IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY...

BHILWARA ENERGY LIMITED

Vipin Arora,Vice President (Civil)

25th September, 2014

IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY ISSUES

OUTLINE OF PRESENATATION

STATUS OF PROJECTS UNDER DEVELOPMENT

Ventures in Nepal

Project Developers

Project Location

Status of Clearances

Power Evacuation Arrangement

Pre-construction Activities

Infrastructure Works

Invitation of Bids

OUTLINE OF PRESENTATION

ISSUES RELATED TO HYDRO POWER DEVELOPMENT IN NEPAL

Country specific Issues

Policy Framework related Issues

Financial Issues

Infrastructure issues

Social and Environmental Issues

LIKHU-IV (120 MW)

& BALEPHI(50 MW)

Joint Venture

of

LNJ BHILWARA GROUP, INDIA

&

TRIVENI GROUP, NEPAL

HYDRO VENTURES IN NEPAL

POWER & CONSULTANCY

I T

A WELL DIVERSIFIED LARGE BUSINESS HOUSE HAVING MORE THAN FOUR

DECADES OF INDUSTRIAL EXPERIENCE IN INDIA. THE GROUP HAS PRESENCE IN:

GRAPHITE ELECTRODESTEXTILES

JOINT PROJECT DEVELOPER - LNJ BHILWARA GROUP

*Turnover USD 1,114(Million)

ExportsUSD 478

Million42.91%

Gross Fixed AssetsUSD 1,331

Million

LNJ BHILWARA GROUP IN POWER

Under Implementation Projects

Project Capacity

Nyamjang Chhu HEP, AP 780 MW

UBDC-III HEP, PB 85 MW

Chango Yangthang HEP ,HP 180 MW

Bara Bangahal HEP Stage-1, HP 92 MW

* Likhu IV HEP, Nepal 120 MW

* Balephi HEP, Nepal 50 MW

Total 1307 MW

Implemented Projects

Project Capacity

Tawa HEP, MP 14 MW

Malana HEP, HP 86 MW

Allain DuhanganHEP, HP

192 MW

Wind Power 105 MW

Captive TPP 119 MW

Total 516 MW

* The Projects are being done in JV with Triveni Group

3031

30 Likhu IV HEP, Nepal 31 Balephi HEP, Nepal

+1823 MW

Group

POWER

POLYMERS

A WELL DIVERSIFIED LARGE BUSINESS HOUSE IN NEPAL.

THE GROUP HAS PRESENCE IN:

AGRICULTURAL PRODUCTS

TEXTILES & SPINNING

JOINT PROJECT DEVELOPER - TRIVENI GROUP

CEMENT

Annuapurna Veg Product

Triveni Dal & Oil Mills

Nepal Tea Dev Corp

Momkor Sugar & Chem Ind

Makalu Agrofirm

Triveni Textiles

Tanush Textiles

Triveni Spinning Mills

Triveni Energy

Triveni Hydro Power

Vishwakarma Cement

Shree Pashupati Cement

Ghorahi Cement

Triveni Synthetic Yarn

Triveni Synpack

Triveni Plasto Polymers

VENTURES IN NEPAL

120 MW Likhu – IV Hydroelectric project

Project to be implemented by Green Ventures Pvt.Ltd. a joint venture company of Bhilwara Energy Ltd,India and Triveni group, Nepal.

Project is located on Likhu river in Ramechhap andOkhaldunga districts.

Project is at a distance of 222 km from Kathmandu inNorth-East Nepal.

VENTURES IN NEPAL

50 MW Balephi Hydroelectric project

Project to be implemented by Balephi JalvidhutCompany Ltd. a joint venture company of BhilwaraEnergy Ltd, India and Triveni group, Nepal.

Project is located on Balephi river in Sindhupalchowkdistrict

Project is at a distance of 94 km from Kathmandu incentral-eastern Nepal.

