
655.24 million as other incomes. Operating
expenditure in the period was NRs 14,443.41 million,
which is higher than that of the previous year by
9.03%. As a result, Operating Profit for the period
was recorded at NRs 1,616.86 million. However,
NEA incurred a net loss amounting to NRs 1,312.16
million after deducting interest, foreign exchange
loss and provisions. NEA had earned a profit of
NRs 314.19 million in the preceding year. Thus,

accumulated loss by the end of FY 2007/08 has
reached NRs 7,133.77 million. NEA's net property
in terms of plant and equipment valued at historical
cost reached NRs 52,294.10 million, whereas NRs
35,930.74 million is recorded as expenditure in
capital works- in-progress. NEA has invested NRs
1,602.05 million as equity shares in various
subsidiary companies including Chilime and Upper
Tamakoshi. By the end of FY 2007/08, NEA's liability
towards Government of Nepal totaled NRs 28,414.99
million as equity and NRs 52,762.18 million as long
term loan.

Thus, review of customer tariff, gradual recovery of
accumulated losses, loss reduction, creation of fund
for hydropower development and for addressing
future inflation- these have emerged as the major
issues, which promptly need to addressed for
sustainability of the organization.

Ongoing Projects

It is a matter of profound satisfaction to report that
the projects that we have undertaken to address
various needs of the power system are making
steady progress and heading towards success in
spite of the numerous obstacles that emerged from
time to time. Construction of Middle Marsyangdi
Hydroelectric Project (70 MW) had commenced on
June 25, 2001 with a target to start power generation
after 4 years of construction period. Progress of the
project was bogged down due to numerous
obstacles including contractual discords. Some of
the contractual disputes have been stockpiling for
2 years thereby impeding the smooth progress of
the Project. Most of the disputes have been resolved
now. With 97% of civil works already completed,
the Project is now nearing completion. Impounding
of the dam is now scheduled to start from October
16, 2008 (Aswin 30, 2065), and subsequently the
first unit will be commissioned by the end of year
2008 and the second unit by January, 2009. NEA
is committed to achieve these target dates.

Chameliya Hydroelectric Project (30 MW) situated

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

in the Far West of Nepal is also moving on the track.
Following the award of civil contract to China
Gezhouba Water and Power Group Company
Limited (CGGC) on December 21, 2006, the Project
construction is gaining momentum. Agreement is
expected to be signed soon with Government of
the Republic of Korea to avail US$ 45 million as
soft loan which will be used for hydro-mechanical,
electro-mechanical and 132 kV transmission line
construction of the Project. The Project is scheduled
to be completed in year 2011. Mobilization and
preparatory works for Kulekhani-lll Hydroelectric
Project (14 MW) have already started. The Project
is schedule to be commissioned in FY 2010/11. To
mobilize financial resources for funding Chameliya
and Kulekhani-lll projects, NEA took a maiden
initiative of raising fund from the domestic capital
market by floating Power Bond. In the first phase,
NEA Power Bond with a value of NRs 1,500 million
was issued successfully and was subscribed for
the full amount by the investors. The response of
the individual as well as the institutional investors
has been extremely encouraging. This pioneering
initiative of NEA has opened up a new model of
fund raising for hydropower projects in Nepal. NEA
intends to replicate this mechanism in future also.

Several transmission projects are under
implementation. Khimti-Dhalkebar 220 kV
Transmission Line Project, the first ever project of
220 kV voltage level in Nepal, is progressing well
and is expected to be commissioned in FY 2008/09.
Thankot-—Chapagaon-Bhaktapur 132 kV
Transmission Line Project under which a 132 ring
will be completed in Kathmandu valley, is going on
in full swing. This Project is scheduled to be
completed by FY 2008/09. Under Hetauda-Bardghat
220 kV Transmission Line Project, construction of
Hetauda—Bharatpur 220 kV Transmission Line and
associated substations are under implementation
for which tender has already been invited from
prospective bidders. After completion, this phase
of the Project will ease transmission congestion in
Hetauda-Bharatpur corridor. This first phase of the
Project is expected to be completed by December

2010. As this 220 kV line will not be available till
year 2010, Hetauda-Bharatpur 132 kV Conductor
Upgrading Project has been implemented to
temporarily remedy the overloading problem existing
in 132 kV Hetauda—Bharatpur line. The works under
this Project will be completed by FY 2008/09. In
addition to the above, several Grid Substation
Reinforcement Project, Chandranigahpur System
Reinforcement Project, Kawasoti 132 kV Substation
Project are also under execution. These projects
will not only enhance quality of supply in and around
the project area but also pave way for extensive
electrification in the adjoining districts.

NEA has been continuing rural electrification
programs with financial support from Government
of Nepal and donor agencies. In the reviewed period,
Government of Nepal provided Rs 100 million to
complete electrification works that have remained
incomplete for past several years for lack of fund.
Almost all outstanding works have been completed
in the reviewed period despite adverse situation
prevailing in the country. As a result, about 49,000
households would get access to electricity benefitting
267,000 consumers.

Construction work of 500 kW Heldung Small
Hydropower Project in Humla has been completed
and the Project has started power generation from
May 27, 2008. The 400 kW Gamgad Small
Hydropower Project in Mugu is nearing completion.
The 33 kV sub-transmission lines and distribution
lines are being continuously extended to pave way
for the electrification of rural areas. Community
based rural electrification programs funded with
80% financing from GoN and 20% from the local
communities are given continuation although the
tariff modality of the scheme itself is a matter of
concern for the sustainability of NEA.

Under the Rural Electrification and Distribution
System Reinforcement Project jointly funded by
ADB, GON and NEA, rural electrification works are
being carried out in 277 VDCs of 22 districts. By
the end of reviewed year, 92% of the Project works

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

have been completed. The remaining works are
expected to be completed in FY 2008/09.

It is important to make a note while appraising rural
electrification works. NEA is required to earn a
reasonable return from its business operations and
develop itself as a commercially oriented self-
sustaining organization. Increased commitment of
NEA's scarce resources in rural electrification
activities, however, is detrimental to the sustainability
of NEA. Keeping this in view, NEA has
recommended to Government of Nepal to establish
a separate government owned Rural Electrification
Company with the sole objective of undertaking
rural electrification and associated works in Nepal.

Capacity Building and
Institutional Strengthening

NEA is mindful that staff are the living asset of the
organization and that effective training and employee
development programs would ultimately result in
enhanced performance of the organization. Giving
due importance to this fact, through the NEA Training
Center, need based training programs were carried
out in the reviewed period benefitting 1,198 trainees
which included trainees from Himal Power Ltd. and
Chilime hydropower Company Ltd. Apart from this,
employee were also sent abroad to study, participate,
interact and learn from the development taking
place elsewhere in the world.

NEA has continued computerization in billing,
accounting, inventory management and customer
service with the aim of enhancing the quality of
service and decision making, bringing automation
in routine business processes and improving
information management. Through its IT Department,
NEA intranet system was expanded by augmenting
the centralized Internet bandwidth. Different
customized applications, such as no-light
management system, interactive voice response
system, power house maintenance system and
personnel management system were developed
in-house and are under various stage of

implementation. NEA is committed in bringing about
continuous improvement in its business operation
by use of information technology and in building up
its in-house capacity for the development and
customization of application software.

As of FY 2007/08, NEA organizational structure
comprises of 10,314 staff positions out of which
9,298 positions are filled up. By the end of FY
2007/08, a total of 743 employees were recruited
for different levels. Recruitment process is going
on to fill the remaining vacancies.

NEA's Subsidiary Companies and
the Private Sector

With a view to facilitate speedy development of
power sector, two especial purpose companies,
namely, Upper Tamakoshi Hydropower Company
Limited (UTHPCL) and Power Transmission
Company of Nepal (PTCN), were constituted under
the initiative of NEA. UTHPCL will execute the
development of 309 MW Upper Tamakosi
Hydroelectric Project in Dolakha district under public-
private partnership model of development. PTCN
is constituted with aim of building and operating
cross border transmission links between Nepal and
India.

With regard to Upper Tamakosi Hydroelectric Project,
Memorandum of Understanding has been signed
with Employee Provident Fund and Himalayan Bank
Ltd. (leading the consortium of banks), for long term
loans of NRs 10 billion and NRs 6 billion respectively.
Employee Provident Fund has also agreed to
subscribe debenture of NRS 2 billion. Discussions
are underway with Rashtriya Beema Sansthan and
Citizen Investment Trust to arrange remaining funds
required for the Project. Detail engineering design
of the Project is in progress.

It is envisioned that Nepal would be in power surplus
by year 2013/14 and after meeting the internal
demand could export power to India. Power

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Transmission Company Nepal Limited (PTCN) was
formed as a joint venture company of NEA and
IL&FS Infrastructure Development Corporation
(India) on September 16, 2007 for taking up the
development of Cross Border Transmission links
to facilitate power trading across the border. Three
cross-border links have been identified:
Butwal—Gorakhpur, Duhabi—Purnea, and
Dhalkebar—Muzaffarpur. Out of these, Dhalkebar-
Mujaffarpur 400 kV cross border link has been
selected for implementation in the first phase. PTCN
will be responsible for constructing the 39 km long
sector within Nepal. The line will be charged initially
at 220 kV. Cross Border Power Transmission
Company Private Limited, a company which will
have equity ownership of NEA, will take up the job
of constructing the Indian portion of this Dhalkebar-
Mujaffarpur line.

Chilime Hydropower Project build under Chilime
Hydropower Company Limited (CHPCL), the first
subsidiary company established by NEA in 1996,
has been in operation since August, 2003. CHPCL
is now set to take up the development of four more
projects, namely, Sanjen Upper (11 MW), Sanjen
(35 MW), Middle Bhotekoshi (80 MW) and
Rasuwagadhi (75 MW) hydropower projects.

In the reviewed period, Power Purchase Agreements
were signed for the purchase of power from Belkhu
Khola (320 kW), Upper Hadi Khola (991 kW), Siuri
Khola (990 kW), Hewa Khola (2,400 kW), Lower
Piluwa (990 kW) and Tinau Khola (990 kW) small
hydropower projects. With this, the total number
of PPAs have reached 39 which amounts to a total
capacity of 234.31 MW. In FY 2007/08, four projects,
namely, Thoppal Khola (1,650 KW), Pheme Khola
(995 KW), Sali Nadi (232 KW) and Sisne Khola
(750 KW) were successfully commissioned, thus
inducting a total 3,627 KW capacity in the system.
With this the total number IPP projects in operation
have reached 17 with a total capacity of 156.34
MW.

Outlook for the Future

Though our present is troubled with supply
shortages, the prognosis for the future is not bleak.
NEA has plans to undertake number of generation,
transmission and distribution projects. Total cost of
these projects is estimated to be about NRs 65
billion to be invested over five year period.

Upper Tamakoshi (309 MW), Chameliya (30 MW),
Kulekhani-lll (14 MW), Rahughat (30 MW), Upper
Trishuli-3A (60 MW), Upper Trishuli-3B (40 MW)
and Upper Modi-A (42 MW) hydroelectric projects
are in different stages of development. These
projects are expected to be commissioned within
5 years period so that by that time, 525 MW power
will be inducted into the system. Moreover, our
subsidiary Chilime Hydropower Company is working
on Sanjen Upper (11 MW), Sanjen (35 MW), Middle
Bhotekosi (80 MW) and Rasuwagadhi (75 MW).
Similarly, under the private sector, Kabeli-A (30
MW), Upper Marsyangdi (50 MW) are expected to
be commissioned by year 2013. Thus by FY
2013/14, we are expecting addition of 700 plus MW
capacity in our system. To ensure adequacy of
power supply during dry months, efforts are
underway to implement 128 MW Upper Seti, 400
MW Nalsyagu Gad and 600 MW Budhigandaki
storage projects under public-private partnership
modality. Export oriented hydropower projects such
as Arun-3, Upper Karnali and West Seti have the
provision of free energy entitlement for Nepal. The
commissioning of these projects will further
contribute in augmenting supply capability.

NEA has already intensified efforts to develop
internal transmission system with backbone at 220
kV. Elimination of existing transmission bottlenecks
will be our first priority. For the future development,
our strategy will be to build transmission system on
corridor-wise basis prioritizing those river basin
corridors for which firm commitment of hydropower
development exists from the developers. A Build-
Own-Transfer model has been mooted to facilitate
participation of private sector in developing

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

transmission lines. Considering the prospects of
power trading with India, cross border transmission
links will eventually be build in all three corridors:
Dhalkebar-Mujaffarpur, Duhabi-Purnia and Butwal-
Gorakhpur.

Reinforcement and expansion of distribution network
will be pursued continuously. The coming years will
also see more of the customer friendly approaches
in the operation of distribution and consumer service.
We are committed to pursue persistent efforts and
employ stringent actions on the front of loss
reduction.

NEA will also take leading role in producing
competent and skilled technicians and engineering
professionals in the field of hydropower in the
country. For this, discussions are underway with
South Korean Government and other donor
agencies for the upgradation of NEA Training Center.
The purpose of this pursuit is to ensure that shortage
of trained technician and professionals do not come
on the way in realizing the government's vision of
hydropower development in Nepal.

Acknowledgements। wish to thank all those contributing to NEA's
activities in different ways during the year. My
special appreciation goes to the NEA staff of all
levels, who have been immersing themselves into
their work with a missionary zeal and delivering
results.। express my deep gratitude to Chairman
and members of NEA Board of Directors for their
guidance and support. My sincerest gratitude goes
to Government of Nepal for their continued support
to NEA's operation and development efforts.। also
sincerely acknowledge the bilateral donors such as
Germany, Japan, Norway, Denmark, Sweden, USA
and India as well as the international development
banks such as World Bank, Asian Development
Bank, Japan Bank for International Cooperation
(JBIC,) Kreditanstalt fur Wiederaufbau (kfW) and
EXIM Bank of China, Korea and India that have
generously supported us and contributed in our

development and institutional strengthening
activities. Our valued customers deserve special
thanks for their understanding and patience in the
face of the turbulence caused by the imperfection
in electricity service. My sincere thank also goes to
the NEA employee unions for their understanding,
support and participation.

Thank You.

[ok

Arjun Kumar Karki
Managing Director

nl

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Generation
Business Group

The Generation Business Group, headed by a
General Manager, is entrusted with the responsibility
of construction of new power stations, and operation
and maintenance of existing power stations under
NEA. Currently, sixteen hydropower stations and
two major thermal power plants with total installed
capacity of 398.39 MW and 53.41 MW respectively
are in operation under this Business Group. There
are three departments, namely, Operation and
Maintenance Department, Generation Construction
Department and Kaligandaki-A Hydropower
Department under this Business Group. Each of
the departments is headed by a Director.

At present, construction works of two hydroelectric
projects, namely, Chameliya Hydroelectric Project
and Kulekhani-lll Hydroelectric Project, are in
progress under this Business Group. Chameliya

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Hydroelectric Project is headed by a Project Director
who reports directly to the General Manager of the
Business Group, whereas, Kulekhani-lll
Hydroelectric Project is under Generation
Construction Department. In addition to these two
projects, a third project, Upper Tamakoshi
Hydroelectric Project is also being implemented,
but under a separate subsidiary company (Upper
Tamakoshi Hydropower Limited) promoted by NEA.
Performance-wise, a total of 1,795.77 GWh of
energy was generated in the FY 2007/08 from NEA
owned power stations, which is an increase of
2.62% over the generation of previous FY.

Operation and Maintenance
Department

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Repaired Stator of Generator No. 2 of Kulekhani-ll HPS

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

responsible for all activities related to the operation
and maintenance of NEA owned power stations
other than Kaligandaki-A Hydropower Station which
is a separate department under Generation Business
Group. In FY 2007/08, a total of 1,036.77 GWh of
energy was generated from the power stations
under this Department.

In the FY under review, preventive maintenance
works were conducted in regular basis in all power
stations in order to ensure timely detection and
rectification of faults. In addition to the periodic
maintenance works, major overhauling works were
also performed in major power stations in the FY.
Overhauling of turbine runners of Marsyangdi,
Trishuli, Sunkoshi, and Puwa Khola hydropower
stations were accomplished. Repair and major
overhauling work of damaged generator of Unit no.
1 of Kulekhani-ll Hydropower Station (KL-II) were
completed successfully under the supervision of
experts from Fuji Electric Systems Co. Ltd. (Japan)
and brought into operation from the last week of
March, 2008. Event Log Recorder for recording
generator, transformer and system parameters and

66 kV SF6 circuit breakers of Kulekhani-I (KL-l) to
Hetauda Double Circuit Line were installed in KL-I
Hydropower Station. A contract agreement has also
been signed between NEA and Fuji Electric Systems
Co. Ltd. for major overhauling of both units of KL-। and the second unit of KL-II hydropower stations.
Fabrication of the spare parts required for the work
has already started in Japan. On April 6, 2008, a
contract agreement has been signed between NEA
and Bharat Heavy Electricals Limited (BHEL) for
rehabilitation of Devighat Hydropower Station. The
fabrication of the spare parts required for the
rehabilitation work has already started. Government
of India has agreed to provide IRs 150 million under
grant assistance and IRs 150 million as Line of
Credit for funding the Project. Balance amount will
be borne by NEA.

