The biggest obstacle to hydropower development is, first and foremost, the National Parks and Wildlife Conservation Act itself. We are dreaming of economic prosperity through hydropower while relying on a law enacted in 1972–1973 AD. If this law is not repealed, that dream of prosperity is not possible.
If hydropower projects are required to operate under the National Parks and Wildlife Conservation Act, then it is practically impossible to build such projects. If hydropower projects cannot move forward within the next few years and the timeline is pushed back by five years, construction costs will have already become much higher by then. In a competitive market, demand may also decline, reducing the value of the electricity produced.
If hydropower projects, once started, can be completed quickly with strong momentum, they can enter the competitive market effectively. The level of competition that is possible today may not be achievable after five years. The more delayed a project is, the less useful it becomes. In some cases, its entire business model may even become unviable.
Hydropower development requires good “head” (head refers to elevation difference for power generation). That “head” means mountains and hills. However, almost all rivers in the mountains and hills fall either within national parks, protected areas, or national forests. If the National Parks-related law is kept in its current form, hydropower generation from such areas is not possible at all. Flat terrain is not useful for hydropower; mountains and hills are essential.
If rivers are still kept under the National Parks Act, hydropower development will not be possible. The government has the authority to designate national parks and protected areas, and it can expand or reduce their boundaries. If the goal is to produce 30,000 megawatts of electricity within 10 years, a new decision regarding the boundary definition of national parks and protected areas must be made.
The government should remove a one-kilometre buffer zone on both sides of rivers and streams from national parks and protected areas. This is currently the most important requirement for hydropower development. If this is done, it will make hydropower project implementation much easier.
When hydropower projects are built in hills and mountains, their benefits are widespread. For example, constructing dams on rivers helps prevent riverbank erosion. Regulated water flow reduces disasters. Areas around dams often become greener, and water sources increase. The Kulekhani project can be taken as an example. Therefore, the government should amend the National Parks Act and exclude rivers and streams from boundary restrictions.
Currently, the situation is such that the Ministry of Energy issues licenses to the private sector for hydropower projects, but when the private sector goes to implement them, the Ministry of Forests stops the work. Because of this, the one-kilometre river buffer zone should be removed from protected area boundaries to reduce obstacles.
Another issue in hydropower projects is environmental impact assessment (EIA). Legally, if a project is not completed within three years of the EIA report being made public, a supplementary assessment is required. This provision needs to be changed.
Some projects take five to ten years to complete. Once an EIA is done, the project should be allowed to continue based on it until completion. If minor changes occur, they should be adjusted in the final report after completion. However, if structural changes significantly affect the environment, exceptions should not be allowed.
Another issue is tree plantation requirements. Projects should not be halted in the name of tree planting. Instead, provisions should allow plantation work to be carried out alongside construction.
Hydropower should be built at low cost so that it can compete in foreign markets. However, there is a requirement that projects be handed over to the state after 35 years. In such a situation, the more difficulties imposed on developers, the higher the project cost becomes. As costs rise, it becomes impossible to compete in a competitive market. The state should therefore make the process easier.
The main point is that the government itself should not be the one constructing hydropower projects; instead, it should be handed over to the private sector. The cost of government-built hydropower projects is already reaching up to 28 million rupees per megawatt. For example, the 1,200 MW Budhi Gandaki project—how many years has it been discussed? Even now, its construction modality has not been decided. This itself shows that hydropower should be developed by the private sector, while the state should only facilitate the process.
Another issue is related to what is mentioned in the Detailed Project Report (DPR). If there are slight changes and different equipment is brought in during implementation, the government imposes full tax on it. For example, if the DPR specifies installing a turbine machine from company “A”, but during execution a better-quality machine from company “B” is used, it is not allowed. Even if the “B” machine is of higher quality than “A”, it cannot be used. If equipment outside the DPR specification is imported, instead of a 1% tax, full tax is charged. This should be made more flexible so that equipment can be used without compromising quality.
There is also a problem with transmission lines. Adequate transmission infrastructure has not been built according to demand. While there is some ease during the winter season, there are major problems during the rainy season. Due to transmission line constraints, some projects, even after completion, are unable to generate electricity. Major improvements in transmission infrastructure are urgently needed in the near future.
There is also debate regarding Initial Public Offerings (IPOs). It is currently argued that IPOs should only be allowed after production begins. However, if IPOs are only allowed after production starts, then no one would need to issue IPOs at that stage. IPOs should be allowed during the construction phase itself. Instead, the focus should be on determining how much percentage of shares should be locked in for security purposes. The more cash inflow a project receives, the faster construction will progress.
Reset Nepal – Bijay Mohan Bhattarai