PROJECT LOCATION

PLACE DISTANCE

(km)From To

Kathmandu Charikot 133

Charikot Haldibeshi 49

Haldibeshi Sirese 35

Sirise

Bimire

Headworks

Likhu IV HEP 10

SIRESE

CHARIKOT

HALDIBESHI

KATHMANDU

LIKHU IV HEP HEADWORKS

BALEPHI HEP HEADWORKS

PLACE DISTANCE

(km)From To

Kathmandu Balephi 72

Balephi Chanaute 19.2

Chanute

Powerhouse

Balephi HEP 3.1

LIKHU-IV -STATUS OF CLEARANCES

Status of Various Clearances

Letter for export orientation issued on 7th July 2010.

Connection Agreement signed with NEA on 19th July 2010.

EIA approved on 15th April 2010.

Fallback Power Purchase Agreement (PPA) signed with NEA on 2nd Feb, 2011.

Generation License granted by MOE on 11 March 2012.

Financial Closure achieved on 9th January 2012.

BALEPHI –STATUS OF CLEARANCES

50 MW Balephi Hydroelectric project

DPR approved in 2009

Letter for export of power issued on 7th July 2010.

Connection Agreement executed with NEA On 27th

July 2010 .

IEE report approved on 17th May 2010.

Fallback PPA signed with NEA on 22nd December, 2010.

LIKHU AND BALEPHI -POWER EVACUATION

Alternative 3 has been Proposed:Construction of 400 kV D/C Transmission line from Nyamjang Chhu HEP to Balipara& 2 Nos. bays at existing 400kV s/stn. of PGCIL at Balipara

PRE-C0NSTRUCTION ACTIVITIES

Geological and Geotechnical Investigations -Likhu IV

Drilling completed in Power house, Dam Area, Pressure shaft

and Surge Shaft.

Plate Load tests completed

5668 m 2D ERT Surveys completed along Head race Tunnel.


Private Land Acquisition – Likhu IV Private lands at Powerhouse, Head Works, Surge Shaft, Adit Portal

and for Engineering Camp are almost procured.

Status of Acquired Land- Private

LocationTotal Private

Land (Ha)Total Private Land

Acquired (Ha)

Remaining Land to be Acquired

(Ha)

Powerhouse 8.49 8.49 0

Headworks 4.48 3.92 0.6

Surge shaft 3.4 3.4 0

Adit Portal 1 0.38 0.40 0

Adit Portal 2 1.01 1.01 0

Adit Portal 3 0.43 0.38 0.1

Engineering Camp 1.76 1.76 0

Ponding Area 0.70 0.39 0.3

Total 20.7 19.8 1


Government Land on Lease – Likhu IV Status of Government Land Lease

LocationTotal Government Land

Lease (Ha)

Powerhouse 0.29

Quarry ,Crusher plant and Batching Plant

2.72

Dumping Site 2.22

Ponding Area 8.70

Total 13.93

Acquisition of Government land was initiated after

obtaining the Generation License in 2012 and is still

under process

LAND ACQUISITION- A REMARKABLE FEAT

Almost 90% of private land acquired within a period of one year without any help & involvement of Govt due to:

Experienced staff and Good Team work in the field.Formation of local road user committees and obtaining

suggestions from them.Educating people about benefits of the project.Strictly following up the schedule of acquisitionQuick decision making process.Transparency in all land acquisition deals.Local manpower mobilization for the jobs.Maintaining good relationships with stakeholders.

LAND ACQUISTION PROCESS –Likhu IV

PUBLIC HEARING

PUBLIC HEARING AT LIKHU IV SITE

INFRASTRUCTURE WORKS

Haldibesi to Dhobi Section (20 km)) Soling and Strengthening work completed.

Spent NRs. 90 millions on 20 Km section.

Dhobi to Sirese Section (15 km) New Road cutting , road widening and grade improvement of

existing tracks.

Stone soling, sub base and road side drains.

Retaining walls and breast walls.

Spent NRs. 134 million on 15 Km section.