Kaligandaki-A Hydropower
Department

During FY 2007/08, a total of 759.0 GWh of energy
was generated from Kaligandaki-A Hydropower
Station which is an increase of 7.24% over the

Overhauling of Unit No. 2 of Kaligandaki-A Hydropower Station

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

preceding year's generation. Repair and
maintenance works in the spillway gates, intake
under-sluice gates, desander flushing gates and
trash rack cleaner were carried out in the fiscal
year. Similarly, inspection of Unit No. 1 and major
overhauling of Unit No. 2 were completed
successfully. Replacement of damaged analog
input/output PLC cards, EPBAX communication
cards and high voltage bushings of 13.8/132 kV,
56.5 MVA transformer of Unit No. 1 have been
carried out. Repair work of 13.8/132 kV, 56.5 MVA
transformer of Unit No. 3 has been successfully
completed.

Generation Construction
Department

At present, the Generation Construction Department
is overseeing the construction of 14 MW Kulekhani-
Ill Hydroelectric Project. The status of the Project
is summarized below.

Kulekhani-lll Hydroelectric
Project

Kulekhani-lll Hydroelectric Project is located in
Makawanpur District, about 115 km south west of
Kathmandu. The headwork site is located on the
right bank of the Rapti River at Bhainse Village
Development Committee (VDC). The powerhouse
site is located at Sanutar of Bhainse VDC, about 4
km north of Hetauda. The Project site has good
accessibility as it is located near the Tribhuwan
Highway.

Kulekhani-lll Hydroelectric Project is a cascade
Project which utilizes the regulated flow from
Kulekhani। and Il Hydroelectric Projects. In addition,
the KL-III utilizes additional water from Khani Khola.
The Project is estimated to generate about 40.85
GWh of energy annually. Power generated from
Kulekhani-lll Hydroelectric Project will be evacuated
through 0.5 km long 132 kV single circuit
transmission line to Hetauda Substation.
Construction work of the Project is scheduled to
commence in near future. Preparatory works of the
Project have already been started. This Project is

categorized as a National Priority Project (P1) by
National Planning Commission, Government of
Nepal (GoN). The funds from Government of Nepal
and NEA will be utilized for the construction of the
Project. The total estimated cost of the Project is
NRs 2,334 million. The Project is schedule to be
commissioned in FY 2010/11.

The Environmental Impact Assessment (EIA) of the
Project has been approved by the Ministry of
Population and Environment (MoPE). The report
indicates that the construction of the Project has
minimal impact on natural and social environment
of the area. Generation License for the Project has
been granted by the Department of Electricity
Development (DoED), Ministry of Water Resources.
For the transmission line, a survey license has been
issued by the DoED. Land acquisition for
powerhouse, tailrace outlets and access road has
been completed and land acquisition for office
buildings and switch yard is in process. Construction
of access road to powerhouse and forebay is in
progress. Approximately, 1,200 m of track out the
2500 m of the acess road has been opened.

Construction of access bridge over Rapti River is
in progress. Main civil works have been awarded
to Sinohydro Corporation Ltd. of China. Presently,
the contractor is building camps near the Intake
site at Bhainse and is in the process of importing
equipment and explosives. Initial consignment of
some construction equipment has reached the
project site. Management and supervision of the
construction of the Project will be carried out by a
Joint Venture of three consulting firms. Water
Resources Consult (P.) Ltd. (WRC), SILT
Consultants (P.) Ltd. and Hydro Engineering &
Development Co. (P.) Ltd. (HEDCO). Currently, the
Engineers/Consultants are in the process of finalizing
construction drawings of the Project.

Chameliya Hydroelectric Project

Chameliya Hydroelectric Project (CHEP) is a
Peaking Run-off-River (PROR) project with an
installed capacity of 30 MW and 6-hour daily peaking
capability. The Project is estimated to generate an
average of 184.21 GWh annually. The Project lies

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

in the Far West of Nepal, about 950 km west of
Kathmandu in Chameliya valley, Darchula district.
Main features of the Project are 54 m high concrete
dam with two 13.5 m high radial gates, underground
desander with 2 basins, 4,067 m long headrace
tunnel, 49.8 m high restricted orifice type surge
tank, 461 m long penstock and semi-underground
powerhouse with two units of 15.3 MW vertical shaft
Francis turbines. Generated power will be evacuated
through 131 km long 132 kV transmission line to
Attariya Substation at Kailali district.

In December 2001, detailed design and tender
document preparation works were completed by
utilizing grant assistance from Korea International
Co-operation Agency (KOICA). Construction of 18
km long access road has been completed and local
transportation services are already in operation.
Out of seven bridges on the access road, six have
been constructed. Construction of bridge at Gandi
Gad is in progress. Construction of the camp facilities
is about 30 percent complete. Land acquisition for
the Project has been completed. EIA study reports
of the Project and the transmission line have been
approved by the Ministry of Environment, Science
and Technology.

On December 21, 2006, China Gezhouba Water
and Power Group Company Limited (CGGC) was
awarded civil contract for the construction of the
civil works of the Project. The excavation work for
227.35 m long Adit No. 2, 274 m long, Adit No.3,
203 m long diversion tunnel, 116m long connecting
tunnel No 2 and 182 m access tunnel to desander
have been completed. Excavation works for Adit
No. 1, headrace tunnel, aeration tunnel, desander
and tailrace are in progress. Out of the total 6 km
of tunnel works, 1,260 m of tunnel excavation and
50 % of the excavation works of power house have
been completed.

Commitment has been received from the
Government of the Republic of Korea to provide
US$ 45 million as soft loan as per the minutes of
discussion held on September 26, 2007 between
GOoN and EXIM Bank of Korea to finance the cost
of electro-mechanical, hydro-mechanical and 132
kV transmission line. Loan agreement is expected
to be signed in the near future. Selection of Korean
consultants for electro-mechanical, hydro-
mechanical and 132 kV transmission line is nearly
complete. Preparation of the tender documents and
selection of contractors are in progress. The Project
is scheduled to be completed in year 2011.

Construction works of Chamelia Hydropower Project

नन जन जी ness ee न Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Middle Marsyangdi
Hydroelectric Project

Middle Marsyangdi Hydroelectric Project is located
near Besishahar in Lamjung District, Gandaki Zone,
about 170 km West of Kathmandu. This is a peaking
Run-of-River Project with an installed capacity of
70 MW and average annual generation of 398 GWh.
The power generated from the Project will be
evacuated through a 38.6 km long 132 kV
transmission line (single circuit) to Lower Marsyangdi
Power Station.

Financial Status

The Project is jointly funded by Government of
Germany through Kreditanstalt fur Wiederaufbau
(KfW) (contributing Euro 178.26 millions as grant),
the Government of Nepal (GoN) and Nepal Electricity
Authority (NEA). Fichtner JV is the consultant for
the Project. The Project was initially estimated to
cost US$ 181.27 million (equivalent to Euro 212

millions at exchange rate US$1=Euro 1.17) in year
2000. The Project cost was revised in January 2008
to Euro 274.84 million.

KfW has also provided additional Euro 2.5 million
for Neighborhood Support Program (NSP) and Euro
0.5 million for supporting projects along the
transmission line corridor and drinking water supply
project in Bhoteodar. The objectives of the NSP is
to improve the infrastructures related to education,
health, water support & sanitation and rural
electrification of eleven Village Development
Committees (VDCs) in the vicinity of Project area.

Progress Status

Project civil works which commenced from June
25, 2001 (Ashadh 11, 2058) is nearing completion
with 97% of the work already completed. Rock-fill

Over view of MMHEP Power House Site

roy

dam is one major component of the Project that
remains to be completed. In the powerhouse,
installation of the electromechanical equipment and
dry commissioning is in progress. Installation of
penstock steel liner has been completed. Installation
of Switchyard is also nearing completion. Erection
of all 115 transmission towers has been completed
and stringing work is in progress with 90% of the
work accomplished.

On the social front, the Project is carrying out various
activities such as resettlement work, vocational
training, and public health awareness program
targeting the inhabitants of project affected area
and local people.

As in the past, the Project continues to face
challenges that threaten the timely completion of
the Project. General security situation of the country,
strikes, fuel crisis, disputes with the contractor
-these are the major factors that tend to impede the
smooth implementation of the Project. Despite
numerous challenges, construction work has been
speeded up to make up for the past delays.
Impounding of the dam is now scheduled to start
from October 16, 2008 (Aaswin 30, 2065), and
subsequently the first unit will be commissioned by
end of year 2008 and the second unit by January,
2009. NEA is committed to achieve these target
dates.

Installation of Radial Gates at Headworks (View from Upstream)

A year in
Review

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Transmission and System
Operation Business Group

Transmission and System Operation (TSO)
Business Group of Nepal Electricity Authority has
three key responsibilities, namely, (1) design and
construction of transmission system of 66 kV and
higher voltage level, (Il) operation and maintenance
of transmission system of 66 kV and higher voltage
level and (Ill) scheduling and dispatching of major
and medium power stations connected to the Grid.
These three functions are entrusted respectively to
the Transmission Line/Substation Construction
Department, Grid Operation Department and System
Operation Department. Each of the departments is
headed by a Director.

Transmission Line/Substation
Construction Department

The Department undertakes design and construction
of transmission lines and substations of 66 kV and
higher voltage level from the preparatory phase to
final commissioning. Works at the preparatory
phase include design, acquiring survey/construction
licenses, field survey, environmental studies and
land acquisition. Government clearance for the
environmental/ social impact assessment (EIA/SIA)
studies is obtained prior to start of construction
works. Construction works are normally carried out
on turnkey contract basis and on completion the
facilities are handed over to NEA's Grid Operation
Department for operation and maintenance.
Presently, the Department is implementing several
transmission line and substation construction
projects. These Projects are summarized below.

Grid Substations Reinforcement Project

Nepal's Power Grid is increasingly subjected to
transmission congestion due to rapid growth in
electrification and demand. It has become a priority
to reinforce and expand transmission capacity to
match the planned augmentation in generation
capacity. Giving due consideration to this need,
NEA implemented Grid Substations Reinforcement

Project with the following scope of works:

(a) Installation of one unit of new 132/33 kV, 30
MVA, 3-phase power transformer and
associated facilities at Anarmani substation.

(0) — Installation of one unit of new 132/11 kV, 30
MVA, 3-phase power transformer and
associated equipment at Pokhara substation.

(c) Installation of one unit of new 132/66 kV,
3x12.6 MVA power transformers (bank of
three single-phase transformers) and
necessary facilities at Siuchatar substation.

The Project costing about US$ 3.2 million was
funded jointly by Asian Development Bank (ADB),
OPEC Fund for International Development (OFID),
NEA and GOoN,. The Project was initiated in FY
2005/06 (2062/63) and completed in January 2008
(FY 2064/65).

Thankot — Chapagaon - Bhaktapur
132 kV Transmission Line Project

A 132 kV transmission line of about 28.5 km length
will be constructed under this Project to complete
the 132 kV ring in Kathmandu Valley. Initially only
one circuit will be strung from Thankot (Matatirtha)
to Bhaktapur via Harisiddhi with ACSR (BEAR)
conductor and OPGW. About 26.5 km of the line
will comprise of double-circuit towers while remaining
2 km will be of four-circuit towers. The scope of the
project also comprises of the construction of a new
132 kV switching station at Matatirtha; a new 132/11
kV, 22.5 MVA substation at Harisiddhi and upgrading
of existing Bhaktapur and Balaju substations by
replacing existing 66/11 kV, 2x10 MVA transformers
with 132/11 kV, 2x22.5 MVA transformers at
Bhaktapur Substation and 66/11 kV, 2x22.5 MVA
transformer at Balaju Substation. The completion
of this Project will not only cater for the growing
power demand of Kathmandu Valley but will also
reduce system losses and improve quality and

reliability of power supply in the valley.

The construction work of the transmission line is
partially completed and construction of substation
is in progress. Estimated cost of the Project is NRs.
1271 million which is being funded jointly by ADB,
OFID, NEA and GoN. The Project is scheduled to
be completed by FY 2008/09.

Khimti — Dhalkebar 220 kV Transmission
Line Project

This is going to be the first 220 kV transmission line
of Nepal. The objective of the Project is to facilitate
power evacuation from the upcoming 309 MW Upper
Tamakosi Hydroelectric Project, provide a direct
route for export of power to India via Dhalkebar
substation, improve the voltage-drop problem of
eastern Nepal, and improve the reliability of power
withdrawal from Khimti-1 Hydroelectric Project.

Under the Project, a 75 km long 220 kV transmission
line will be built on double circuit towers from Khimti
Hydroelectric Project to Dhalkebar Substation using
single circuit ACSR BISON duplex conductor, and
132 kV line bays at both end of the line will also be
extended. The line will be charged at 132 kV level
initially. The cost of the Project is estimated at US$
22 million and is funded jointly by International

Development Association of World Bank, NEA and
GON and. The Project is scheduled to be completed
by FY 2008/09.

Chandranigahpur System Reinforcement
Project

The objective of the Project is to meet the increasing
electricity demand of Rautahat and Sarlahi districts,
to improve reliability and quality of power supply in
project covered areas including Birgunj and to
reduce system loss. The scope of this Project covers
construction of new substation at Chandranigahapur
consisting of 132/33 kV, 30 MVA and 33/11 kV, 8
MVA transformers with associated equipment and
74 km of 33 kV sub-transmission line to connect
the new Chandranigahpur substation with existing
33 kV substations at Harsaha, Haripur, Gaur and
Nijgadh. A noteworthy feature of the 33 kV sub-
transmission line is that AAAC-250 conductor will
be used for the first time in Nepal for this line.
Construction and commissioning of 132/33/11 kV,
30 MVA Chandranigahpur substation has already
been completed, whereas construction of 33 kV
sub transmission line is in progress. The Project is
jointly funded by WB, NEA and GoN and is estimated
to cost NRs. 421 million. The project is scheduled
to be completed by FY 2008/09.

132 kV Switchyard Chandranigahapur

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Kawasoti 132 kV Substation Project

The main objective of the Project is to provide
reliable and quality electricity supply to the
consumers in and around Nawalparasi district and
reduce system loss. Furthermore, this substation
will cater for the increased power demand of
industrial consumers, facilitate the integration of
new power projects to be developed by the
Independent Power Producers (IPPs), and will pave
way for the expansion of 33/11kV_ sub-
transmission/distribution network in the region.

Under this Project, a new 132/33/11 kV substation
at Pragatinagar will be established by looping in
and looping out the existing Bardghat-Bharatpur
132 kV transmission line. The Bharatpur — Kawasoti
33 kV line presently fed from Bharatpur substation
will then be transferred to this new substation.
Overhead 11 kV lines will be drawn out from this
substation to feed existing 11 kV distribution network.
Major components of the Project consist of
construction and installation of two 132 kV line bays,
one 132 kV transformer bay with 132/33 kV, 30
MVA power transformer; one 33 kV transformer bay
with 33/11 kV, 8 MVA power transformer, two
outgoing 33 kV feeders and 11 kV cubicles.

The Project is jointly funded by Japan International
Cooperation Agency (JICA), GoN, and NEA.
Estimated cost of the Project is about NRs 586.42
million, which is funded with a Japanese Grant of
JP¥ 847 million and contribution from NEA and
GON for the local cost component amounting to
NRs 139.45 million. Civil engineering construction
work such as equipment foundation and control
building has been started by the Japanese
Contractor. Equipment design and manufacturing
work are in progress. First lot of substation
equipment has arrived in site and remaining
equipment are expected to be delivered by
September 2008. The Project is scheduled to be
completed by the FY 2008/09.

Hetauda — Bardghat 220 kV Transmission
Line Project

As the first step in relieving the transmission
congestion along the Hetauda-Bardaghat corridor,
construction of Hetauda—Bharatpur 220 kV

Transmission Line and associated substations are
under implementation. The Project comprises of
construction of 70 km long 220 kV double circuit
transmission line using ACSR BISON duplex
conductors (initially only one circuit strung and
charged at 132 kV level) and OPGW. The aim of
the Project is to improve the reliability of the system
and ease in evacuation of full power from Kaligandaki
'A' hydropower station.

Tender has already been called for the transmission
line construction work. This first part of the Project
is jointly funded by IDA of World Bank, NEA and
GoN. Estimated cost for Hetauda-Bharatpur
transmission line component is US$ 16.8 million
and for substation component is US$ 4.5 million.
The Project is expected to be completed by
December 2010.

Hetauda - Bharatpur 132 kV Conductor
Upgrading Project

The load on Hetauda-Bharatpur 132 kV single circuit
transmission line has already exceeded the capacity
limit of 70 MW. A new 220 kV line is planned for
construction in this section. This Project has been
initiated as a provisional remedy for the period until
the commissioning of Hetauda— Bharatpur 220 kV
transmission line.

The Project comprises of replacement of the existing
ACSR PANTHER (200 mm2) conductor by AAAC,
UPAS (300 mm2) conductor. On completion, the
thermal capacity of the Hetauda-Bharatpur section
of the existing 132 kV transmission line will be
upgraded and which will help reduce system loss.
Estimated cost of this Project is NRs. 70 million and
is funded entirely by NEA. The Project is scheduled
to be completed by FY 2008/09.

Project Identification & Feasibility Study
for Transmission System Development

It is not feasible to build separate transmission lines
for connecting each of the planned medium and
small hydropower projects with the national grid.
This is one of the prominent constraints faced by
IPPs for development of hydropower projects. It
has been felt that a comprehensive transmission
line identification project is required to indentify the

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

techno-economically feasible transmission projects
for facilitating development of hydropower projects
in Nepal.

System Planning Department of NEA has identified
following six different transmission line corridors
based on secondary information.

७ Dhankuta-Titire corridor
७ Marsyangdi corridor

७ Modi-Butwal corridor

७ Kabeli/Tamor corridor

७ Sunkoshi corridor

The proposed Study Project will primarily build on
initial findings of System Planning Department. The
Study Project will be completed in FY 2008/09. The
cost of this Study Project is about NRs. 3.5 million
which will be borne by NEA.

Planned Projects

The following Projects have been planned to be
taken up for execution from FY 2008/09:

(a)। Middle Marshyangdi — Damauli - Marshyangdi
132 kV Transmission Line Project

(0) Kabeli -Damak 132 kV Transmission Line
Project

(८) Butwal - Kohalpur 132 kV Second Circuit
Transmission Line Project

(0) Pathlaiya 132 kV Substation Project

(e)। Anbukhaireni 132/33 kV, 15 MVA Substation
Project

(f) Matatirtha Substation Expansion Project

(g) New Marsyangdi — Matatirtha 220 kV
Transmission Line Project

(1) Damak 132/33 kV, 30 MVA Substation Project

(i) Syangja 132/33 kV, 15 MVA Substation
Project

(j) Chapali 132 kV Substation Project

(९)  Singati -Lamasangu 132kV Transmission
Line Project

Grid Operation Department

Besides the regular activities of operation and
maintenance, the Department has undertaken
various upgrading, reinforcement, reactive
compensation and rehabilitation works of grid
substations and transmission lines. Reinforcement
works executed by this Department in the overloaded
grid substations have helped reduce outages of the
substations. The Enhance Performance Reward
(EPR) was provided for the staff of the Departments,
Divisions and branch offices of the Business Group
from FY 2006/07. This scheme of rewarding for
performance has brought about visible improvement
in performance both on individual and team level,
and has helped in reducing system outages. Major
works undertaken by this Department in FY 2007/08
are summarized below.

Transformer upgrading and substation reinforcement
works accomplished in FY 2007/08:

(a) Repair, installation, testing & commissioning
of 132/33 kV, 10 MVA Power Transformer
with associated bay at Damauli Substation
to upgrade the substation capacity to 20
MVA;

(b) Addition of 66/11 kV, 6.3 MVA Transformer
with associated bay at switchyard of Sunkoshi
Power Station to evacuate power of IPP
Projects connected at 11kV;

(c) — Shifting and installation of 132/11 kV, 6/7.5
MVA Power Transformer from Pokhara to
Bardghat Substation to upgrade substation
capacity to 13.5 MVA;

(d) Replacement of 66/11 kV 7.5 MVA
Transformer by 66/11 kV 15 MVA Transformer

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

at Birgunj Substation to upgrade substation
capacity to 66/11 kV 30 MVA.

Transformer upgrading and substation reinforcement
works in progress:

(a) Construction of 132/33 kV, 15 MVA bay at
Lamosanghu Substation for evacuating
power of IPPs projects at Sunkoshi corridor;

(b) Construction of 33/11 kV Transformer bay
for 3 MVA Transformer at Damauli Substation
to upgrade substation capacity;

(c) Replacement of the 33/11 kV, 8 MVA
Transformer by new 16.6 MVA Transformer
along with the replacement of old circuit
breakers with new VCBs at Butwal
Substation;

(d) Replacement of the 33/11 kV, 3 MVA
Transformer by 8 MVA Transformer at Lahan
Substation;

(e) Interconnection of the 132 kV and 66 kV
systems with 45 MVA power transformer at
Parwanipur for system reinforcement of
Hetauda-Birgung sector to displace some
load from 66 kV transmission line and
improve voltage;

(f) Replacement of the 132/33 kV, 30 MVA
Power Transformer by a new 63 MVA
Transformer at Butwal Substation to upgrade
substation capacity to 93 MVA;

(g) Replacement of the 132/33 kV, 30 MVA
Power Transformer by a new 63 MVA
Transformer at Duhabi Substation to upgrade
substation capacity to 126 MVA;

(h) = Shifting and installation of the 132/33 kV, 5
MVA Transformer from Kohalpur Substation
to Mahendranagar Substation to upgrade
substation capacity to 12.5 MVA.

(i) Construction of double bus bar system at
Butwal and Chanauta Substations to facilitate
import of power from India;

(j) Replacement of protection relays at Lahan
Substation;

(k) Installation of 33 kV, 10 MVAr & 11 kV, 10
MVAr capacitor banks to improve system
voltage at Birgunj Substation.

Other works accomplished:

(a) Re-routing of Chilime -Trishuli 66 kV
Transmission Line (Tower No. 39-41);

(b) Testing of 200 relays and 80 energy meters
of various grid substations and IPP Projects.

System Operation Department

As the system operator, System Operation
Department is responsible for real time operation
and supervision of the Integrated Nepal Power
System (INPS). The Load Dispatch Center (LDC)
under this Department is equipped with Supervisory
Control and Data Acquisition (SCADA) system and
other facilities. The Department has been able to
achieve best possible combination of security,
economy and quality of supply from available
sources. It is worthwhile to mention that only 15
total system collapse events were recorded during
FY 2007/08 compared to 21 during preceding year.
This is equivalent to 28.5% reduction in system
collapses. Similarly, availability of real time data
and better communication system have improved
the overall availability of power stations and
transmission lines and has helped to minimize the
time required for restoration of the power system
following black-outs, thereby reducing NEA's loss
of revenue.

For the smooth functioning of the INPS, it is
necessary that the data acquisition from the power
stations and substations be updated according to
the latest changes/modifications in the respective
stations. The trained manpower in the LDC has
been able to keep the INPS data up-to-date in the
SCADA software. Maintenance team of System
Operation Department has maintained the data
acquisition and communication system as well as
computer hardware and software system in good

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

condition thereby recording above 99% availability
of the SCADA system. Besides the regular
maintenance work, new substations at Parwanipur
and Chapur have been integrated in SCADA System.
Additional spare optical fibers have also been leased
to Nepal Telecom and other private companies
thereby generating additional revenue for NEA.

Power Development Project NEA
Transmission and Distribution

The Power Development Project (PDP) is being
implemented under the loan/grant assistance of the
World Bank. The initial allocation to this Project was
about US$ 31 million. As part of the original scope,
the following projects are being implemented:

(a) Khimti-Dhalkebar 220 kV Transmission Line
Project;

(b) — Distribution and Rural Electrification Project;

(c) Chandranigahpur System Reinforcement
Project;

(d) Institutional Strengthening Project.

Under the Khimti-Dhalkebar 220 kV Transmission
Line Project, a 75 km long of 220 kV line is being
constructed. Distribution and Rural Electrification
Project consists of reinforcement of distribution
systems and electrification in Lalitpur, Bhakatapur,
Kavre, Dhading and Nuwakot districts. The
Chandranigahpur System Reinforcement Project
involves construction of a 132/33 kV substation at
Chandranigahpur and related 33 kV sub-
transmission lines. Finally the Institutional
Strengthening Project focuses in improving the
processes in finance, accounts and internal audits
within NEA.

The 220 kV Khimti-Dhalkebar Transmission Line
and the facilities under the Distribution and Rural
Electrification Project are currently under
construction. The 132/33 kV substation at
Chandranigahpur has recently been charged. The
activities under the NEA Institutional Strengthening

have been completed.

In February 2008, the Power Development Project
was restructured, whereby the scope of work under
NEA Transmission and Distribution was increased
providing an additional allocation of about US$ 36
million. Under this additional scope of work the
following projects are being implemented:

(a)।Hetauda-Bharatpur 220 kV Transmission
Line Project;

(b) Distribution System Reinforcement Project;
and

(c) Institutional Strengthening Project (Il).

The tender for the supply and installation of the
Hetauda-Bharatpur 220 kV transmission line has
recently been published. Under the Distribution
System Reinforcement Project rehabilitation of 33/11
kV substations at the following ten locations are
being implemented: (i) Khanar (ii) Inaruwa (iii)
Rupani (iv) Janakpur (v) Haripur (vi) Chanauli (vii)
Bhairahawa (viii) Ghorahi (ix) Tikapur, and (x)
Gularia. The activity also includes reinforcement of
the distribution networks in areas supplied by these
substations.

The various projects/activities implemented under
the Power Development Project fall under different
business groups or corporate offices. Distribution
and Rural Electrification Project is under
Electrification Business Group, while Distribution
System Reinforcement Project falls under
Distribution and Consumer Service Business Group.
The Project under the Transmission and System
Operation Business Group are Khimti-Dhalkebar
220 kV Transmission Line, Chandranigahpur System
Reinforcement Project, and Hetauda-Bharatpur 220
kV Transmission Line Project. The Institutional
Strengthening Project is under Finance. Further
details on these projects are given in sections
corresponding to respective Business Groups or
corporate offices. The expected completion date of
this Project is June 30, 2010.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Route Alignment Survey of Dhalkebar- Bhittamod 400kV
Transmission Line Project

Nepal - India Cross Boarder
Transmission Line Project

Under Cross Border Transmission Line Project,
three Indo-Nepal Cross border Transmission
Interconnections have been identified: NEA has
recently completed transmission line route alignment
survey of the following transmission links.

७ Duhabi-Purnia 400 kV, 90 km (Duhabi-
Jogbani, 25.8 km within Nepal)

७ Butwal-Gorkhapur 400 kV,100 km (Butwal-
Sunauli, 20.4 km within Nepal)

७ Dhalkebar-Mujaffarpur 400 kV, 140 km
(Dhalkebar- Bhittamod, 39 km within Nepal)

EIA study for the transmission lines are in progress
and expected to be completed within six months.
NEA and IL&FS Infrastructure Development
Corporation (India) have formed two special purpose
joint venture companies: "Power Transmission
Company Nepal Pvt. Ltd." (PTCN) having its
registered office at C/o NEA, Durbarmarg,
Kathmandu, and "Cross Border Power Transmission

Company Pvt. Ltd. (CPTC) having its registered
office in New Delhi, India. NEA and IL&FS
Infrastructure Development Corporation (India) will
own 50% and 50% equity respectively in PTCN,
whereas, CPTC is currently a 100% subsidiary of
IL&FS. As per the arrangement, IL&FS will offload
their shares to NEA and PGCIL by 26% each.

Each company is responsible for overall
construction, operation and maintenance of the
portion of cross border transmission line under the
respective country. Dhalkebar-Muzaffarpur 400 kV
line has been identified for implementation in the
first phase. Major components of the Project for the
first phase consists of construction of 2x100 MVA,
220/132 kV Substation at Dhalkebar and 39 km,
400 kV transmission line from Dhalkebar to
Bathanaha (Bhittamod). The Transmission Line will
be charged at 220 kV voltage level. Estimated cost
for this work is about NRS 1,553.32 million.
Tendering process is expected to be started from
FY 2008/09. The Dhalkebar-Mujaffarpur portion of
the project is scheduled to be completed within two
years.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Distribution and Consumer
Services Business Group

The Distribution and Consumer Services Business
Group (DCS) was formed in FY 2003/04 as a part
of internal unbundling process of Nepal Electricity
Authority (NEA) to strengthen customer focus and
operate NEA in line with commercial principles. This
is one of the core and the largest among the five
business groups of NEA in terms of number of
employees and business activities. DCS accounts
for about 55% of the total NEA staff providing various
services to about 97% of NEA customers.

This Business Group is entrusted with the key
responsibility of overall management of electricity
distribution network of NEA including operation,
maintenance, rehabilitation and expansion of the
network up to the 33 kV voltage level, together with
customer service activities like new connection,
meter reading, billing, revenue collection, customer
grievance handling and so forth. The Business
Group is also leading a campaign of encouraging
and supporting energy saving activities and Demand
Side Management for the optimal use of electricity.

This Business Group is headed by a General
Manager and is organized into three departments
at the center and five regional offices, each of which
is headed by a Director.

Performance Highlights

In FY 2007/08, total number of customers under
DCS reached 1,475,975, an increase of 9.32% over
the preceding fiscal year. Similarly, a total of 2,322.04
GWh of energy was sold earning a gross revenue
of Rs. 15,429.67 million in this FY. Compared to the
preceding FY, energy sales and gross revenue
earned by this Business Group increased by 6.61%
and 5% respectively. Number of customers, sales
and revenue contribution from different consumer
category under DCS for the period is depicted in
the following table.

No. of consumer

(% of total
consumers)

95.64%।40.36%!। 40.82%
€ H 4

0%

Sales। vserorup Group Revenue

6 .
0.39% 6.64% 8.
1.70%।39.21%। 36.46%

7.93%

The combined industrial and commercial consumer
categories represent only 2.09 % of the total number
of customers but accounts for 45.85% of total sales.
Similarly, the domestic consumer category
represents 95.64% of total number of customers
but accounts for 40.36 % of total sales.

During the year in review, the Government of Nepal
(GON) provided Rupees 100 million to complete
electrification works that have remained incomplete
for past several years. Almost all the works have
now been completed despite adverse situation
prevailing in the country. Completion of these works
will bring about addition of approximately 49,000
new customers benefiting around 267,000 people.

In FY 2007/08, a total of 998 Distribution
Transformers (DTRs) were installed at different
locations under this Business Group. Because of
the preventive measures taken, DTR failure rate
was reduced to around 7% as compared 13% of
the previous year. Around 65.5 km of 33 kV; 1,137
km of 11 kV and 3,052 km of 0.4 kV lines were
constructed in the FY.

The Business Group continued their drive of keeping
the distribution network up to par by undertaking
reinforcement and upgrading of the network at
various places. The highlights of major works carried
out in this FY are presented below:

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

(a) Substation Works
Upgrading of:

e existing 33/11 kV, 0.5 MVA transformer with
1 MVA capacity at Syangja.

७ existing 33/11 kV, 0.5 MVA transformer with
1.5 MVA capacity at Bhedetar.

७ existing 33/11 kV, 1.5 MVA transformers with
3 MVA capacity at Rajbiraj and Dhankuta.

Installation of:

७ 33/11 kV, 3 MVA transformers at Damak and
Haripur sub-station.

७ 33/11 kV, 1.5 MVA transformers at Sindhuli
and Guleriya.

७ 33/11 kV, 3 MVA transformer at Nepalgunj
old sub-station.

Extensions of 33 kV bay and breaker and control
panels have been carried out at Itahari Substation.

(b) Distribution Network

Upgrading of 13 km of 33 kV line, 59 km of 11 kV
line and 133 km of 0.4 kV line and distribution
transformers at 297 locations have improved and
strengthened the existing distribution network under
this Business Group.

(c) Customer Service

DCS is rendering service to NEA customers through
34 Distribution Centers and 32 branch offices spread
over 49 districts in the country.

As part of the drive to strengthen customer focus
and commercial orientation in its operations, NEA
had implemented the profit center concept by
enacting "Distribution Center Operation Regulation-
2059" in February, 2002, whereby the Distribution
Centers were required to operate on commercial
principle and the Center Chiefs were made
accountable in achieving specified performance
targets. Reduction of system losses, shortening of
average collection period, improvement in stock

utilization, enhancement of quality customer
services, improvement of overall efficiency, increase
in sales and reduction of costs were defined as the
major performance areas.

With several years of experience, NEA has now sat
out to bring about changes in the regulation so as
to enhance its effectiveness. A committee formed
to review the existing regulations and the
recommendations of expatriate consultants is
working on the task.

(d) Customer Service Reforms

To provide better service to the customers, DCS
has introduced Queue Management System (QMS)
in its cash collection operations in Nepalgunj,
Mahendranagar and Dhangarnhi, in FY 2007/08.
With this, 14 collection centers spread over different
districts now have the QMS facility.

(e) Loss Reduction Activities

Metering units and energy meters are being installed
with priority in the incoming and outgoing feeders
of all the distribution substations under this Business
Group. This measure will help identify high loss
areas and facilitate launching of loss control program
focusing on those areas.

DCS has taken measures such as upgrading of
overloaded conductors and replacement of defective
insulators, to reinforce distribution network with a
view to bring down technical losses. Use of Ariel
Bundle Conductor has been encouraged in pilferage
prone areas.

Stringing of single wire has been emphasized
especially for street lighting purpose. In FY 2007/08,
about 375 km of single wire has been strung and
150 meters and 65 photovoltaic switches have been
installed at different locations.

(f) Demand Side Management

DCS has initiated Demand Side Management
campaign targeting the customers to heighten their
awareness on efficient use of electricity. Medias
such as print, hoarding boards, TV are being used
to deliver the messages to the customer effectively.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

(g) Information Technology

With a view to enhance the management of
information and quality of decision making, DCS
continues to explore on the use of information
technology in its processes. DCS Mail Club
launched in FY 2006/07, continues to give desirable
results on quick sharing of information and problem
solving.

(h) Local Interactions

The concept of interaction program initiated in FY
2006/07 with a view to bridge the gap of perception
among the stakeholders and improve the
performance of DCS was continued in FY 2007/08
too. During the year in review, interactive workshops
were organized at Biratnagar, Bhadrapur, Damak
and Rajbiraj Distribution Centers. Though planned,
the program could not be held in other regional
offices due to disturbances and security concern.

(i) Human Resource Development

To enhance the technical and managerial knowledge
and skill of the employees, about 175 technical and
non-technical staff under DCS were deputed to
participate in various training programs and seminars
organized by NEA and other agencies.

Ongoing Projects

(a) Computerized Billing Project

Computerized Billing System developed under this
Project has been in operation in 20 revenue
collection centers. It is planned to implement this
system in remaining 102 revenue collection centers
by July, 2009.

From year 2009, the Project will also implement
Computer Assisted Interactive Voice Response
Service in major branch offices which will facilitate
customers to know their payment dues and to access
other service related information over the telephone.

The Project is also planning to introduce Hand Held
Meter Reading Device in major branch offices in

this FY. The use of this Device will help to eradicate
errors in meter reading attributed to the human
factor.

