New Law Drafted to Extend Permit Period for Hydropower Projects

A new law has been drafted to extend the period of permits for hydropower projects. According to the Electricity Bill 2080, which has been approved by the Council of Ministers, the permit period for reservoir projects has been proposed to be 45 years. It is recommended to make the permit for other types of projects 40 years. During this period, if an uncontrollable situation is created and there is an obstacle in the development and operation of the project, the duration of the power generation permit can be extended for a maximum of 5 years after evaluating the benefits, costs, insurance, damage, and risks of the project. In this way, it is recommended to extend the period of permits for hydropower projects to a maximum of 50 years.

Earlier, the Electricity Act of 2049 provided that the duration of the project permit would be up to 50 years. However, the Hydropower Development Policy 2058, which came in 2058, set the duration of the permit to be 35 years for projects that are exported directly to foreign countries and 35 years for projects that are produced for domestic consumption. Now, the period of the permit has been clearly extended to 45 years in the law itself. In the case of projects that are directly exported abroad, the period of the permit will be reduced to 5 years.

According to the bill, the duration of the permit for the project to export electricity directly from the project to the foreign market is 40 years, and for other types of projects, the permit period is 35 years. Private sector investors have been demanding for a long time to extend the period of permission for power projects. The new bill has addressed that.

In the past, the bill left the government optional by keeping the words 'up to 50 years', so the government reduced the period of the permit through policy. The policy is passed by the Council of Ministers and implemented. The Act must be passed by the Parliament.

According to the bill, a period of 25 years has been fixed for generating electricity from sources other than water sources. The duration of the customer service license is 5 years. Such a period was not specified in the Electricity Act.

Applicable only in the case of new projects

According to the bill, this provision will be applicable only in the case of projects that require a new permit. It is mentioned in the bill that the same period will be applicable in the case of permits that were issued for a fixed period earlier.

It is mentioned that the organizations that have obtained permission for electricity trade and customer service must apply for renewal 30 days before the expiry of the permit. Before the commencement of the Act, if someone had obtained a survey permit for a period of less than 5 years, the survey permit can be extended up to 5 years based on the progress of the work. A provision has also been made that hydropower projects will not be nationalized within the specified period and that compensation should be paid if it is done for the public good.

The jurisdiction of the lower government was defined

The bill has also specified the jurisdiction of Nepal government, state government, and local government regarding electricity. Now the relevant local level can develop and operate power projects with a connected capacity of up to five megawatts. State-level power projects (up to 25 megawatts) have been authorized by the state government. The provincial government has also been given the right to power projects with a connected capacity of up to 5 megawatts on the border of two or more local levels.

In the case of large power projects (more than 25 megawatts), the government of Nepal and the power projects located on the borders of two or more provinces will also be taken over by the government of Nepal. The bill has given concessions to the state and federal governments in terms of capacity.

The federal government has also been given the right to develop and operate power projects of all capacities at the request of the provincial government or local level. Even in electrification, all three levels of government have to cooperate and coordinate. The Government of Nepal has stipulated that technical assistance should be provided to the provincial and local governments.

The license of the project occupying only the river will be revoked

The project survey permit will be revoked if the application for the power generation permit has been applied for but the project study report, environmental study report, project operation method, and financial management related documents have not been submitted within the time of implementation of this bill. The bill also mentions that the project will be carried forward on the basis of competition.

There is a provision in the bill that there will be no competition in the case of projects made by the government of Nepal or entities with more than 51 percent ownership of the government. There will be no competition even in the case of projects to be built by the three-level government.

Authority to be decommissioned within 5 years

According to the Electricity Bill 2080, if electricity generation, transmission, and distribution are being done by the same organization, then within 5 years after the implementation of the Act, this work should be done by separate organizations.

That is, now this work is being done by the Nepal Electricity Authority on behalf of the Government of Nepal. Now within 5 years, the authority should be split up and production, transmission, and distribution should be done by separate entities in the bill. Parliament can also amend the provisions proposed in this bill. This will become a law after it is discussed and passed in the parliament. Even though the bill was presented in the previous parliament, but it was not passed, the government passed it again.