Likhu IV INFRASTRUCTURE WORKS

LIKHU IV INFRASTRUCTURE WORKS

Strengthening works of Access Road from Dhobi to Sirese

Panoramic view of Access Road from Dhobi to Sirese

PHOTOGRAPHS


Sirese to Powerhouse(4.3Km) and SteelBridge Complete new road cutting , road widening and grading.

Retaining walls, breast walls and road side drain.

50 m span truss bridge over Likhu river completed.

Spent NRs. 114 million on 4.3 Km section and Steel

Truss bridge.


50m Span Steel truss Bridge on Likhu River & side Abutments


Powerhouse to S. Shaft and Link Roads

Track opening, widening and grade cuttingcompleted.

Retaining walls, breast walls and Stone soling incertain sections completed.

Spent NRs. 32 million on this section.

Panoramic view of Surge Shaft area

PHOTOGRAPHS


Powerhouse to Intake Section -

Track opening of left bank completed and rightbank 75% completed.

Road widening and grade cutting of left bank inprogress.

Retaining walls and breast walls in progress.

Spent NRs. 103 million on left bank and rightbank roads.


Access Roads on right and left banks (Power House –Intake)


Strengthening works of Access Road ( Power House –Intake)

INFRA STRUCTURE WORKS

Infrastructure Works Pre Fabricated Office Building at PH site erected.

Guest House was established at Sirese.

Staffs, Engineers & Office Accommodations-Bidding in

process.

INVITATION OF BIDS

Bids for Main Packages – LIKHU IV

Bids invited for the construction of Civil works andElectro mechanical works.

Six international companies participated in theTechnical and Financial bids for civil packages.

Eleven international contractors participated in thebids for Electro-mechanical packages.

CONTRACTS NOT AWARDED

Construction put on hold because ofthe following reasons:

Wheeling charges for NEA system and cross-border line still not decided by the Govt.

Uncertainty in the construction of cross- bordertransmission line.

Permission to transfer Private land in the name ofcompany still awaited.

Process of taking Govt. land on lease (started inNov, 2012) still not complete.

ISSUES RELATED TO DEVELOPERS

ISSUES RELATED TO HYDRO POWER DEVELOPMENT.

Country specific Issues

Policy Framework related Issues

Financial Issues

Infrastructure Issues

Social and Environmental Issues

ISSUES RELATED TO PROJECT FINANCING

No Credit rating and no sovereign guaranteeby the Govt. of Nepal.

Indian or Foreign banks are reluctant to lendmoney for Hydro Projects in Nepal

Lenders would require PDAs coveringbasic guaranties against political andexchange risks and assurance againstchange of law etc.

COUNTRY SPECIFIC ISSUES

CROSS BORDER LINE ISSUES-

Three Cross Border connections have beenenvisaged between Nepal and India.

(i) Butwal – Gorakhpur

(ii) Dhalkebar – Muzaffarpur

(iii) Duhabi – Purnea

So far only Dhalkebar – Muzaffarpur taken upfor implementation.

Early commissioning of these lines is essentiallyrequired.

Investment decisions can not be taken inabsence of firm time schedule for crossborder connections.


ISSUES RELATED TO WHEELING

No commitment by Govt. on wheeling charges andlosses for export oriented projects.

Back to Back Agreement between Developers andPTCN and CPTC are still awaited.

Wheeling charges may be much more ascompared to charges in India.

Accurate Financial analysis and investmentdecisions not possible in absence of any firmcommitment on wheeling charges and losses.



POWER EXPORT FROM NEPAL-

Policy framework required for open access toIndia. (PTA between Nepal and India still awaited)

Regulations for importing power from Nepal needto be formalized in Indian side also.

Comprehensive guidelines are required foroperations and synchronization of the two grids.

Open Access policy for sale of power within Nepalis required to be framed.

An independent regulatory authority isrequired for regulation of flow of electricityinside and out of Nepal.

REGULATIONS-

Hydropower Development Policy, 2001 is yet to beratified and related Acts NERC & New Electricity Actare yet to be promulgated.