(b) Chitwan Madi Electrification Project

This Project designed to electrify Madi area of
Chitwan is financed jointly by Government of India
(Gol) and Government of Nepal (GoN). Scope of
work of the Project includes the construction of:

७ 33/11 kV, 3 MVA substation at Madi
७ 22 km of 33 kV overhead line
७ 10 km of 33 kV underground cable

७ 30 km of 11 kV line and 50 km of 0.4 kV line
using ABC cable

Gol is providing a grant assistance of approximately
US$ 1.5 million with the balance amount required
for the Project being provided by GON. In FY
2007/08, the survey license for the Project has been
obtained and the EIA study is in process.

(c) Distribution System Reinforcement
Project

The scope of the Project includes upgradation of
distribution substations at 10 locations, construction
of 64 km of new 11 kV line, rehabilitation of 96 km
of existing 11 kV distribution network, 59 km of 0.4
kV new line using ABC Cable and rehabilitation of
168 km of existing 0.4 kV distribution network.

This Project will be jointly financed by World Bank
(WB), GoN and NEA. The Project covers Sunsari,
Saptari, Dnanusha, Chitawan, Rupandehi, Dang,
Bardiya, Kailali and Sarlahi districts and is in the
tendering stage.

(d) Energy and Customer Accountability
Enhancement Project

This is a World Bank funded project for which
expression of interest for the selection of consultant
has already been invited. The Project is mainly
aimed at (i) putting in place a system for regular
energy audit of large customer and verification of

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

the accuracy of the metering system, (ii) setting up
of the remote metering of large consumers via GSM
or other appropriate communication network, (iii)
implementation of GIS-based Distribution Network
Management (DNM) and Customer Relations
Management (CRM) system in five distribution
centers in the Kathmandu valley, (iv) enhancement
of the existing billing system and development of
necessary interface.

In addition to the above activities, DCS is also
working with the Energy Sector Management Project
(ESMAP) of the World Bank to implement energy
audit activities with a view to reduce losses in the
distribution system.

(e) Rural Electrification through Indian
Grant Assistance

Under the grant assistance of Government of India,
rural electrification in some of the VDCs of Sarlahi,
Siraha, Dnhanusha, Rupandehi, Dang and Nuwakot
has been proposed. The Project will be implemented
by the concerned District Development Committees
(DDCs) and NEA will provide technical assistance.

Proposed Projects

(a) Distribution System Reinforcement
Project

This Project covers construction of new distribution
substations at 9 locations, new switching stations
at 3 locations and upgradation of existing substations
at 3 locations covering Jhapa, Siraha, Dhanusha,
Mahottari, Sarlahi, Kaski, Parbat, Syangja, Gorkha,
Banke, Bardiya, Kanchanpur, Dadeldhura and
Kathmandu districts. In FY 2007/08, DCS has
submitted a preliminary Project Study Report to the
ADB and is under review by the latter.

(b) Project for Energy Efficiency
through Loss Reduction

This Project to be implemented with ADB loan is
aimed at adoption of best network design and
construction practices starting from 33/11 kV

substation right down to the customer connection.
Distribution network in Kathmandu valley and Birgunj
will initially be targeted which will then serve as a
model for distribution energy efficiency improvement
activities across the rest of NEA's distribution
network.

(c) Project for Introduction of Compact
Fluorescent Lamps (CFLs)

With the loan from ADB, a financing modality for
the widespread adoption of CFLs for lighting will
be developed, executed and monitored. A program
for creating awareness in the use of CFLs will be
formulated and executed extensively.

(d) Project for Solar Powered Street
Lighting

This Project is aimed at installing solar powered
street lighting systems and setting up a system to
ensure their proper maintenance. Under this Project,
replacement work of defective solar powered street
lighting systems will also be undertaken. The Project
will be financed by ADB, GoN and NEA. This Project
is felt necessary to prevent arising of any disputes
with municipalities over payments of street light
bills.

Effect of Terai Disturbance and
Petroleum Product Shortages

The disturbance in Terai that started in
January/February, 2007 and continued throughout
the year did create numerous hurdles on the smooth
functioning of distribution and customer services.
Scarcity of petroleum products also further
hampered the normal operation of offices with the
restriction in the movement of both staff and
materials throughout the year. In addition, security
concern including the cases of extortions (to the
extent of killing of one of the staff at Birgunj and
kidnapping and manhandling of several NEA
employees) resulted in lowering of the staff morale.
These crisis's had adverse cascading effects on
the overall performance of DCS including the loss
reduction activities.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Electrification

Business Group

Electrification Business Group, headed by a General
Manager, is mainly responsible for rural electrification
in Nepal. Besides rural electrification, the Business
Group also oversees distribution and consumer
service functions of 18 centers located at different
districts. These centers serve 48,297 consumers in
total.

Centers S.N] Centers

Baglung। 13.236 Terhathum
Tatopani 523
5,896
Kalikot 573
Baitadi 6,149
Khandbaril 4790
Achham 1,584

Dolpa 716
Doti 4,518 Arughat

Total Number of Consumers। 48,297

No. of Consumers under Electrification
Business Group

Ramechhap
Myagdi Bajura
Okhaldhunga
Rupalgad
Helambu
Manang

Chame

1
2
3
4
9
6
7
8
9

Presently, several projects are being implemented
under this Business Group. The ongoing donor
assisted projects are: Rural Electrification,
Distribution and Transmission Project with loan
assistance from Asian Development Bank;
Distribution and Rural Electrification Project financed
by the World Bank; Kailali-Kanchanpur Rural
Electrification Project funded by DANIDA and Ilam
Rural Electrification Project with Non-project grant
assistance from the Government of Japan. Apart
from these, with financing from GoN, many rural
electrification projects are under implementation
through Small Hydropower and Rural Electrification
Department and Community Rural Electrification
Department of this Business Group. The highlights
of the activities of different departments and projects
under this Business Group are presented below.

Small Hydropower and Rural
Electrification Department
(SHPRED)

SHPRED is responsible for construction, operation
and maintenance of isolated small hydropower
plants, execution of rural electrification, extension
of the National Grid to remote hilly regions and the
establishment of distribution system to provide
electricity service to rural population. Under the
Department, 26 small hydropower plants, 2 solar
plants and 7 distribution branch offices carry out
various activities related to operation maintenance
of electricity generation, distribution, customer
service and so forth, covering 27 districts in 12
zones of the country. Out of 26 small hydropower
plants, 7 have been leased out to private firms and
4 have been leased out to the consumer
communities, which operate under the guidelines
set forth by NEA. A number of 33 kV transmission
lines and 33/11kV substation projects are under
construction. The status of projects carried out by
SHPRED in FY 2007/08 is summarized below.

Heldung Small Hydropower Project (Humla
District)

Construction work of this 500 kW project, which
commenced in FY 2001/02, is almost fully complete.
The power plant has been commissioned and has
started power generation from May 27, 2008

Gamgad Small Hydropower Project (Mugu
District)

Construction work of this 400 kW project was
commenced in FY 2001/02. Construction of most
of the civil structures have been completed. Penstock
pipes have been manufactured and transported to
the site. The Project is scheduled to be completed
within FY 2007/08.

Buipa-Okhaldhunga 33 kV Transmission Line
Project (Khotang and Okhaldhunga Districts)

Major components of the Project consist of

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

construction of 32 km of 33 kV transmission line,
30 km of 11 kV and 25 km of 0.4 kV distribution line
and two 33/11 kV, 1.5 MVA substations in
Okhaldhunga and Khotang districts. Construction
of 33/11 kV, 1.5 MVA substation at Buipa,
Okhaldhunga is expected to be completed by the
mid of FY 2008/09. Altogether, 26 km of 33 kV
transmission line, 3.5 km of 11 kV transmission line
and 6.5 km of 0.4 kV distribution line have been
completed. Construction of the 33kV transmission
line is nearing completion.

llam-Phidim-Taplejung 33 kV Transmission
Line Project (Panchthar and Taplejung
Districts)

Major components of the Project include the
construction of 90 km of 33 kV transmission line
and 33/11 kV, 1.5 MVA substation in Phidim and in
Taplejung districts. Out of 90 km long 33 kV
transmission line, 60 km line has been constucted
and poles for 13 km line have been erected.
Construction of 33/11 kV, 1.5 MVA Substation at
Phidim is in progress and is expected to be
completed soon.

Sitalpati-Musikot 33 kV Transmission Line
Project (Salyan and Rukum Districts)

As the major component under this Project, 50 km
of 33 kV transmission line and two 33/11 kV
substations of 1.5 MVA capacity one each at Sitalpati
and Musikot will be constructed. Out of 50 km long
transmission line, pole erection up to Musikot has
been completed and stringing of conductor for 32
km line has been completed. Construction of 33/11
kV, 1.5 MVA substation at Sitalpati and 33 kV bay
extension at Tulsipur are ongoing and are expected
to be completed in FY 2008/09.

Chhinchu-Rakam-Jajarkot 33 kV Transmission
Line Project (Surkhet and Jajarkot Districts)

The major components of this Project are:
construction of 70 km of 33 kV transmission line,
45 km of 11 kV and 45 km of 0.4 kV distribution line
and two 33/11 kV substations in Surkhet and Jajarkot
districts. Out of 70 km long 33 kV transmission line,
pole erection for a distance of 49 km and stringing
of conductor for 33 km and 7 km of 11kV/0.4kV line
has been completed in FY 2007/08. Construction
of 33/11 kV, 750 kVA substation at Rakam is going

on and is expected to be completed in FY 2008/9.

Ghorahi-Holeri 33 kV Transmission Line
Project (Rolpa District)

As the major components under this Project 45 km
of 33 kV transmission line, 50 km of 11 kV and 50
km of 0.4 kV distribution lines and one 33/11 kV,
1.5 MVA substation will be constructed in Rolpa
district. Construction of 33 kV transmission line from
Ghorahi to Holleri has been completed and 9 km
of 11 kV/0.4 kV line has been completed in FY
2007/08. Construction of 33/11 kV, 750 kVA
substation at Holleri and 33 kV bay extension at
Ghorahi are going on and are expected to be
completed in FY 2008/09.

Udipur-Besisahar-Manang 33 kV Transmission
Line Project (Lamjung and Manang Districts)

This Project includes construction of 90 km of 33
kV transmission line, 53 km of 0.4 kV distribution
line, one 33/11 kV, 1.5 MVA substation at Manang
and 33 kV bay extension in the existing Udipur
substation. Out of 90 km, pole erection up to a
distance of 45 km and stringing of conductor for a
distance of 15 km have been completed for the 33
kV transmission line.

Dadeldhura-Baitadi 33 kV Transmission Line
Project

Major works of this Project are: construction of 52
km of 33 kV transmission line, 15 km of 0.4 kV
distribution line, one 33/11 kV, 3 MVA substation at
Baitadi and 33 kV bay extension in the existing
Dadeldhura substation. Construction of 33 kV
transmission line from Dadeldhura to Baitadi has
been completed. Construction work of 33/11 kV, 3
MVA substation at Baitadi is in progress and is
expected to be completed in FY 2008/09.

Dhankuta-Hile-Leguwa-Bhojpur 33 kV
Transmission Line Project

Major works under this Project are the construction
of 40 km of 33 kV transmission line, 52 km of 11 kV
line, 50 km of 0.4 kV distribution line and one 33/11
kV substation in Bhojpur district. Construction of
substation at Bhojpur is in progress and is expected
to be completed in FY 2008/09. Construction of 33

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

kV Transmission line from Hile to Bhojpur is nearing
completion.

Tumlingtar-Dingla-Bhojpur 11 kV Transmission
Line Project

Construction of 30 km of 11 kV transmission line,
25 km of 0.4 kV distribution line in Sankhuwasabha
and Bhojpur districts are the major works under this
Project. Line survey work has been completed and
erection work of 18 km of 11kV/0.4 kV line has also
been completed.

Rasuwaghat-Khotang 33 kV Transmission
Line Project

Major works to be carried out under this Project are:
construction of 14 km of 33 kV transmission line,
one 33/11 kV, 1.5 MVA capacity substation at
Rasuwaghat of Khotang district, 90 km of 11 kV and
90 km of 0.4 kV distribution lines in Khotang district.
Out of these, 6 km of 33 kV transmission line, 11.74
km of 11 kV and 18 km of 0.4 distribution line
construction have been completed. Construction of
33 kV bay extension at Jaljale substation, Gaighat
is going on and is expected to be completed soon.

Dipayal-Sanfebagar-Manma-Jumla 33 kV
Transmission Line Project

Major works of the Project are: construction of 100
km of 33 kV transmission line, 15 km of 11 kV line
and 3 nos. of 33/11 kV, 630 kVA substations at
Sanfebagar, Manma and Jumla. The Initial
Environmental examination (IEE) and line survey
have been completed. The contract for pole erection
for 10 km of 33 kV transmission line has been
awarded and is scheduled to be completed soon.

Description

Dailekh Substation Project

Construction of 25 km of 33 kV transmission line,
15 km of 11 kV line and one 33/11 kV, 750 kVA
substations at Dailekh are the major works to be
implemented under this Project. Survey work for
the 33 kV transmission line has been completed.
Land acquisition for the substation construction has
been completed.

Community Rural Electrification
Department

In order to promote community participation in rural
electrification, GON has declared a policy, whereby
80 percent of the capital cost of electrification will
be provided by the government, provided that, the
community bears the balance 20% of the cost. To
promote and regulate the activity, NEA has enacted
"Community Distribution Regulation-2060". Following
the enactment of the regulation, Community Rural
Electrification Department (CRED) was established
in February 2003 to carry out community based
rural electrification works in an organized way. The
public response to this initiative of NEA has been
overwhelming. Altogether, 176,000 households are
going to be added to the distribution system after
completion of programs approved till F/Y 2007/08

CRED status till June 30, 2008

Details of Works accomplished under CRED from
2004/05 to 2007/08

HT Line length 1,130 km
LT Line Length 3,266 km
Distribution Transformer 745 Nos.
33/11 kV, 3 MVA Substation 3 Nos.

4। 444

Applications approved a। a0

Currently in operation 47 (30 Districts) 19 (24 Districts)। -।] 66।

Note:

CBRE: Community Based Rural Electrification Program;

CBOM: Community based Operation and Maintenance
CBG: Community based generation

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Rural Electrification, Distribution
and Transmission Project

Rural Electrification, Distribution and Transmission
Project (REDTP) is being implemented with loan
assistance from Asian Development Bank (ADB)
and OPEC Fund for International Development
(OFID). GoN and NEA are financing the local
expenses of the project. Out of six components of
the REDTP, the following components have already
been completed.

७ Grid Substation Reinforcement Project
७ Fixed Assets Revaluation Project
७ Distribution District Profit Center Project

The following remaining components are under
implementation and are expected to be completed
in FY 2008/09.

७ Rural Electrification and Distribution System
Reinforcement Project

७ Computerized Billing Project

७ Thankot-Chapagaon-Bhaktapur 132 kV
Transmission Line Project

Rural Electrification and
Distribution System
Reinforcement Project

The Scope of this Project includes rural electrification
in 22 Districts covering 277 VDCs of the Eastern,
Central and Western development regions.
Estimated cost of the Project is US$ 37.3 million.
The Project is jointly funded by ADB, GoN and NEA.
So far, nearly 92% of works under the Project have
been completed and the remaining works are
expected to be completed in FY 2008/09. The Project
comprises of Rural Electrification (RE) and
Distribution System Reinforcement (DSR)
components as follows.

Rural Electrification Component

Description

New area 33/11 kV Substations, nos। 8।

Distribution transformers (11/0.4 kV

nos

Total increase in distribution transformers 34.55
capacity in MVA

Distribution System Reinforcement
Component:

No. of districts

33/11 kV Substations Upgrading, 12

Rehabilitation

Distribution transformers (11/0.4
nos

Low voltage line (new
upgradation), km

Distribution and Rural
Electrification Project

The Distribution and Rural Electrification Project is
being implemented in five districts, namely, Dhading,
Nuwakot, Lalitpur, Bhaktapur, and Kavrepalanchok
with funding from International Development

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Association (IDA) of the World Bank under the Power Development Project. Power Development Project
was formulated to help realize the government's objective of increasing the population coverage of electricity
service by extending the distribution network to the nook and corner of the country. Total estimated cost
of the Project is NRs. 859 million. Physical progress up to FY 2007/08 was 85.36%. The Project is scheduled
to be completed by FY 2008/09.

Rural Electrification Schemes

Rural Electrification schemes cover the extension of the sub-transmission and distribution systems to the
rural areas yet to be electrified. The Project scope is summarized below.

किल्ला, तार?
हा
[०।

Distribution System Reinforcement Schemes

This Project covers the reinforcement and replacement of the existing system in Laltipur, Bhaktapur and
Kavrepalanchok districts. The Project scope is summarized below.

ति

llam Rural Electrification Project for electrification of 11 VDCs only. Later NRs. 45
million was added for additional 6 VDCs. In FY

The Project plans to provide electricity to 10,659 2007/08, additional sum of NRs. 20 million was
households in 17 Village Development Committees provided by the Government of Japan as grant.
(VDCs), namely, Maipokhari, Sulubung, Jamuna, 1005 the total Project cost adds up to NRs. 135

Soyang, Nayabazar, Chisapani, Siddhithumka, million. Scope of work consists of construction of
Mangalbare, Dhuseni, Jitpur, Phakphook, Laxmipur, 316 km of 11 kV line, and 284 km of 400/230 volt
Shantipur, Shree Antu, Godak, Danawari and line and installation of 71 nos. of distribution

Samalbung of Ilam district, Mechi Zone. The Project _ transformers. The Project is scheduled for completion
was started on July 17, 2006 with NRs. 70 million in FY 2007/08.
Non Project Grant (NPG) of Government of Japan

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Rural Electrification in llam

Kailali Kanchanpur Rural
Electrification Project

Kailali Kanchanpur Rural Electrification Project
started in 1999 with DKK 85 million grant assistance
of Danish Government and NRs. 420 million of GoN
and NEA. The Project works are now nearing
completion. The original design of the Project was
found insufficient to cater the future load of the area
and therefore, redesigning was carried out in May
2006 which required construction of additional four
new substations (10.5 MVA) through extension of
70 km of 33 kV line, upgrading of distribution
transformers and conversion of two phase
distribution system to three phase in the load centers.
The Project will supply electricity to around 70,000
new consumers of 33 VDCs and one municipality
in Kailali and Kanchanpur districts.

