HYDROPOWER DEVELOPMENT IN NEPAL

Khimti I 60 MW hydropower plant: the BOOT project in Nepal

Water is the most important natural resource of Nepal. There are about 6,000 rivers and rivulets of which there are seven major rivers in The Koshi basin, seven major rivers in the Gandaki basin, and five major rivers in the Karnali basin which are perennial.

The total average runoff is estimated at about 225 billion cubic meters with an estimated hydroelectric potential of 83,000 MW of which some 44,000 MW can be economically harnessed. So far less than 1% (300 MW) of the available economic potential has been exploited and only 15% of the population has access to electricity.

The Nepalese domestic demand for electricity is increasing, on average at 8% a year, with the largest growth in the residential, commercial and agriculture sectors.

Private Sector Participation In Hydropower Development

After the restoration of democracy in 1990, the new government initiated the process of economic liberalization and declared its sincere belief in private sector led growth, limiting the role of the government only to the creation of a conducive atmosphere for market regulated economic decision making.

Hydropower development was the most important sector opened for private sector participation, which until then was under the exclusive domain of the Nepal Electricity Authority (a State Enterprise). This policy opened new opportunities for the private sector business, local as well as foreign. Together with local institutions, NORAD and Norwegian expertise played an important role in the restructuring of the power market.

The following guiding policies were promulgated for private sector participation.

1. Hydropower Development Policy, 1992
2. Water Resource Act 1992
3. Electricity Act 1992
4. Foreign Investment & Technology Transfer Act 1992
5. Industrial Enterprise Act, 1992
6. Electricity Regulation, 1993
7. Water Resources Regulation, 1993

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