Power Sector Overview

Anil Rajbhandary, NEA Capacity Building Program for SARPEX Mock Exercise 07 February, 2017; New Delhi Legislative and Regulatory Framework

Key Acts and Regulations that govern Nepal’s Power Sector:

Nepal Electricity Authority Act, 1984 Electricity Act, 1992 Electricity Regulations, 1993 Electricity Tariff Fixation Commission Regulation,1993 Institutional Arrangement

Ministry of Energy

Department of Electricity Development

Water and Energy Commission

Electricity Tariff Fixation Commission

Nepal Electricity Authority

Role of Private Sector Ministry of Energy

Line Ministry of the Power Sector Responsible for framing legislation for submission to Cabinet and Parliament Regulatory oversight for issuing licenses for power generation, transmission and distribution under the Electricity Act 1992 Department for Electricity Development

Department under the Ministry of Energy as the official one-stop window for interested private investors to facilitate the development of private sector power generation, transmission and distribution projects.

Functions: Private Power Development Promotion and Facilitation Inspectorate Technical Support Water and Energy Commission

Policy Advisory Body to the Government

Formulates Short and Long Term Water and Energy Development Policies

Analyses and advises on bi-lateral and multi-lateral energy development programs as well as hydropower development treaties with neighboring countries E Electricity Tariff Fixation Commission

Reviews and approves retail electricity tariff rates and other fees for electrical service at the consumer level.

Comprises a full time Chairman, and members representing the line ministry, private sector, regulated entities, industry and the consumers. Nepal Electricity Authority

Established in August 1985 under NEA Act 1984 Wholly Government of Nepal undertaking Responsible for generation, transmission and distribution of electricity throughout Nepal Roles of NEA

Project Execution

Power Purchaser

Operation & Maintenance of National Grid

Scheduling and Dispatching Organizational Structure of Nepal Electricity Authority

NEA Board Audit Committee

Managing Director Internal Audit Department L-11 Acc. MD'S Secretariat, NEA Subsidiary L- 11 T Companies

Loss Reduction Division L-10 Electrical

Distribution & Consumer Services Generation Transmision Planning, Monitoring & IT Engineering Directorate, Project Mgmt. Administration Finance DMD L-12 T , , Directorate, Directorate, Directorate, Directorate, Directorate, Directorate Directorate DMD L-12 T DMD L-12 T DMD L-12 T DMD L-12 T DMD L-12 A DMD L Grid Operation Large Generation Operation Planning & Technical Regional Office, Department, Power Trade Department, Project Development Services Department, L-11 T & Maintenance Department, Department, L-11 T L-11 T Accounts L-11 T L-11 T L- 11 T Project Preparation Human Resource Department, Department, Regional Office, Grid Development Department, L-11 Acc. Community & RE L-11 Adm. L-11 T Medium Generation Operation Department, Information Technology Environment & Social L-11 Adm. Department & Maintenance Department, Department, L-11 T L-11 T Study Department, L-11 T L-11 T Hetauda Regional Office, L- 11 T General Service Corporate Finance System Operation L-11 T Department, Department, Finance Division, Department, Technical Support L-11 Adm. L-11 Acc. L-10 Acc. Department, L-11 T System Planning Department, L-11 T Soil Rock and Concrete Regional L-11 T Laboratory, Office, L-11 T Administration Division, L- 11 T Legal Department, Administration Division, L-10 Adm L-11 Adm Generation Development L-10 Adm Corporate Planning & Department, Monitoring Department, Butwal Regional Office, Finance Division, NEA Training Centre, L-11 T L-11 T L-11 T L-10 Acc L- 11 Adm. Recruitment Material Management Div, Department, L-10 Electrical Administration Division, Monitoring & MIS L-11 Adm L-10 Adm Economic Analysis Pokhara Regional Office, Section, L-9, Electrical Electromechanical Design Department, L-11 Adm/Misc. Monitoring & MIS Section, L-11 T Division, L-9, Electrical Finance Division, L- 10 Electrical L-10 Acc Nepalgunj Regional Office, L-11 T Monitoring & MIS Administration Section, Section, L-9, Electrical L-9 Adm Attaria Regional Office, L-11 T Finance Section, L-9 Acc

Note : T = Technical Services; A = Administration Services: Adm = Administration Group: Acc=Account Group

Role of Private Sector

Availability of concessional loans for the power sector, particularly in generation projects, is lately on the decline.

