1. LATEST DEVELOPMENTS IN NEPAL POWER SECTOR INCLUDING THE STATUS OF D-M 400 KV CBTL Third Meeting of Taskforce 2, February 25-26, 2015; Colombo, Sri Lanka Surendra Rajbhandari Chief, Project Management Directorate, Nepal Electricity Authority

2. Overview of Nepal Power System as of Feb 2015 Total installed capacity: 792 MW Under Construction: 1200 MW Transmission Lines: 2848 cct km 40 Grid Substations of 2000 MVA Average annual growth rate of peak: 9% Average annual growth rate of energy: 8.5% Access to grid electricity: 63% Peak Load in FY 2014/15= 1200 MW Capacity shortage in FY 2014/15= 600 MW

4. Installed Capacity: 792.9 MW In Grid 786.4MWOff Grid 4.5 MW Hydro 734.99 MWThermal 53.41 MW ROR 640.99 MWStorage 92 MW IPP 262.5 MWNEA 380.99 MW

5. Developments in Nepal Power System The Government of Nepal is finalizing: Revised Electricity Act 1992 Nepal Electricity Regulatory Commission Act Process for establishing National Transmission Company Committees set up to review/draft the provisions of the Acts and Articles of Association Committees comprise of representatives from various stakeholders/fields Stakeholders consultations and meetings held

6. Status of Project Development Agreement (PDA) as of Feb 2015 PDA signed: 900 MW Upper Karnali with GMR India 900 MW Arun -3 with SJVNL PDA in the pipelines: 600 MW Upper Marsyangdi - GMR 750 MW West Seti – CWE ( Three Gorges ) 880 MW Tamakosi III (SN Power)

7. Development in Nepal Power Sector Reform Initiatives Government is also studying the establishment of a power trading company. Power trading company will provide the platform to developers for exploring energy markets. The revised Electricity Act will facilitate development of generation, transmission, trade of electricity. The Transmission Company will be responsible for planning, development, operation and maintenance of transmission facilities and for running/maintaining the system.

8. Updates in Nepal Power System Power System Study Report on Nepal India: 2020-21 Scenario finalized prepared by PGCIL Bardaghat- Gorakhpur 400 kV cross border HVDC has been proposed. NEA is in the process of procuring consultant for detail design. The Nationwide Master Plan Study on Storage Hydroelectric Projects finalized. The plan identified 31 projects with total capacity of 9000 MW.

9. Updates in Nepal Power System NEA is updating the Transmission System Master Plan. The draft report to be ready by April 2015 The revised TSMP based on 6 zones and north south connection. TSMP to cover all the river basins NEA is also in the process of developing Distribution System Plan

10. Features of Revised Electricity Act One business at a time in grid connected area Benchmarks for issuance of licenses. Generation license for domestic supply:35 years and for export oriented projects: 30 years Trans., dist and trade license valid for 25 years Government reserves the right to develop hydro projects on competitive basis. Facilities to be handed over to GoN after expiry of license. No nationalization of facilities.

11. Revised Electricity Act 1992 Section 1:Preliminary provision and definitions Section 2: Licensing Section 3: National Transmission Grid Section 4: Electricity sales, export and import provision Section 5: Royalty and Electricity Tariff Section 6: Quality of electricity and safety Section 7: Water rights and Environment

12. Revised Electricity Act 1992 Section 8: Land acquisition, compensation, resettlement Section 9: Investment management Section 10: Provisions of Facilities Section 11: Provision of micro hydro and rural electrification Section 12: Compensation and Penalties Section 13: Miscellaneous

13. Proposed Electricity Regulatory Commission Act The objectives are to: Maintain balance between demand and supply by managing generation, transmission, distribution and trade of electricity in transparent way. Regulate electricity tariff Protect the rights of the consumers Promote competitive electricity markets

14. Proposed Electricity Regulatory Commission Act The proposed Act has 7 Sections: Section 1: Preliminary provisions and Definitions Section 2: Establishment and Institutional Set up Section 3: Duties, Responsibilities and Authorities Section 4: Duties, Responsibilities and Authorities of Chairman and Members of the Commission Section 5: Secretariat and Employees Section 6: Budget and Audit Section 7: Miscellaneous

15. Hydropower Potential and Licensing Status Storage capacity plants: 21,400 MW Survey license issued: 6000 MW Government reserved: 5584 MW Survey application :3096 MW Generation license issued: 2156 MW Projects under construction: NEA and subsidiary companies = 1002 MW IPPs = 297 MW

16. Existing Power Exchange Arrangement Nepal and India has been exchanging power for many years. Power is being exchanged and traded mainly through 8 points along the Indo-Nepal border. Present level of exchange: 50 MW, trading: 180 MW. Power exchanges mainly through 33kV and 132kV links. To facilitate power exchange, two committees exist: Power Exchange Committee constituted in 1992 and Joint Commission on Water Resources (2000).