So far, 33/11 kV, 3 MVA substations at Lamki,
Attariya, Lalpur, Joshipur, Choumala and Jhalari;
and 33/11 kV, 1.5 MVA substation at Shripur have
been completed. Similarly, construction of 82 kV of
33 kV, 419 km of 11 kV and 1,970 km of 400/230
V lines also have been completed. The first three
substations are already in operation and have
resulted in improvement of the voltage and supply
situation in the districts while other four are at the
last stage of testing, charging and commissioning.
Around 52,000 new consumers are already supplied
with electricity from the completed lines.

The Project requires that the substation and high
voltage lines shall remain as property of NEA while
the low voltage distribution line and distribution
transformers shall be handed over to load centre
based electricity user's cooperatives which will be
responsible for owning, operating and maintaining
distribution systems.

Altogether, 216 cooperatives have been registered
at district cooperative offices. Umbrella organization
of cooperatives covering both the districts has been
established and it will provide technical, management
and administrative support to load centre based
cooperatives. The cooperatives will get a subsidy
of NRs. 7,200 per household while the balance of
investment in low voltage distribution line, transformer
and service connections will be provided as an
index loan at 2% real rate of interest over 20 years
to be collected along with payment for NEA's
wholesale supply of electricity. Distribution lines
have been handed over to 143 cooperatives
supplying power to 32,000 consumers.

Sindhu Dolakha Distribution Line
Extension Project

Started in FY 1999/2000, the project is under
implementation with funding from the Government
of Nepal. The Project is expected to benefit about
50,000 households, and some small and medium
industries in Dolakna and Ramechhap districts. The
major works under the project are as follows.

७ Construction of 82 km of 33kV, 200 km of 11
kV and 460 km of low voltage line.

७ Installation of 278 nos. of distribution
transformers.

७ Construction of 4 nos. of 33/11 k V, 1.5 MVA
Substations at Makaibari, Jiri, Kirnetar and
Singati

The 1.5 MVA substations at Jiri and Makaibari have
been completed. Likewise, constructions of 18 km
of 11 kV and 12 km of 400 volts lines have been
completed. Construction of Singati Substation is
scheduled to be completed by FY 2008/2009. The
Project is expected to be completed by FY 2009/10.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Engineering Services

Business Group

Engineering Services Business Group comprising
of four departments, namely, Project Development
Department, Environmental and Social Studies
Department, Soil Rock and Concrete Laboratory
and NEA Training Center Department is one of the
five business groups of NEA. The Business Group
also oversees the management of Electromechanical
Design Division, Concrete Pole Plants and Central
Workshop. With over two decades of experience in
the field of hydropower development, this Business
Group has been providing services to clients inside
and outside of NEA on all technical works related
to study and implementation of hydropower projects.
Various activities carried out during FY 2007/08 by
different departments and wings under this Business
Group are summarized below.

Project Development Department

Project Development Department performs activities
related to project studies, consulting services and
construction supervision of hydroelectric projects.
The Department is involved in the development of
various hydroelectric projects under NEA. A brief
description of such projects and their status are
given below:

Upper Trishuli 3-A Hydroelectric Project

Upper Trishuli 3-A Hydroelectric Project is a run-of-
river project with 4 km long headrace tunnel and
an underground powerhouse. The Project is located
in Rasuwa and Nuwakot districts, about 80 km
northwest of Kathmandu. With installed capacity of
60 MW, the Project will generate about 460 GWh
of energy annually. Headwork lies nearly 15 km
north of existing Trishuli Hydropower Station
Diversion Weir. Powerhouse is about 5 km south
of the proposed headwork site. For evacuation of
the power, a 48 km long 220 kV transmission line,
connecting the Project to the upcoming Matatirtha
Substation in Kathmandu is being planned.

The Detailed Project Report (DPR) of Upper Trishuli
3-A was completed in FY 2006/07. Project

Development Department is currently preparing
contract document for construction of the Project
under Engineering, Procurement and Construction
(EPC) model. Environmental Impact Assessment
Study of the Project including transmission line is
in progress.

The Project is estimated to cost US$ 109 million.
This Project will be implemented through soft loan
from the Government of China. Construction work
is planned to commence in 2008/09 as a part of
fast track program to augment the generation
capacity of NEA. The Project is scheduled to be
commissioned by year 2011.

Headrace Tunnel

Powerhouse

Schematic Layout of structures of Upper Trishuli
3- A Hydroelectric Project.

Upper Trishuli 3-B Hydroelectric Project

Upper Trishuli 3-B Hydroelectric Project, located in
Nuwakot district, about 75 km northwest of
Kathmandu, is a cascade development of Upper
Trishuli 3-A Hydroelectric Project. So the Project
shares most of the infrastructures, such as access
road, transmission line, headwork, and desanding
basin of Upper Trishuli 3-A Hydroelectric Project.
The intake site is located at Simle near the tailrace
outlet of Upper Trishuli 3-A Hydroelectric Project.
Powerhouse site is located about 3 km south of
intake site. The Project comprises of a head-pond,
3 km long headrace tunnel, surge tank, inclined
shaft, pressure tunnel and a surface powerhouse
as major structures. Powerhouse is equipped with

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

two units of Francis turbines. With 40 MW as the
installed capacity, the Project will generate about
296 GWh of energy annually. The Department has
recently accomplished preparation of the Detailed
Project Draft Report for this Project. The Project is
estimated to cost US$ 68 million. NEA plans to raise
the required fund for the Project through local
resources. The Project is expected to be
commissioned in year 2013.

छ छ > a * न
Powerhouse area of Upper Trishuli
3-B Hydroelectric Project.

Rahughat Hydroelectric Project

Rahughat Hydroelectric Project is a run-of-river
scheme with 6 km long headrace tunnel and a
surface powerhouse. The Project is located in
Myagdi district, about 83 km west of Pokhara. With
installed capacity of 30 MW, the Project will generate
about 186 GWh of energy annually. Beni-Jomson
road passes through the powerhouse site and about
12 km of additional road is required to be built to

fe क, wht

Proposed Headwork site of Rahughat
Hydroelectric Project.

meres

access the headwork site. For evacuation of the
power, a 28 km long 132 kV transmission line,
connecting the Project to the Modi Khola
Hydroelectric Project switchyard is being planned.
The Department has completed the upgraded
feasibility study of the Project. Cost of the Project
is estimated at US$ 66 million. The Line of Credit
facility provided by the Government of India through
Export Import (EXIM) Bank of India will be utilized
to implement the Project. The Project is expected
to be commissioned in year 2013.

Upper Seti Storage Project

Upper Seti Storage Project will have an installed
capacity of 128 MW and average annual energy
generation of 476 GWh. The Project comprises of
a 140 m high concrete dam in Seti river near
Damauli, 195 m long penstock, an underground
powerhouse and ancillary structures. Power
evacuation will be effected through a 40 km long
220 kV transmission line to the upcoming New
Bharatpur Substation. With construction period of
5 years, the Project is estimated to cost US $ 328
million.

NEA is currently undertaking Environmental Impact
Assessment study for the transmission line and
hydrological and sediment study. NEA has completed
the Upgrading Feasibility Study of Upper Seti
(Damauli) Storage Project under the Technical
Assistance from Japanese Government through
JICA in 2006/07. NEA is considering various options
for financing the Project.

Cross Border Transmission Line Survey

During the year in review, Project Development
Department carried out detailed survey for
Dhalkebar- Bhittamod (39 km) section of Dhalkebar-
Mujaffarpur 400 kV Cross Border Transmission
Lines which is one of the three cross border
transmission lines proposed to be built under special
purpose companies to facilitate the power trading
between Nepal and India. Detailed topographical
survey of 25.80 km long Duhabi — Jogbani and
20.40 km long Butwal — Sunauli 400 kV Transmission
Lines were completed in the FY 2006/07.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Feasibility Study of Nalsyagu Gad Storage
Project

The feasibility study of Nalsyagu Gad Storage Project
(400 MW) is being carried out by this Department
from FY 2007/08. The Project is located in Jajarkot
District in the Mid-western Development Region.
An access road of approximately 30 km length is
required to reach the powerhouse site from the
district head quarter. Additional 20 km long road is
required to be built to access other components of
the Project.

As per the pre-feasibility study, the Project comprises
of a 189 m high rockfill dam, 7 km long concrete
lined head-race tunnel, surge tank, inclined shaft
and a surface powerhouse as major project
components. The Project will be connected to the
National Grid through a 105 km long 220 kV double
circuit transmission line to Kohalpur Substation.
Total Project is estimated to cost US$ 539 million.
As the first part of feasibility study, hydrological
study and topographic survey works are initiated in
FY 2007/08. The study is scheduled to be completed
by the end of FY 2009/10.

- 7 9
- ¥ क

Nalsyagu Gad Storage Project : Reservoir
area as seen upstream of proposed dam site.

Project Identification Study

Project Identification study is aimed at producing
an updated project inventory for future development
purpose. Two medium scale hydroelectric projects,
namely Upper Tamakoshi-A and Upper Rahughat,
were identified and their preliminary studies were
completed in FY 2007/08.

Upper Tamakoshi-A Hydroelectric Project is located
at the northern part of Dolakha district. Nine km of

road will be required to be built to access this Project
from the headwork site of Upper Tamakoshi
Hydroelectric Project. This will be a conventional
run-of-river type of project with installed capacity
45 MW. Average annual generation is estimated at
227 GWh. Power evacuation will be effected through
a 9 km long single circuit 132 KV transmission line,
linking this Project with the Upper Takamoshi
Hydroelectric Project. Estimated cost of Project is
US$ 63 million.

Upper Rahughat Hydroelectric Project is located in
Myagdi district, about 92 km Northwest of Pokhara.
About 9 km of road is required for accessing the
Project from the dam site of Rahughat Hydroelectric
Project. This will be a run-of-river type of project
with installed capacity 32 MW. The Project will
generate about 201 GWh annually. For power
evacuation, a 10 km long single circuit 132 KV
Transmission Line connecting this Project with
Rahughat Hydroelectric Project switchyard will be
required to be built. The Project is estimated to cost
US$ 52 million.

Other Activities

Other activities carried out in FY 2007/08 by Project
Development Department are:

७ Construction supervision of the Chameliya
Hydroelectric project in association with J/V
of local consulting firms: Shah, SILT and
ICON.

७ Detailed topographical survey of 82 km long
Kabeli-Damak 132 kV Transmission Line.

७ Construction drawing preparation for

Kulekhani Ill Hydroelectric Project.
७ Sediment Survey at Kulekhani reservoir.
७ Design of staff quarters at Nuwakot, Dhading

and Lalitpur for Distribution and Rural
Electrification Project.

७ Design Review and preparation of tender
document for Galwa Gad Small Hydroelectric
Project.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Environmental and Social Studies
Department

Environmental and Social Studies Department
executes activities related to the environmental
aspects of all projects undertaken by NEA.
Environmental studies were pioneered in Nepal by
NEA in 1987 by establishing Environmental Unit.
This cell has now developed into a full-fledged
commercial Department and is working in close
association with national and international consulting
companies in undertaking Environmental Impact
Assessment (EIA), Initial Environmental Examination
(IEE), monitoring and implementing mitigation
measures and environmental auditing of
hydroelectric, transmission line and distribution line
projects.

In FY 2007/08, the Department obtained EIA
approval for Hetauda—Bardaghat 220 kV
Transmission Line project, prepared Scoping
Document and Terms of Reference of the prioritised
cross-border 400 kV Duhabi—Jogbani and Butwal—
Sunauli Transmission Line and Dumre—Damauli
132 kV Transmission Line Projects. The Department
has recently started implementation of environmental
monitoring and mitigation program of Chameliya
Hydroelectric Project and Khimti-Dalkebar 220 kV
Transmission Line Project. Furthermore, the
Department has undertaken the following
assignments in FY 2007/08:

७ Environmental Impact Assessment study of
Upper Trishuli 3-A, Upper Trishuli 3-B and

Rahughat Hydroelectric Projects.
७ Quarterly monitoring of air, noise and water
quality of Middle Marsyandi Hydroelectric
Project.
७ Environmental Impact Assessment study of

Dhalkebar-Bhittamod, Duhabi-Jogbani, and
Butwal-Sunauli 400 kV Cross-Border
Transmission Line projects.

७ Environmental Impact Assessment study of
Upper Trishuli 3-A — Thankot 220 kV,
Bharatpur-—Damauli 220 kV and
Dumre—Damauli 132 kV Transmission Line
projects.

७ Initial Environmental Examination of Anbu
Khairani 132 kV and Kulekhani III] 132 kV
Transmission Line projects.

Monitoring Air and Noise quality in Middle
Marsyangdi Hydroelectric Project.

Soil, Rock and Concrete
Laboratory

Soil, Rock and Concrete Laboratory (SRCL) provides
services in material testing, geological and
geotechnical engineering, topographic surveying at
the different phases of a hydroelectric project
development.

The Laboratory provides the services like geological
mapping, geophysical exploration, core drilling and
seismic refraction survey. In the field of soil and
rock engineering, it provides services like
construction material investigation, in-situ test,
determination of index properties, tri-axial test,
consolidation test, point load test, direct shear,
uniaxial compressive strength on regular basis for
NEA and for the clients outside NEA. The Laboratory
also provides geotechnical design including rock
support pattern for underground and surface
structures. Concrete quality test, mix design and
topographic survey are few other services provided
to NEA and private sector at different levels.

In this fiscal year, Soil, Rock and Concrete Laboratory
has procured CS10 Drill Rig capable of drilling up
to 550 m, the only laboratory able to provide this
deep drilling service in Nepal. The following works
were undertaken by this Laboratory in FY 2007/08:

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

७ Surface geological mapping and core Drilling
of Rahughat Hydroelectric Project in Myagdi.

७ Deep core drilling for Upper Tamakoshi
Hydroelectric Project.

७ Seismic Refraction survey and topographic
survey for Upper Tamakoshi Hydroelectric
Project.

७ Core drilling at Sunkoshi storage cum

diversion scheme in Okhaldhunga for Sapta
Koshi Multipurpose Project.

७ Concrete mix design and various tests on
rock, soil and concrete for various private
parties.

७ Seismic refraction survey and Core Drilling

at Tamakoshi 2 Hydroelectric Project and
Tamakoshi 3 Hydroelectric Project for SN
Power Holdings Singapore Pte. Ltd.

NEA Training Center

NEA Training Center (NEA-TC), established in FY
1988/89 (2045/46) with World Bank assistance, has
been providing need-based short term training to
the staff of the NEA and IPPs. In FY 2007/08,
NEA-—TC conducted 58 different training programs
participated by a total of 1,198 trainees, including
trainees from Himal Power Ltd. and Chilime
Hydropower Company Ltd.

Shortage of qualified and competent manpower
could present itself as a serious obstacle in the
realization of the government's commitment to
develop hydropower potential of Nepal. Giving due
consideration to this fact, NEA has proposed to
upgrade and further develop the NEA Training
Center and transform it into a center of excellence
for enhancing the capability of technicians and
professionals in the field of hydropower engineering
and management. For this purpose a request has
been made to the Government of Republic of Korea
through GON for assistance.

Discussions are also being held with Provincial

Electricity Authority (PEA) of Thailand, Japan
International Cooperation Agency (JICA) and
German Technical Cooperation (GTZ) to explore
the possibility of their participation in NEA-TC's
training programs.

Electromechanical Design
Division

Electromechanical Design Division provides inputs
on electromechanical components for various
hydropower project studies conducted by
Engineering Services. Besides this regular task,
this Division has completed preliminary design and
preparation of tender documents for 131 km long
Chameliya— Attariya 132 kV transmission line for
Chameliya Hydroelectric Project in FY 2007/08. The
Division is currently conducting project identification
and feasibility study for transmission system
development and a techno feasibility study for
electrification of 13 VDCs in Nawalparasi district.
The Division is also undertaking power evacuation
studies for IPP projects.

Central Workshop

Central Workshop at Hetauda undertakes
maintenance work of power transformers and
distribution transformers for NEA and other
institutions. It also rents out heavy construction
equipment to different parties. In FY 2007/08, this
Workshop has carried out maintenance work of
about 200 transformers ranging from 15 kVA to
12,000 kVA ratings.

Concrete Pole Plants

Concrete Pole Plants at Amlekhgunj and Kotre (near
Pokhara) produce pre-stressed concrete (PSC)
poles of different length for NEA and other customers.
In FY 2007/08, the Amlekhgunj plant produced about
10,600 units of PSC poles of 8m, 9m and 11m
length. In the same FY, the Kotre plant produced
1,492 units of PSC poles of 8 m and 10.4 m length.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

NEA's Subsidiary
Companies

Chilime Hydropower Company
Limited

Chilime Hydropower Company Limited (CHPCL)
was promoted in 1996 by NEA as its first subsidiary
company. NEA is the major shareholder of the
Company with NRs. 489.6 million which amounts
to 51% of total equity capital. The staff of NEA and
CHPCL has 25% stake and the remaining 24% of
the equity is allotted for the general public. CHPCL
successfully implemented Chilime Hydroelectric
Project by mobilizing the financial and technical
resources from within the country in 2003 (BS 2060).
This Project has been acclaimed as an exemplary
model of development for hydropower in Nepal.

Project Features

Chilime Hydroelectric Project (CHEP), with an
installed capacity of 22.1 MW, is located in Rasuwa
district about 134 km north of Kathmandu, and is
a peaking run-of-river type of scheme. The Project
started commercial operation on August 24, 2003
(Bhadra 8, 2060). Till FY 2007/08, the Project has
delivered a total of 670,817.90 MWh, whereas the
total contract energy for the same period was
647,128.36 MWh. The Company has been
successful in awarding its shareholders a dividend
of 10%, 20% and 35% in FY 2003/04, 2004/05 and
2005/06 respectively. For FY 2006/07, a dividend
of 30% has been proposed.

Projects in Pipeline

Backed by the rich experience of design,
construction, operation and management of CHEP,
the Company is now poised to undertake
development of four more hydropower projects,
namely, Sanjen Upper Hydroelectric Project, Sanjen
Hydroelectric Project, Middle Bhotekoshi
Hydroelectric Project and Rasuwagadhi
Hydroelectric Project. Feasibility studies of Sanjen
Upper Hydroelectric Project (11 MW) and Sanjen
Hydroelectric Project (35MW) have been completed
and detailed engineering design is in progress. Both

of these projects are located upstream of the existing
Chilime Hydroelectric Project. Feasibility study of
Middle Bhotekoshi Hydroelectric Project (80 MW),
located in Sindhupalchowk district, in Central Nepal,
also is in progress. Feasibility study of Rasuwagadhi
Hydroelectric Project (75 MW) located in Rasuwa
district shall be carried out in FY 2008/09. Local
people of the districts have shown great interest in
investing and participating in the development of
these hydropower projects being planned by the
Company. CHPCL plans to start construction of
both Sanjen Upper and Sanjen Hydroelectric
Projects in the FY 2008/09.

Upper Tamakoshi Hydropower
Limited

Upper Tamakoshi Hydropower Limited (UTKHPL)
was formed as a subsidiary company of NEA in
March 9, 2007 (Falgun 25, 2063) with the primary
aim of developing and managing 309 MW Upper
Tamakoshi Hydroelectric Project (UTKHEP) utilizing
the financial and the technical resources from within
the country. NEA is the major shareholder of the
Company with 51% stake. Employment Provident
Fund (EPF) will contribute 20% of the equity. The
rest of the equity capital will be raised from general
public (10%), natives of Dolakha district (10%), NEA
staff (6%), and staff of financial institutions providing
the debt for the Project (3%). The Company also
has plans to develop other hydropower projects in
Nepal.

NEA Board has constituted a five-member Board
of Directors for the Company on March 12, 2008
(Falgun 29, 2064) comprising of Mr.Arjun Kumar
Karki (Managing Director, NEA), Mr. Sashi Bikram
Rana (Administrator, Employee Provident Fund),
Mr. Uttar Kumar Shrestha (Deputy Managing
Director, NEA), Dr. Jibendra Jna (General Manager,
Generation, NEA), and Mr. Bhoj Raj Regmi (General
Manager, Engineering Services, NEA). The first
meeting of the Company Board of Directors held

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

on March 20,2008 (Chaitra 07, 2064) has
unanimously elected Mr. Arjun Kumar Karki,
Managing Director of NEA, as the Chairman of the
Company.

Project Features

Upper Tamakoshi Hydro Electric Project (UTKHEP)
is located in Lamabagar Village Development
Committee of Dolakha District and is a peaking run-
of-river type of project with 820 m gross head and
design discharge of 44 m3/s. The Project will be
generating about 1,737.7 GWh of energy annually.
The major components of this Project are: an intake,
a 22.5 m high concrete dam, twin desanding basins,
7.2 km long headrace tunnel, 2.0 km long pressure
shaft, underground powerhouse, 2.5 km long tailrace
tunnel and 47 km long 220 kV transmission line.
Before the formation of UTKHPL, the Project was
managed by NEA.

Project Status

A MoU was signed between NEA and EPF on
January 29, 2008 (Magh 15, 2064) where the latter
pledged to provide NRs. 12 billion for the project;
NRs. 10 billion will be as debt and NRs. 2 billion as
debenture. In another MoU signed on July 16, 2008
(Shravan 1, 2065) between NEA and Himalayan
Bank Ltd. (HBL), the lead bank for the consortium
of commercial banks of Nepal, the latter has pledged
to provide NRs. 6 billion as debt for the Project.
Discussions are underway with Rastriya Beema
Sansthan and Citizen Investment Trust to arrange
remaining funds required for the Project. The Project
is estimated to cost NRs 27.4 billion, 70% of which
is structured as debt and the rest as equity.

Responding to the Company's call of proposals for
prequalification, 16 international construction
companies have tendered their proposals for Project
civil work. Evaluation of the proposals is underway.
Detailed engineering design of the Project is in
progress and is expected to be completed by
November, 2008 (Mangsir, 2065). On the field side,
the last 28.5 km stretch of the 68 km long access
road is under construction, and upgrading of 35 km
long Dolakha-Singati section of access road will be
commenced by September, 2008 (Ashwin, 2065).

The Company has already invited applications for
the Chief Executive Officer (CEO) from competent
candidates.

Power Transmission Company
Nepal Limited

The initiatives taken by Government of Nepal for
hydropower development have given rise to
launching of more and more numbers of hydropower
projects in Nepal. It is envisioned that Nepal would
be in power surplus by year 2013-14 and after
meeting the internal demand could export power
to India, which is perpetually power deficit. Hence
there is an urgent requirement for Nepal to develop
transmission capability to transfer Nepal's power
across the border and reap the benefits of huge
Indian power market. Development of transmission
network within Nepal is also equally important to
evacuate the power of future power projects aimed
at meeting internal demand.

Considering this urgent requirement, NEA and
IL&FS IDC has formed a joint venture company
under the name "Power Transmission Company
Nepal Limited (PTCN)" on September 16, 2007 for
taking up the development of transmission projects
in Nepal including Cross Border Transmission links.

The Indo—Nepal transmission line links would be
implemented by two Special Purpose Companies:
JVC India and JVC Nepal. The JVC-India would
be responsible for implementation of the Indian
portion of the transmission line. The JVC—Nepal
would be responsible for implementation of the
Nepal portion of the transmission line. Power trade
in India would be routed through PTC, the nodal
agency in India nominated by Ministry of Power, for
the purpose.

In India side, "Cross Border Power Transmission
Company Private Limited" (CPTC) has been
incorporated on December 19, 2006 in India and
is presently 100% subsidiary of IL&FS. As per the
arrangement, IL&FS will offload their shares to NEA
and PGCIL by 26% each.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Central Activities

NEA Board Matters

Mr. Gyanendra Bahadur Karki, Honorable Minister,
Ministry of Water Resources (MoWR) is the
Chairman of NEA Board since June 12, 2006 (Jestha
29, 2063).

Mr. Shankar Prasad Koirala, Secretary, Ministry of
Water Resources, GoN has been in NEA Board as
an ex-officio member since December 9, 2007
(Mangsir 23, 2064).

This is beginning of the third year for Mr. Arjun
Kumar Karki as Managing Director and Member
Secretary of the NEA Board. He was appointed to
the post in June 17, 2006 (Shrawan 1, 2063) by the
Government of Nepal (GoN). With regards to the
other board members, no changes have been made
over the year.

During the year in review, twenty-four board meetings
were convened to deliberate and decide on various
agenda. Scores of important and far reaching
decisions were made. Approval of the Memorandum
of Understanding (MoU) between Nepal Electricity
Authority and Employees Provident Fund for
financing the development of Upper Tamakoshi
Hydroelectric Project, and issuance of Power Bond
to the institutional and individual investors to finance
ongoing hydropower and transmission lines projects
were some of the significant decisions taken by

Mr. Arjun Kumar Karki, MD of NEA and Mr. Ashok SJB Rana,

the Board. Furthermore, various by-laws relating to
personnel and financial management were amended
to impart greater degree of efficiency and
effectiveness on the functioning of NEA.

Public Relation and Grievances
Management Department

This department is entrusted with the responsibility
of managing public relations functions, to handle
all promotional and publicity related matters of NEA
including issuing periodic press releases and
organizing press conferences.

In FY 2007/08, the department conducted several
press conferences for disseminating information
about the activities of NEA. On 29 January, 2008
it conducted a press conference on signing of a
Memorandum of Understanding (MoU) between
NEA and Employees' Provident Fund to finance
NRs. 12 billion and on 16 July, 2008 on signing of
a MoU between NEA and Himalayan Bank Ltd. (as
the lead bank) to finance NRs. 6 billion for the
construction of Upper Tamakoshi HEP. The
Department also played an important role in
promoting the sales of NEA's Power Bond amounting
to NRs. 1.5 billion.

The department is also responsible for collecting

public grievances and complaints and forwarding
them to concerned units for necessary action.

wey 2 PSY Cae oo Gis'

Te

CEO of HBL signing the 'Memorandum of Understanding'
to finance the construction of Upper Tamakoshi HEP.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Planning, Monitoring and
Information Technology

The Planning, Monitoring and Information
Technology, a corporate level wing headed by a
Deputy Managing Director, is entrusted with the key
responsibility of preparing short and long term
Generation, Transmission and Distribution Expansion
Plans to cater to the nation's growing demand for
electricity. In addition, the wing also periodically
evaluates and monitors the progress of the
development projects undertaken by NEA and
provides feedback needed for their successful
completion. It also plays coordinating role in power
exchange and power trading activities. Concluding
Power Purchase Agreement (PPA) with Independent
Power Producers (IPPs) and facilitating PPA
administration is another important area of the wing's
responsibility. This wing is organized into five
departments, namely, System Planning Department,
Power Trade Department, Information Technology
Department, Monitoring Department, and Corporate
Planning Department, each headed by a Director.

System Planning Department

System Planning Department is responsible for
formulating NEA's generation and transmission
expansion plans. During the year under review, the
Department accomplished various studies on Load
Forecast, Generation Expansion Plan and
Transmission Expansion Plan.

The Department also carried out Grid Impact Studies
on interconnection\integration of number of planned
hydropower projects under NEA and private sector,
and for addition of bulk load customers to the
National Grid. Major activities carried out by this
Department during FY 2007/08 also included the
Evacuation Study for Rahughat hydropower project
and the Study to identify possible transmission line
corridors to accommodate hydropower projects to
be developed under private sector.

Power Trade Department

Power Trade Department is primarily responsible
for processing of the applications for Power Purchase
Agreements (PPAs) filed by Independent Power
Producers (IPPs) and execution of the PPAs for
technically and financially viable power projects.
The process involves verifying the documents
submitted by the IPP, detail review of the technical
and financial aspects of the project, execution of
Connection Agreement between the IPP and
concerned department of NEA, negotiation, and
finally, conclusion of the PPA. The Department is
also involved in the monitoring and assisting in the
administration of PPAs including processing of the
invoices. Coordinating the activities related to power
exchange and power trading with India is another
key area of responsibility of this Department.

During Fiscal Year (FY) 2007/08, the Department
has concluded 6 PPAs, and is ready to sign 6 PPAs
with the draft agreements prepared. In spite of the
draft agreements being ready, some IPPs have not
been forthcoming in concluding the PPAs, probably
in expectation of increased power purchase price.
The total number of PPAs concluded with IPPs has
now reached 39 with a total installed capacity of
234.31 MW. In FY 2007/08, four IPP projects,
namely, Thoppal Khola (1,650 kW), Sisne Khola
(750 kW), Pheme Khola (995 kW) and Sali Nadi
(232 kW) were successfully commissioned. With
this, the total number of IPP projects in operation
has reached 17 with a total installed capacity of
156.34 MW. NEA has signed a Memorandum of
Understanding (MoU) with the promoters for the
purchase of power from Upper Marsyangdi-A
Hydroelectric Project with an installed capacity of
50 MW. Six IPP projects with a total capacity of
12.97 MW are under construction. The following
chart summarizes the PPA related activities of this

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Department in FY 2007/08.

PPA Concluded in the FY 2007/08

IPP Projects

1. Belkhu Khola
2. Upper Hadi Khola
3. Siuri Khola

4. Hewa Khola
5. Lower Piluwa
6. Tinau Khola

Draft PPA Prepared 6 IPPs 6,350
Connection Agreements Requested 7IPPs 34,935
Projects under Detail Technical Review 10 IPPs 66,453
Projects under General Technical Review 7IPPs 72,860

To alleviate the power shortage in Nepal, additional
25 MW of power was imported round the clock on
commercial trading arrangement from PTC through
Duhabi-Kataiya 132 kV transmission link for a limited
period of 2 weeks in May, 2008. This first ever
arrangement to trade power across the border on
commercial principles, made possible by the
agreement in Indo-Nepal Power Exchange
Committee meeting held in Kathmandu (June 7-8,
2007), is a noteworthy development heralding an
era of power trading between Nepal and India.

Information Technology
Department

During the year under review, Information
Technology Department carried out a number of IT
related activities such as development and
implementation of application software, extension
of the NEA Intranet system, augmentation of the
centralized Internet bandwidth, and value addition
through the utilization of IT infrastructure. In this FY
2007/08, this Department has also conducted a
total of 8 training programs participated by 96 NEA
staff on use of the software applications developed
by the Department.

Other noteworthy achievement of this Department
is the development of Power House Maintenance
software and its implementation in Trishuli, Panauti

and Sundarijal Power Stations. Inventory
Management System was also upgraded this year
by accommodating the feedbacks of the users. The
Department is also implementing Customized
Accounting and Inventory System (CAIS) in more
and more units. So far, CAIS has been implemented
in 119 locations of NEA. The Department continued
the implementation of utility software like No-light
Management System and Interactive Voice
Response System (IVR) with a view to respond
promptly to customer calls.

To enhance and expand NEA intranet into a country-
wide data network, the Department has started to
use the fiber optics cable provided by Load Dispatch
Center. Three locations, namely, Lagankhel,
Bhaktapur, Balaju grid offices and Load Dispatch
Center have been connected so far and the
Department aims to connect most of the distribution
offices within Katmandu by the end of next fiscal
year. The Internet bandwidth in the corporate office
complex was upgraded to 512 kbps using the optical
fiber link.

NEA intranet site www.nea.org was refurbished this
fiscal year with improved interface updates and
inclusion of various utilities like inter-unit account
view. NEA intranet site now includes important
facilities like telephone inquiry system, library, book
inquiry system, document dispatch system and so
forth. Most of the information about NEA activities
can be downloaded from the NEA website
www.nea.org.np.

Monitoring Department

The Department monitors the progress of projects
implemented under NEA, prepares four-monthly
and annual progress reports for internal evaluation
and for review by the Ministry of Water Resources
(MoWR). During FY 2007/08, this Department has
reviewed the progress of a total of 63 projects being
implemented under various business groups of
NEA. The Department also furnishes required data
and reports to MoWR, National Planning
Commission & Peace Secretariat. Another task of
this Department is to provide technical support to
the Petition Committee of NEA constituted for hearing
petitions on electricity pilferage cases.

Corporate Planning Department

Corporate Planning Department undertakes various
tasks involving plans and programs at corporate
level. The Department assists the National Planning
Commission in the preparation of national budget
by providing data related to NEA projects. Besides,
the Department also provides data input for studies
undertaken by various organizations on topics
related to NEA. The Department was involved in
preparing the country's three year Interim Plan
(2007/08-2009/10) for electricity sector.

During the year under review, NEA obtained 5 new
licenses from GON. Out of these new licenses, two
are the survey licenses: one for Chitwan-Madi
distribution network and the other for Kulekhani Ill

- Hetauda 132 kV transmission line. Generation
License for Kulekhani-lIll Hydroelectric Project and
Construction Licenses for Chandranigahpur 33 kV
Sub-transmission Line and Kawasoti 132 kV
Substation are the other licenses.

The Department also plays coordinating role in the
development of hydropower projects under Public-
Private Partnership program. Recently, NEA has
decided to develop 42 MW Upper Modi-A Project
under Joint Venture arrangement with Korean
Electric Power Corporation (KEPCO), a South
Korean Government undertaking. Initiation has
been made to develop 128 MW Upper Seti
Hydroelectric Project under bilateral funding.
However, NEA has also taken step to develop this
Project through other mode of funding.

es Modi A Project

JDA Signing Ceremony
"Public - Private Partnership,

between
NEA and KEPCO

April 18, 2008

Kathmandu, Nepat

Signing of JDA between NEA and KEPCO for Upper Modi 'A' HEP

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Administration

The Office of Administration, headed by Deputy
Managing Director is responsible for formulating
and implementing administrative rules and
regulations of NEA in order to manage its human
resources. This office is also responsible for providing
logistic support, legal advice, property management,
security arrangement of central office as well as for
promoting public relations. The office is supported
by two departments namely, Human Resources
Department and General Services Department.

Human Resources Department

The Human Resources Department is entrusted
with the responsibility of managing the human
resources of NEA which consists of a total of 9298
staff. In the year under review; 181 staff retired, 24
took voluntary retirement, 24 resigned and 39 passed
away.

Promotion of employees is being carried out on a
regular basis with 5 officers and 26 assistants being
promoted based on 12 years automatic promotion
scheme. Similarly, 15 officers and 14 assistants
were promoted based on performance in different
levels, and 35 officers and 25 assistants were
promoted on the basis of internal competition.

Under disciplinary actions, 9 staff have been
cautioned, 4 staff have been denied promotion, 2
had their salary grade increment suspended, 2 have
been suspended, 9 have been dismissed from
service and 4 have been dismissed from service
with ineligibility for future NEA service of which 3
were on charges of possessing fake academic
certificates.

The recruitment of new personnels in different
positions, under both open and internal competitions,
is in process. Under open completion, 652 technical
and non-technical candidates for level 1, 2 and 3
were appointed. Likewise, under internal competition,
91 technical and non-technical candidates for level
4 and 5 were appointed. In addition, interviews for
non-technical Level 3 positions are under process.

Curriculums for open and internal competitions
written examinations for level 3 to level 7
(Technical/Nontechnical) have been
developed/updated.

A new Personnel Management Software has been
developed for efficient record keeping of employees
and enhancing the existing Personnel Data Bank
(PDB).

Personnel Services Regulation, 2062 6th
amendment has been implemented from 2065/2/27.

To strengthen the Core Business and for
improvement of quality of service, a performance
based incentive system was implemented and
approved positions considering existing staff of
Generation, Transmission and System Operation
were revised. In near future, approved positions for
other businesses will also be revised.

For enhancing the skill and knowledge of the
employees, NEA is providing training in different
field. A total of 154 staff participated in trainings,
seminars, workshops, conferences, higher studies
and field visits abroad and similarly 111 staff
participated in trainings, seminars, workshops and
higher studies in Nepal. This fiscal year, 174 officers
and 306 assistants received training from NEA
Training Center. Induction Training was also provided
to 738 newly recruited employees by the Training
Center.

During FY 2007/08, financial support was provided
to 10 employees under staff welfare program, for
the treatment of serious illnesses like Cancer, Kidney
Transplant and Cardiac Surgery.

Similarly, 535 staff received house/land purchase
and construction loan, 76 received house
maintenance loan, 117 received social activities
loan, 110 received 3 months' salary loan and 1
received natural disaster loan.

During the year 44 staff were injured and 4 passed
away in different accidents.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

General Services Department

General Services Department has the responsibility
of repair and maintenance of NEA buildings,
managing all vehicles owned by NEA, providing
logistic support, disseminating decisions made by
NEA management and for matters relating to trade
unions of NEA. The department also has the
responsibility of managing NEA's property including
payment of taxes and insurance premium. All
religious and social functions to be observed by
NEA are also the responsibility of this Department.

In FY 2007/08, NEA auctioned 24 damaged vehicles,
and procured 19 pick ups for Distribution Centers.
The Department works for keeping records of the
land owned by NEA and protecting it from
encroachment.

Legal and Arbitration Division

Legal and Arbitration Division of General Services
Department deals with legal matters of NEA. In FY
2007/08, 118 cases were registered in different
courts and arbitrational trribunals out of which the
courts have given their verdict in favor of NEA in
18 cases and in 8 cases against. At present, 92
cases are being defended by NEA in different courts.
Contractor of LOT 4 of Kaligandaki "A" Hydroelectric
Project, Noell Stahl-und Maschinenbau GmbH,
Germany has withdrawn its claims filed in
International Court of Justice. A case in Kathmandu
District Court between Nepal Bank Ltd. and NEA
regarding bank guarantee issue amounting
Rs.7,59,30,027/49 has been reconciled on a
mutually agreed basis.

STAFFING STATUS- Fiscal Year 2007-2008 ( Last Ashad 2065)

Approved Position

Service

(Level 6 - 11)

Existing Situation

Managing Director। 1 0 1 1
GM/DMD (Level -12)

Officer Level

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गु तला हा हु त। _485[ 470] 1] 0

3

Assistant Level
(Level 1-5)

P33

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3096
हला

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EMPLOYEE SITUATION (FISCAL YEAR 2054/055-2064/065)

Fiscal Year

Employee No. 8666} 9303

9694 9790

1998/99।1999/00। 2000/01।2001/02।2002/03। 2003/04।2004/05। 2005/06।2006/07।2007/08
9860

9779

9673

1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

हा Employee No.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Internal Audit

The Office of the Deputy Managing Director (DMD)
Internal Audit, which is responsible for internal audit
of financial management, energy and technical
activities within NEA, carried out 205 audits in FY
2007/08. During the course of these audits, the
department faced various challenges and even
obstacles, and was not able to meet its target.
Disturbances in some parts of Nepal and cases of
security concern to the auditors themselves impeded
work of this Office.

The Office of the DMD Internal Audit also conducted
various skill enhancement programs including
trainings, observation, interactions etc. AS many
as.48 staff took part in various training programs
conducted abroad on risk analysis, risk based audit,
internal audit for effective management etc. Anumber
of auditors were also given opportunity to participate
in various trainings organised by NEA Training
Center.

Likewise, a number of interaction programs were
conducted to discuss various aspects of internal
audit process in FY 2007/08. Apart from this, the
office of the DMD Internal Audit started a whistle
blowing campaign, which proved to be effective in
assessment of internal control mechanism and
efficient management of various fields in NEA.

In FY 2007/08, a total of 189 financial audits were
carried out compared to 253 the previous year.
These audits were conducted to ensure compliance,
effectiveness, reliability, efficiency, and integrity of
internal control mechanism. The auditors were
provided full cooperation from all core business
units in the course of audit, follow-ups and
presentation of reports etc. The department also
carried out 7 energy audits in FY 2007/08 and
provided various suggestions regarding NEA's
system loss assessment process. Technical audits
were also conducted in 7 offices of various core
business offices. In addition to field visits and site
observations, the auditors were involved in finding
lapses, discrepancies and deviations by studying
various management information reports and
providing proper suggestions to concerned
offices/personnel for timely corrective actions.
Furthermore, unscheduled/casual visits for specific
audit issues were made during FY 2007/08 and
suggestions were made available to the concerned
officials for corrective action.

In FY 2007/08, the DMD Internal Audit submitted
the annual report as well as the trimester wise
reports on internal audit to the Managing Director,
NEA.

NEA participants in Risk Based Audit in Utility Company Training
Program Organised by ICWAI in New Delhi

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Finance

The corporate level Finance, headed by the Deputy
Managing Director, is responsible for overall
corporate financial activities of NEA. It has two
departments, namely, Corporate Finance and
Finance & Accounts Department, each headed by
a Director.

Corporate Finance Department

Fiscal Year 2007/08 is marked as a successful year
for NEA in bringing out its new debt instrument,
NEA Power Bond, in the capital market. This is the
first of its kind in Nepalese capital market and was
overwhelmingly subscribed by the public as well as
institutional investors. This has essentially provided
comfort to NEA in managing its budget deficit. At
the same time, it opened up new horizon for
mobilizing much needed financial resources from
domestic market for funding power projects.

This is yet another year in succession that NEA
faced a daunting task of managing a huge deficit
budget. The approved budget for FY 2007/08 had
projected a cash deficit of NRs.1,081.12 million.
Similarly, NEA faced a financial loss of NRs.1,312.16
million, less than the estimated loss of NRs. 1,777.92
million in FY 2007/08. Strikes and unrest in mid
south Terai aggravated the financial health of NEA
to a large extent. Financial performance remained
satisfactory in some cases whereas there are
achievements below expectation in many areas of
activities, suggesting mixed results.

In FY 2007/08, NEA registered a total of 2,348.91
GWh as sales, which is equivalent to 97.02 % of
the target and a growth of 6.57 % in comparison to
sales of 2,204.20 GWh in FY 2006/07. In the
reviewed period (FY 2007/08) total internal sales
grew by 7.52 %, whereas export to India decreased
by 19.99 % over last year's export. Total internal
sales and export stood at 2,287.41 GWh and 61.50
GWh respectively in FY 2007/08.

Revenue from internal sales (net) and from export
amounted to NRs. 15,034.80 million and NRs.

370.23 million respectively in FY 2007/08. A modest
increment of 7.05 % in internal sales over previous
year's internal sales was recorded whereas export
revenue declined by 13.69 % in the same period.
Strikes, bandhs and unrest in Terai restricted mobility
leading to lapses in theft control, meter reading and
maintenance etc. which substantially hampered
NEA's efforts of controlling losses. In export side,
India's curtailment in drawing power from Nepal in
Thakurganj and Ramnagar are main causes of
reduction in export sales revenue. As a result, overall
sales income amounted to NRs. 15,405.03 million
as against the target of NRs.15,890.94 million in
FY 2007/08. This is an increase of only 6.61 % in
comparison to sales of NRs. 14,449.73 million in
FY 2006/07.

Rebate provided to consumers for early payment
of bills amounted to NRs. 326.28 million which is
approximately equal to previous fiscal year's rebate
amount.

NEA's income from other services such as surcharge
dividend, lease rent, interest, sales of goods etc.
amounted to NRs. 655.24 million, a decrease of
35.55 % from FY 2006/07.This decrease is primarily
due to dividends being not paid by Chilime Hydro
Power Co. Ltd (CHPCL), a subsidiary of NEA.
However, CHPCL has recently declared 30 %
dividend for FY 2006/07. In FY 2006/07, NRs. 171.36
million was received as dividend for FY 2005/06
from CHPCL. Income from other services contributed
4.08 % to total income in FY 2007/08.

Total revenue for FY 2007/08 amounted to NRs.
16,060.27 million, an increase of 3.84 % over
preceding year's income. The average revenue rate
of NRs. 6.70 per kWh in FY 2006/07 remained
unchanged in FY 2007/08. Cost of service for
providing electricity to consumers increased by
4.37% to reach NRs. 7.40 per kWh, the primary
reason for financial losses to NEA. If the tariff is not
adjusted in the near future, the losses are bound
to increase. The last tariff adjustment with an effect
of 11 % increase was made in FY 2001/02.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

NEA's total expenditure in FY 2007/08 in comparison
to that of FY 2006/07 increased by NRs.1,739.45
million to reach a figure of NRs. 17,372.42 million.
NEA spent NRs. 2,125.98 million in staff cost in FY
2007/08 which is equivalent to 12.24% of the total
cost and 13.23 % of the total income. The same
was 11.31 % of the total cost and 11.43% of total
income in FY 2006/07. Reason behind this increase
in staff cost by NRs. 356.94 million is attributable
to a raise in staff salary in FY 2007/08. Operation
and maintenance expenses also increased by
36.76% over the previous year's operation and
maintenance expenses and stood at NRs. 1,323.84
million in FY 2007/08. Major reason behind this
steep increase in operation and maintenance cost
is due to overhaul including runner replacement in
large power generating stations such as Kulekhani
and Marsyangdi.

Depreciation expense increased by 3.42% over
previous year's (FY 2006/07) figure and stood at
NRs. 1,920 million in FY 2007/08. Interest on long
term loan was NRs. 2,368.41 million in FY 2007/08,
a marginal increase of 0.71 % over last year's figure.
Royalty, previous years' adjustment and deferred
revenue expenditure and provision etc. amounted
to NRs. 839.18 million, NRs. 50 million and NRs.
190 million respectively. NEA incurred a loss of NRs.
480.61 million due to depreciation of Nepalese
Rupees vis-a-vis the Japanese Yen from loan in
Japanese Yen for the Kulekhani Disaster Prevention
Project.

The revenue collection in FY 2007/08 was only
about 88 % of the total sales whereas it used to be
around 95 % in previous years. The collection was
impeded by strikes and unrest in different parts of
the country. The public sector and the street light
dues still remain serious problems in revenue
collection. The receivable balances from
municipalities, government offices and public
institutions stood at approximately NRs.2,527.88
million at the end of FY 2007/08. This is about 37.30
% of total receivables. Total receivable in FY 2007/08
was NRs.6,776.70 million, equivalent to 5.35 months
of sales.

Additional fund requirement for various projects
including Middle Marsyangdi HEP further worsened

NEA's already difficult cash position. In order to
overcome this problem of cash shortage, NEA issued
Power Bond carrying an interest rate of 7.75 % to
raise NRs. 1,500 million from the general public and
financial institutions. The raised money was utilized
in Middle Marsyangdi HEP, Chameliya HEP and
Kulekhani-lIll HEP. In addition to this, NEA borrowed
short term loan of NRs. 1,740 million from different
commercial banks with an average interest rate of
7 % per annum.

In FY 2007/08, NEA requested GoN for revision of
re- lending interest rate, royalty calculation
procedures, capitalization of projects constructed
under foreign grants and formation of a separate
Rural Electrification Company to undertake all rural
electrification works as per GON policies. GoN
agreed to make a due diligence study on financial
health of NEA, review its existing capital structure
and its impact on NEA's financial performance and
explore an alternative financial restructuring plan.

In spite of the difficult situation, NEA has been
investing in generation, transmission and distribution
projects with a view of improving the supply situation,
providing quality service as well as for catering
electricity services to a larger population. For
improving the supply situation, NEA is also
encouraging the private sector by entering into
power purchase agreements and by taking initiatives
to develop projects in other modalities. Considering
the effectiveness of Public Private Partnership (PPP)
for project development in lowering the cost of
supply, NEA is going forward with firm commitment
to develop Upper Tamakoshi Hydroelectric project
with a capacity of 309 MW under PPP. Tamakoshi
Hydropower Limited (UTKHPL) has been
incorporated for this purpose, with NEA as a sole
promoter of the company holding 51 % of the equity
share. Rest of the shares will be distributed to
employees of NEA and UTKHPL, lenders, regular
contributors of Employees' Provident Fund, locals
of Dolakha district and the general public. For the
financing of the project, NEA has signed
Memorandum of Understandings (MoUs) with
Employees' Provident Fund (EPF) and with
Himalayan Bank as the lead bank of consortium of
commercial banks. In the mean time, funding for
Rahughat Khola (30 MW) and Upper Trisuli3-A (60

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

MW) has been mobilized from India and Exim Bank
of China respectively. Similarly, a MoU and a
subsequent Joint Development Agreement is signed
between NEA and Korean Electric Power Company
(KEPCO) for developing Upper Modi "A" Hydropower
Project (42 MW) in a joint venture modality.

NEA is required to meet a number of covenants as
per the loan agreements with the donor agencies.
Major financial covenants are: Rate of Return (ROR)
of 6 %, Self Financing Ratio (SFR) of 23 %, Debt
Service Coverage Ratio (DSCR) of 1.2 times and
Average Collection Period (ACP) of 3 months. Due
to the high cost of services and the financial losses
it has been facing, NEA has not been able to honor
these covenants. As these covenants are not
attainable for NEA in near future, it has become
necessary to revise them with the consent of the
donor agencies. Consequently, a discussion was
held in FY 2007/08 with the mission of World Bank
and the Bank has agreed in principle to revise it. In
F/Y 2007/08, NEA achieved a ROR of 2.10 %, SFR
of 10.88 %, DSCR of 1.01 times and ACP of 5.35
months. However, these covenants have been
removed by the Bank as mandatory covenants for
the time being.

To enhance the capabilities and to bring efficiency
in financial management and accounting practices
of NEA, a Technical Assistance (TA) has been
approved by the World Bank. This TA will also
implement the recommendations provided in the
first phase of the Institutional Strengthening Project.
Accounting framework reform and design,
development, procurement, installation and rolling
out of a new Financial Accounting System (FAS)
along with required capacity building program will
be implemented with this TA.

Finance and Accounts
Department

Statutory audit for FY 2006/07 was completed during
the FY 2007/08 and final audit report from Office of
the Auditor General has been issued. Similarly, Tax
Audit for the above income year was also completed
in FY 2007/08.

Before completion of accounts for FY 2006/07,

discussions on the observations in the audit report
were held in all regional office under Distribution
and Consumer Service in the presence of statutory
auditors. NEA Board formed a committee with the
Secretary, Ministry Of Water Resource as the
Coordinator, for furnishing replies to the preliminary
auditor's report. The committee acquired
explanations on the observations mentioned in the
audit report from various departments/projects and
recommended a number of instructions to be
implemented immediately for improving the overall
performance of NEA.

Even though efforts were made to improve the
deteriorating financial health of NEA, the financial
results for the FY 2007/08 were not up to the level
of expectation. The total income was lower by NRs.
733.28 (4.36%) million than previously estimated.
However, compared to the budgeted figure, the total
operation & maintenance expenditure and regular
capital expenditure was less by 8.30% and 22.71%
respectively.

Total operating expenses under generation,
transmission, distribution and administration in FY
2007/08 stood at NRs. 9,625.57, NRs. 304.28, NRs.
1,947.42 and NRs. 576.14 million respectively. As
compared to last fiscal year's figures, the expenses
under the above headings increased by 9.46%,
26.32%, 6.16% and 20.13% respectively, whereas
the total expenses increased by 11.12%.

Operating surplus of NRs 2,218.77 million in FY
2006/07 decreased to NRs 1,616.86 million in FY
2007/08. In spite of an operating surplus in
FY2007/08, NEA suffered a net loss of NRs. 1,312.16
million against previous year's profit of NRs. 314.19
million. The reasons for incurring losses are mainly
attributed to high interest and appreciation of
Japanese Yen vis-a-vis Nepalese Rupees, regarding
loan repayment in Japanese Yen for Kulekhani
Disaster Prevention Project.

In FY 2007/08, NRs. 2,497.34 million worth of
property, plant & equipment was capitalized. At the
end of the FY 2007/08, property plant & equipment
valued at historical cost reached NRs. 52,294.10
million as compared to NRs. 51,781.76 million in
the beginning of the fiscal year. Similarly, the project

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

work in progress was NRs. 35,930.74 million and
NEA invested NRs. 9,894.58 million in capital works
and projects of which NRs. 2,032.79 million
comprised of government equity, NRs. 3,830.32
million through government loan and NRs.4,031.47
million was borne from NEA''s internal source.

NEA has invested NRs 1,602.05 million in
subsidiaries and other companies till F¥2007/08 of
which NRs 489.60 million was for equity share in
Chilime Hydro Power Co. Ltd. (CHPCL). In FY
2007/08, Upper Tamakoshi Hydropower Limited
(UTKHPL) was incorporated as a subsidiary
company of NEA and all assets and liabilities of
Upper Tamakoshi Hydroelectric Project were
transferred from the NEA's books of accounts to
UTKHPL. Accordingly, an amount of NRs. 670 million
was recorded as investment in UTKHPL. Other
investments of NEA include equity investment in
Nepal Engineering Consultancy (NRs 2.28 million),
Khumbu Bijuli Company ( NRs 20.65 million), Salleri
Chaylsa Hydro Electric Company (NRs 11.63 million)
and Butwal Power Company ( NRs 8.86 million) .
NEA has not received any dividends from the above
companies except Butwal Power Company In FY
2007/08, NEA received NRs 3.84 million as dividend
from BPC. In addition to this, as of FY2007/08 end,
NRs 399.00 million has been invested in Citizen
Investment Trust (CIT) towards gratuity and pension
liabilities.

NEA's total borrowing stood at NRs. 52,762.18
million as of end of FY 2007/08. In FY 2007/08,
NEA paid NRs. 552.56 million for interest,
NRs.780.96 million for royalty and NRs. 668.24
million for repayment of loan to government.
Likewise, NRs.3,154.98 million was provided from
NEA's internal source for financing in various
projects.

NEA was adopting a policy of revaluation of its
majority of property, plant & equipment by applying
revaluation factor provided by the World Bank every
year. However, from FY 2007/08, NEA decided to

discontinue the accounting policy of revaluation of
assets. Accordingly, the entire property, plant &
equipment were stated at historical cost and
revaluation reserves, effect of revaluation on
provision for depreciation and value of property,
plant & equipment were adjusted and prior years'
figures rearranged.

NEA is importing/exporting power under Indo- Nepal
power exchange agreement with Bihar Electricity
Board (BSEB). The annual escalation rate for the
power import/export was revised in FY 2007/08 with
effect from January 2004. Accordingly, necessary
adjustments and reconciliation of receivables and
payables as per revised rate were made in the
books of NEA account before finalization of accounts
for the FY 2006/07.

For proper management of gratuity fund, a draft of
"Gratuity Fund Management and Operation
Procedure 2064" has been prepared which is
presently under the purview of the NEA Board.

Aremarkable achievement has been made in terms
of clearance of pending audit remarks. During FY
2007/08, out of the total outstanding NRs. 145.97
million of pending audit remarks for the period FY
1973/74 to FY1993/94, NRs. 109.70 million has
been settled and the remaining are in progress.

NEA has initiated conversion of its manual
accounting system by computerized system in a
phased manner. Oracle based Customized
Accounting and Inventory System (CAIS) was
introduced and to date 100 budget centers are using
financial accounting module. Out of 110 budget
centers, inventory module is used only in 75 budget
centers. NEA is planning to go into full automation
in all its budget centers including small hydro and
project offices. This will facilitate to consolidate the
accounts and complete the financial and tax audit
at stipulated time as well as to help integrate data
into a new IT based financial accounting system to
be implemented in the near future.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Nepal Electricity Authority

Highlights of FY 2007/08

(NRs. in million)

DESCRIPTION 2008" 2007 INCREASE/DECREASE

rr ee eee ee। 593.93] 3.84।
a
Distribution Expenses (M.NRs.)
Administration Expenses (M.NRs.)
Depreciation Expenses (M.NRs.)
Deferred Revenue Expenditure (M.NRs.)
Total Operating Expenses (M.NRs.)। 1,366.92 9.03
Operating Surplus (M.NRs.)
Interest on Long-Term Loans (M.NRs.)
)

Other (Exps.) income incl. prior year's Adj. (M.NRs.) (560.61 480.83 (1,080.66) (216.59)

Net Income/(Loss) (M.NRs.)। (1,312.16)} 314.19। (1,836.65) (517.63)
Longterm Loans (M.NRs.) 52,762.18] 47,616.15 5,146.03 10.81

Number of Consumers
Total Sales of Electricity (GWh)
internal Sale (GWh)
ee
Hydro Generation (GWh)
Purchased Energy (GWh)-India
'Nepal(nternal) (GWh)

Average Power Purchase Rate(NRs./kWh)++
Exported Energy (GWh)
Thermal Generation (GWh)
Self Consumption (GWh)

Net System Losses (Percentage) 25.15 26.71 (1.56) (5.84)

Net Property, Plant & Equipment (M.NRs.) 52,294.10। 51,781.76 512.34

Note:

* Provisional figures; Subject to final audit.
+ On Internal sales.

++ On total purchase

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

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6661 0००८ 00८ [ ८0०८। ६00८। 00८। 900८। 900८। ४00८ sueinowed

(प०]]प्य Ul 544)

00८ 'SL Aine Bulpud ६4 ०५) 10} 3प०प४७)१४)१5 ०प८४००प५।

24140प4117 /10111995154 1४५७

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Accounting Policies

1. Basis of preparation of
Financial Statements

The financial statements have been prepared on
the basis of historical cost convention in accordance
with the generally accepted accounting principles.

The financial statements comply with Nepal
Accounting Standards (NAS) and presentational
requirement of the Companies Act 2063.

2. Revenue from Sale of Electricity

(i) Revenue from sale of electricity is recognized
at the time of raising of bills on the customers
as per the billing cycle. Revenue from the
billing cycle date up to 31 Ashad (15 July)
has been accrued taking average rate.
Revenue from sale of electricity is shown net
of rebate.

(ii) Rebate and surcharge for delayed payments
are accounted on cash basis.

3. Income from Other Services

(i) Interest on investments and lease rent are
recognized on accrual basis.

(ii) Dividend on investment in shares is
recognized when received.

(iii)। Revenue from other services is recognized
on cash basis.

(iv) Revenue from services provided by
Engineering Services are accounted for on
cash basis on the completion of the relevant
job.

4. Property, Plant and Equipment

Property plant and equipment are stated at cost of
acquisition or cost of construction less accumulated
depreciation. The cost of acquisition, construction/
erection include interest on loans related to the

period of construction/erection up to the date of
completion of the project, along with other incidental
costs and charges attributable to bringing the asset
to its working condition for its intended use. The
incidental costs include proportionate overheads
relating to the following offices at the rates given
below:

(a) Planning 50%

(b) Distribution and Consumer 10%

(c) Engineering 50%

(d)। Finance and Administration 10%

5. Foreign Currency Loans

Liabilities on foreign currency loans which remained
unpaid at the year end are converted at the year
end exchange rates. The profit/loss arising there
from is recognized as income or expenses in the
Income Statement.

6. Contribution from Customer/
Local Authority

Contribution from customer or local authorities for
property plant and equipment are shown as capital
reserve. An amount as depreciation of the
contributed amount for the respective assets is
charged on capital reserve.

7. Investments in Shares

Investment in the shares of subsidiary and other
companies held for long term are stated at cost.

8. Depreciation

Depreciation is provided on all categories of property,
plant and equipment on straight line basis which
reflects the estimated useful lives of the assets.

The rate of depreciation on property, plant and
equipment is as follows

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

a। Basis। 8.14.] N.

__
re
Pe

17। Additions during the year At applicable rates
for half year

leave and electricity facility are accrued in the
financial year in which the services are rendered
by the employees .NEA's contributions to provident
fund is charged to income statement. The provision
for Pension and Gratuity is created by 15 % of
annual salary less actual amount paid during the
year. If any amount appears short fall, then additional
provision is made. Liability on account of
accumulated home and sick leave has been provided
for on an estimated basis to cover the liability.
Liability on account of medical reimbursement
continues to be accounted for on cash basis.

9. Inventories

Inventories are valued at cost, using the weighted
average method.

10. Accounts Receivable

Accounts receivable are stated at book values, less
provision as may be considered appropriate by
the management.

11. Deferred Revenue Expenditure
Certain expenditure incurred on training, 13+ Insurance Fund

investigation, survey, software development,

feasibility studies of infrastructure projects and major Insurance fund is created by setting aside a sum

overhauling etc. which are expected to generate
benefits over a period of time, are treated as deferred
revenue expenditures and written off over a period
of five years, including the year in which the said
expenditures are incurred.

12. Employees Benefits

Salary, wages, allowances, overtime, paid annual

of Rs. 20 million every year irrespective of profit/loss
for the year to cover any loss of property, plant and
equipment, in case of any eventuality.

14. Prior year's figures/ Regrouping

Previous year's figures have been reclassified/
regrouped, where necessary, to make them
comparable with current year's figures.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Tariff Rates
(Billing Effective since Septermber 17, 2001)

DOMESTIC CONSUMERS

[ [A [Minimum Monthly Charge: METER CAPACITY। Minimum Charge एल] Exempt (RWh)।
[] [utosamee पा 0
ao
TT
ao
TT

1
ee ला
[] [upto20unis नयामाममा [पा
TP at-260unts SSSR 7.80 permit। Sd
[[Jover250unts SSCS 8G peru CS"

a
2
अङाापभउ SSCS
[A [with Eneroy Meter ज्ञानमा]
[re [witouteneray Meter छाना]
विउ म माला
[COMMUNITY WHOLESALE CONSUMER ——SOSC~iSCSSSSSCSC~C~SSCCSC~*"

INDUSTRIAL Monthly Demand Charge। Energy Charge
(Rs./kVA) (Rs./unit)

[TA [low Vonage aoomovey ——SSCSC—"—~sS—"'iSSC';';C;*"
CT
मलाला 7
Te
—
—
es
]
8!
]
छ ढठाम्टलबहरला नि
]
Te
[.]

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

IRRIGATION

9:। :

[ [A [प्रकास]
[।B [Medium Votage (rte)। SSCS
लात
जिला कामा
जिल्ल ताका

[Te।Meciumvotage ता।
[Tc।Meciumvotage @akvy) [।
fas [TRANSPORTATION. पि
[TA [Medium votage in)
[छ [Mediumvotage sev) [SSS

TIME OF DAY (TOD) TARIFF RATES

Consumer Category & Monthly Demand

a
]
ािक्राराहालनबाण्ण [या
=
छ [Medumvorageaaey [dT Cd Cid
=
लि

पा
7 0]

औ।

=।
=
=
=
=
=।।
=
=
=।

Note:
) If demand meter reads kilowatts (kW) then kVA = kW/0.8
) 10% discount in the total bill amount will be given to the Government of Nepal approved Industrial District

८) 25% discount in the total bill amount will be given to the Nepal Government Hospital and Health Centers (except
residential complex)

ao 9)

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Statistics, Schematics and Maps

AVAILABILITY FY 2007/08 UTILIZATION FY 2007/08

71.92%

0.29%

12.97%। M@ Hydro थि Thermal O Purchase India U Purchase Nepal। B Internal Salemi Export System LossO Self Consumption

SALES FY 2007/08 REVENUE FY 2007/08
2.62% 6.63% 2.35% 5.41%

35.93% 40.66%

6.78% 4.64%

छ Domestic छि Non-Commercial 0 Commercial छ Domestic Non-Commercial
O Industrial mw Export O Others O Commercial O Industrial
@ Export O Others

EXPENDITURE FY 2007/08 NO. OF CONSUMERS
—!

%
0.43% 1.67%

mt H Domestic H Non-Commercial

O Commercial O Industrial
Others

10.94%
& Staff Cost हल Power Purchase
O Operation & Maintenance 0 Interest
@ Depreciation O Royalty
@ Prior Years Expenses O Insurance Fund
@ Others कि

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Total Energy Available
& Peak Demand

3500
3000
2500
2000 a a। aa
1500 a Za।।
1000 [ ] rn
1 781 1 el

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008"
FISCAL YEAR

GWh

CI 1. Hydro CI 2. Thermal
Gm Nepal (IPP) [— India (Purchase) —@— Peak Demand (MW)*

Particulars

Peak Demand (MW) 351.9। 391 470.33 721.73
Available Energy (GWh)। 1475। 1701.45। 1868.42 2261.13 3180.66
1233.22। 1113.36 1478,04। 1345.46 1798.61

92 16.1

. . 5
2. Thermal 118.82 66.73 27.14 17.01 4.4 13.669 13.31 .
3. Purchase (Total) 309.67 401.5] 727.93] 936.31] 778.69 11025.519।1106.184] 1196.27।1291.09/1372.88
छ

India 232.39} 232.2] 226.54] 238.29] 149.88] 186.675] 241.389] 266.23। 328.83) 412.41
Nepal 77.28 169.3। 501.38] 698.02} 628.81] 838.844] 864.795] 930.04। 962.26) 960.47

Note :- Peak demand is for all areas covered by integrated system including supply to India
* Provisional figures; Subject to final audit

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Growth Of Consumers

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000

400,000

(No of Consumers)

200,000

=
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*
FISCAL YEAR

O Domestic O Grand Total O Others

Particulars। 1999। 999। 2000।। 2001। 2002।। 2003।। 2004।। 2005।। 2006। 2007 2008*

Domestic 593,468} 643,314] 713,307] 848,540] 930,554।1,010,719] 1,113,740) 1,227,295] 1,339,253। 1,458,419

138 150

155 298
2,290

5
2,290 2,628 2,752
5

s

48

Non-Commercial 8,629 9,865 10,215 10,639
Industrial 18,789 21,374 24,089। 25,498
Irrigation 1,353 2,557 13,183। 17,654
Street Light 1,048 1,437 1,608 1,952
i
खा

1,131 1,248 1,441 1,800

Total (Internal Sales)} 622,358] 673,974] 745,987] 884,530} 970,606।1,053,930। 1,159,850} 1,277,442] 1,397,808। 1,524,605

1,738 1,959

76
42
Temporary Supply
21
5

50
2,150
5

5

oi

=
oT

Grand Total। 622,363 673,979। 745,992] 884,535

Note : * Provisional figures; subject to final audit.

5 5 5

970,611 1,277,44711,397,813।] 1,524,610

NN
on 1५)
1५)
ae।
0
3
ZS
त

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Electricity Sales

2500.00
2000.00
1500.00

y
1000.00 हि. हि. हि 7 [२८ } पर V4
A
ns ( igi

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*

Energy (In GWh)

FISCAL YEAR

Oo Domestic Industrial [Grand Total gg Others

(in GWh)

ee es
Tiss [nar vse। seen। nse। rns। vsan [ne। sae

Note : * Provisional figures; subject to final audit.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Revenue

18000.00
16000.00

]।।
रेप।। tt

14000.00

12000.00
10000.00

ttl

8000.00

6000.00

(Million NRs)

=
ri।

"4
टि

we 7 7।

99 2000 2001 2002 2003 2004 2005 2006 2007 2008"

4000.00

AL Z
A,

Na

2000.00

—— nn

—\

0.00

—
९०

FISCAL YEAR

[] Domestic [1] Industrial O Total Revenue g Others

(in million NRs)

Category। 1999। 2003।। 2004।। 2005।। 2006। 2007
Domestic 2056.05। 2622.03) 3161.38] 3641.43) 4249.81] 4578.99) 5079.87) 5405.12] 6021.40) 6396.37

rome
ee ee ee
coo

Note : * Provisional figures; subject to final audit.

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

Load Forecast
LOAD FORECAST

16000 3500.0
14000 3000.0
12000 2500.0 _
= 10000 =
= 2000.0 ©
= 8000 <
6? 1500.0 3
11 6000 <
i 1000.0 गा
4000 Va
2000। ॥ 500.0
0 0.0
gersereeckeesryesKs
6 & 2 7 €४ 2 एरं22 56: 2८5८०८४&6४४०«०४
८) Oo Oo 90 ८ 90 ७ ८) Oo Oo ८) Oo OO ८) Oo oO Oo ©
NNN ता त त त NN TON ON त ९
FISCAL YEAR। mmm Energy (GWh) —4— Peak Load (MW)।

ग्णा]

lon)
N
—

ve ६८ ८८ [८ 9८ 61 ४1 LI 91 SI vl el cl Il Ol 6 8 L 9 ५ टि

YO" WLOL

0४०1
1595410 WLOL

Avpuow (L007 'TE 9°) 790८ '9T Usnod
429 9८) JO ४४० ४०० JO SAIND 0४०- WI9s}SAS

A year in
Review

MIN

ग्णा],

ve ६८ ८८ IZ 90८ 61 81 LI 91 al al el cl II OI 6 8 L 9 ५ v ६

wow TVLOL

1,

LYOdWI WLOL

'

VLOL

598015 WLOL
ee

THOS'6T 3° AMIN OS"EP9 HOI vod Avps.iny (L007 '8 भाँग?) 7907 हिट UBMLIS

Tasaid 1

Aeg uoseas }0M 12216/1 10 BAIND peo yz wa}shs

OCP
Orr

0८४
Ors

90८9
2

089

MIN

का समा year in
Review

FY 2007/08

Energy Management: Percentage Contribution of Group Sources
F/Y - 2064/65 (2007/08)

IMPORT (WITH

TANAKPUR) ७.
11.96% were
IPP
27.90%

NEA HYDRO
31.07%

NEA THERMAL
0.26%

Comparison of Group Sources in Peak Demand Supply
2063/064 (2006/07) Vs. 2064/065 (2007/08)

F/Y 064/65
(2007/08)

F/Y 063/64
(2006/07)

छ Major Hydro Small O Thermal OIPP @ Import (with Tanakpur) छौ Load shedding

Nepal Electricity Authority, Fiscal Year 2007/08 - A Year in Review

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