Electricity Act 1992, provides a legal framework for the private sector participation in electricity generation, transmission and distribution.

Today, IPPs share is nearly 45 percent of the total installed generating capacity. Nepal Power System

Installed Capacity: 960.6 MW

1700 Micro HP, 15 MW On Grid 956.1 MW Off Grid 4.5 MW

Hydro 902.7 MW Thermal 53.4 MW

ROR 810.7 MW Storage 92 MW

IPP 429.7 NEA 381

Import from India 350 MW NEA Power System Status

On Grid Installed Capacity 956.1 MW

Transmission Line 132 kV 2,417 Circuit Km NEA Power System Status Substation 132 kV : 29 1,765 MVA

Transmission line 66 kV 511 Circuit Km

Substation 66 kV : 12 458 MVA

Number of consumers 2.97 Million

Population Coverage 58 %

Total Energy Available and Peak Demand

Particulars FY 2011/12 2012/13 2013/14 2014/15 2015/16*

Sales (GWh) 3,044.7 3,156.0 3,496.3 3,743.7 3,746.0

Peak Demand (MW) 1,026.65 1,094.62 1,200.98 1,291.10 1,385.30

NEA Hydro Generation 2,357.43 2,273.11 2,288.23 2,365.64 2,168.49

NEA Thermal Generation 1.56 18.85 9.65 1.24 0.07

NEA Generation Total 2,358.99 2,291.96 2,297.88 2,366.88 2,168.56 (GWh)

Power Purchase from India 746.07 790.14 1,318.75 1,369.89 1,758.41

Power Purchase from IPPs 1,073.57 1,175.98 1,070.46 1,268.93 1,173.14

Power Purchase Total 1,819.64 1,966.12 2,389.21 2,638.82 2,931.55 (GWh)

Available Energy (GWh) 4,178.63 4,258.08 4,687.09 5,005.70 5,100.11 System Load Curve of Peak Load Day (October 30, 2016) Sunday

1300

1200

1100

1000

900

800 Nepal Supply/Demand(MW)

700

600

500 0 3 6 9 12 15 18 21 24 Time Hr Supply Demand Breakdown of Supply Option in Meeting the System Peak

Contribution Supply Option (MW) NEA – Hydro 430.1 IPP - Hydro 241.0 Import 230.1 Total 901.2 Peak System Demand 1291.2 Deficit 390 Percentage Energy Share of Different Supply Options Fiscal Year - 2015/2016 (Total : 7,328.9 GWh)

IMPORT 1,758.4 GWh 24.0%

IPP 1,173.1 GWh 16.0%

NEA HYDRO 2,168.5 GWh 29.6%

ENERGY SHEDDED 2,228.8 GWh 30.4%

NEA THERMAL 0.1 GWh 0.0% Electricity Demand Peak Electricity Demand of Nepal is nearly 1300 MW Prolonged Load Shedding throughout the year was enforced to cope with Supply – Demand Imbalance since last couple of years This year supply situation is comparatively improved Increased import Commissioning of number of IPP Projects Demand Side Management Being a Developing Country and with more than a third of the population still without access to electricity, electricity demand is projected to grow on an average by 8.2 percent annually based on target GDP growth rate of 6 percent Load Forecast 5785.3 28,329.85 30,000.00 6000

4280.7 25,000.00 5000 20,811.80

20,000.00 4000 2978.3

14,349.25

15,000.00 3000

2071.5

Energy Energy (GWh) PeakLoad(MW) 1559.7 9,889.91

10,000.00 2000 7,491.08

5,000.00 1000

0.00 0

2025/26 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32 2032/33 2033/34 Fiscal Year Energy (GWh) System Peak Load(MW) Projects Under Construction

Installed Capacity Commissioning Projects (MW) Year NEA Chameliya 30 2017/18 Kulekhani III 14 2017/18 Trisuli 3 ‘A’ 60 2019/20 Rahughat 40 2020/21 Total 144 Projects Under Construction…

Installed Capacity Commissioning Projects (MW) Year NEA Subsidiary Upper Tamakosi 456 2018/19 Tanahu 140 2022/23 Upper Sanjen 14.8 2018/19 Sanjen 42.5 2019/20 Madhya Bhotekosi 102 2020/21 Rasuwagadhi 111 2020/21 Total 866.3 Total (NEA + Sub.) 1010.3 IPPs (83 Projects) 890.0 2017/18-2020/21 Grand Total 1900.3 Supply Demand Scenario In the next two years, with the commissioning of number of Hydro Projects Power Deficit Likely to be eliminated during the wet season But likely to persist in the dry season By 2019 -20 Likely to become surplus in energy terms Need for Import to meet Peak Demand during Dry Season Seasonality of hydro power generation Comparatively higher load Power Exchange between Nepal & India

Started with the signing of Koshi River Treaty in 1954. Nepal’s entitlement 10 MW Power Exchange Agreement concluded in 1971 for a 5 MW power exchange at present it stands at 50 MW level. Other River Treaties: Gandak Treaty: 15 MW Gandak Power Station Built Mahakali Treaty: 12 – 16 MW (70 GWh per annum) being drawn from the Tanakpur Power Station Import beyond the 50 MW level under commercial terms Import of power by India from Nepal is lately on decline Extension of Indian Grid to rural areas adjoining Nepal Border Existing Import Interconnections

Voltage Level Import Capacity Interconnections (kV) (MW) Kataiya - Kusaha 132 125 Kataiya - Rajbiraj 33 10 Sitamadi-Jaleshwor 33 12 Kataiya-Inaruwa 33 5 Raxaul-Birgunj 33 12 Ramnagar-Gandak 132 25 Jaynagar- 33 7 Nanpara-Nepalgunj 33 12 Tanakpur-Mahendranagar 132 40 Muzaffarpur-Dhalkebar 132 120 Total 368 New Interconnections Kataiya - Kusaha 132 kV single circuit 15 km 50 MW Raxaul - Parwanipur 132 kV single circuit 17 km 50 MW Both transmission lines are being implemented under Government of India Grant Assistance Dhalkebar – Muzzaffarpur 400 kV double circuit cross- border transmission line being implemented under PPP Model D – M 400 kV Cross Border Line Implemented under commercial mode i.e. PPP Model The JV companies will develop, own, operate and maintain the transmission line in their respective territory. PTC India signed Power Sales Agreement (PSA) with NEA on 12 December, 2011 for the bulk sale of 150 MW of power to NEA With the commissioning of mega hydro projects in Nepal, this high capacity interconnection will facilitate in exporting surplus power from Nepal to India D – M Line Project Features Voltage: 400 kV (initially charged at 220 kV) and will be operated in synchronous mode with the Indian grid Line length: 40 Km in Nepal and 86 km in India Transmission Capacity: ~ 1,000 MW Pending commissioning of 220 kV Dhalkebar substation the Transmission Line was operated at 132 kV level for importing 80 MW power from 18 February, 2016 Presently 120 MW is being drawn

Wholesale Tariff For bulk purchase by NEA from IPPs NRs 4.80/kWh for 8 wet months (mid April – mid December) NRs 8.40/kWh for 4 dry months (mid December – mid April) increment at 3 % simple rate per year for 5 times for projects upto 25 MW increment at 3 % simple rate per year for 8 times for projects > 25 MW and upto 100 MW Koshi Agreement : IRs 4.36/kWh Mahakali Treaty : NRs 5.41/kWh payable to GoN Power Exchange Agreement : IRs 5.63/kWh at 132 kV IRs 6.08/kWh at 33 kV IRs 6.54/kWh at 11 kV Wholesale Tariff …

Power Purchase from North Bihar Power Distribution Company Ltd : IRs 5.55/kWh Power Purchase from Power Trading Corporation of India Ltd : IRs 3.44/kWh RTC Power Purchase from NTPC Vidyut Vyapar Nigam Ltd : IRs 3.60/kWh RTC Average Consumer Retail Price : NRs 8.60/kWh in FY 2015/16 [email protected]