17. Existing Interconnections with India Transmission LinkEvacuation Cap. (MW) Traded, MW Voltage Level, kV Kusaha--Kataiya13080132 Gandak -Rampur50 25132 Mahendranagar- Tanakpur 5030132 Kataiya- Rajbiraqj10833 Raxual- Birgunj10 33 Sitamadhi-Jaleswor10833 Nepalgunj-Nanpara10833 Jayanagar-Siraha8833

18. Under Construction and Planned Interconnections with India Transmission LinkTransfer Cap. (MW) Voltage Level, kV Status Dhalkebar- Muzaffarpur1200400Under cons. Bardaghat- Gorakhpur (HVDC) 2500400Planned, Consultant procurement initiated Duhabi- Jogbani1800400Proposed Other LinksTo be identified

19. Load Forecast

20. Hydropower Potential of Nepal, MW River BasinGrossEconomical Sapta Koshi Basin22,35010,860 Sapta Gandaki Basin20,6505,270 Karnali and Mahakali Basin36,18025,125 Southern River Basin4,110878 Total83,29042,133

21. Projection of Generation Capacity Addition YearInstalled capacity, MW RoRStorage 2014/1510214 2015/162410 2016/179920 2017/182910 2018/194990 2019/2097140 2020/215350 2022/23300400 2024/25 400 2025/26 530 Total 30571484

22. Projection of Transmission Line Addition S. N.YearTransmission Line, cct km 132 kV220 kV400 kV 12014/1535444080 22015/16414172570 32016/17500400200 42017/18710370470 52018/19100230 62019/20 80 72020/21 650 82022/23 180 Total207816122230

23. Dhalkebar – Muzaffarpur CB Transmission Line: Background In 2006 IL&FS, NEA and PTC India took initiative for the first Nepal India EHV link. Power Transmission Company Nepal Limited (PTCN) and Cross Border Power Transmission Company India (CPTC) were established. PTCN to construct, operate and maintain about 41.5 km of transmission line from Dhalkebar to Bitthamod in the Nepalese territory. CPTC to construct, operate and maintain 87 km of line from Muzaffarpur to Sirsand in the Indian territory.

24. Dhalkebar – Muzaffarpur CB Transmission Line: Background To be initially charged at 220kV; operated in synchronous mode between Indian and Nepalese power grids. Implementation and Transmission Service Agreement (ITSA) signed on 12 Dec 2011. Power Sale Agreement (PSA) with PTC India for the purchase of 150 MW of power in long term basis has been signed on December 13 December 2011.

25. Dhalkebar – Muzaffarpur CB Transmission Line: Background Joint Venture cum Share Purchase Agreement signed on 5 April 2014 among NEA, PGCIL, Hydroelectricity Investment and Development Company Ltd. and IEDCL India. The shareholder pattern is as follows: NEA - 50%, PGCIL India - 26%, HIDCL - 14% and IEDCL - 10% The shareholder of CPTC : IEDC: 38%, PGCIL: 26%, SJVNL: 26%, NEA: 10% SHA signed on 9 July 2012

26. Contract Award and Completion Dates NIT Zero date Comp. Period Comp. Date Transmission Line Muzaffarpur – Sursand CPTC) Feb’13Feb’1416 mnthsJune’15 Dhalkebar – Bhittamod (PTCN) Feb’13May’1416 mnthsSept’15 Substation works Dhalkebar substationNov’13Aug’1415 mnthsNov’15 Transfrmer at DhalkebarFeb’14Oct’1412 mnthsOct’15

27. Dhalkebar- Muzaffarpur Cross Border Line, Nepal Portion Implementing AgencyPower Transmission Company Nepal Ltd (PTCN) Scope of Work400 kV D/C Bhittamod – Dhalkebar Trans. Line Length41.5 km Date of Award12/19/2012, modified to 1 May 2014 Name of VendorTata Projects India Limited Commissioning dateJune 2015 (16 months) Cost of AwardUS$ 7.03 million

28. Dhalkebar- Bhittamod Section: Status as of 15 February 2015 ItemQuantity Completed till date Balance Quantity Foundation(No)1127141 Erection(No)1124171 Stringing(km)42.2-

29. Dhalkebar- Muzaffarpur Cross Border Line, India Portion Implementing Agency Cross Border Power Transmission company Limited (CPTC) Scope of Work400 kV D/C Muzaffarpur – Sursand Transmission Line with 220 kV S/S at Muzaffarpur Length87 km Date of Award 4-Feb-14 Name of VendorKEC International Limited Project Commissioning date June 2015 (16 months) Cost of AwardRS 123.71 Crores

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