Whereas, Electricity Act, 2049 (1991) is still inplace.

Harmonization is required in Hydro power relatedlaws.

Royalties and free power required to be redesigned.

Policy for multiple buyers and multiple sellers isrequired for competitive market including MerchantPower sale within Nepal.

POLICY RELATED ISSUES (NEPAL SIDE)

GOVT POLICIES AND PROCEDURES:

Cumbersome procedures for procurement ofexplosives and import of materials &equipments.

Present regulations allow only 75 ropani of landin the name of one company instead of 400 to500 ropani required by a Hydro Project. Thislimit may be suitably increased.

Coordination required between Ministriesof Energy, NEA, Finance, Environment &Land Reforms.


TENURE OF GENERATION LICENSE

In India, the MOU term is for 35 years from COD.

In Nepal it is 35 years for Domestic supply and 30years for Export projects from the date of Issue ofGeneration License including 4 -5 yrs ofconstruction period .

Generation License tenure may be increasedto 40 yrs for both Domestic and Exportprojects.


PPAs with NEA for sale within Nepal may be allowedin Foreign Currency to attract more foreigninvestment.

Expediting approval process for remitting foreigncurrency to foreign vendors.

Capacity royalty rate for export is @ NRs 400/Kwper year for 15 years and NRs 1800/Kw/year beyond ,with 5% increment every year. This is over and aboveenergy royalty.

FINANCIAL ISSUES

ROYALTIES

EXPORT ORIENTED PROJECTS

S.No Type

Up to 15 Years After 15 Years

Annual Capacity Royalty, Per kW

Energy Royalty

Per, kWh

Annual Capacity Royalty, Per kW

Energy Royalty

Per, kWh

1Export- oriented run-Of - the river Projects

NRs. 400 7.50%NRs. 1800

12%

2Export- oriented Storage Projects

NRs. 500 10.00%NRs. 2,000

15%

Interference by local people during projectconstruction phase.

NGOs should be restricted from initiating pettyissues leading to court cases and stoppage of work.

Effective tackling of Law and order issues at projectsite is required.

Strong security arrangements are required duringconstruction phase.

Only the elected representatives may be allowedand encouraged to approach project authorities forlocal issues.

SOCIAL AND ENVIRONMENT ISSUES

INFRASTRUCTURE CONSTRAINTS-

Poor basic infrastructure because of tough terrainsand adverse climate conditions.

The first developer in any river basin has to make heavy investment on infrastructure before taking up Project construction.

Govt. may provide basic infra structure

OR

Develop mechanism to facilitateinfrastructure with contribution from allDevelopers in the same river basin.

INFRASTRUCTURE ISSUES

OTHER CONSTRAINTS

Dependence on costly diesel based generation.

Establishment of own telecommunicationsetup.

Cost of explosives very high, due torequirement of high security provisions.

Strengthening of existing roads and bridgeswith own resources, for carrying heavyequipment

INFRASTRUCTURE ISSUES

SUGGESTIONS-

Financial viability is must for privateinvestors. IPPs would like to have reasonablereturns on their equity(15% or more fromIndian context).Following measures may beconsidered for boosting confidence ofinvestors-

Capacity royalty may be completely abolished.

Concessions may be considered on custom duty onall project imports & equipments.

Common basic infrastructure may be constructed

by the Govt.

Transmission line may be constructed by Govt. upto the nearest NEA Sub Station.

CONCLUSION

SUGGESTIONS – contd.

Construction power may be provided at nominalrates wherever available.

Govt. of Nepal should accelerate the process ofsigning PDAs incorporating basic guaranties.

Setting up of Regulatory authority as early aspossible.

Single Window required for coordination amongstvarious Ministries and departments.

Security provisions in the transportation andstorage of explosives may be reviewed.

Lead agency consisting of representatives ofdifferent political parties may be nominated forcoordination of all CSR activities.

CONCLUSION

IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY...

Documents

Transcript of IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY...