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Experiences in Hydropower Development in Nepal
An International Perspective
Einar StenstadvoldExecutive Vice President Asia, SN Power
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SN Power is placed in the intersection of two global megatrends
Growth in emerging markets
Demand for renewable energy
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Mission
”To become a leading hydropower company in emerging markets, contributing to economic growth and sustainable development”
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Business objectives and strategy
Established in June 2002 -Jointly owned by Statkraft (50%) and Norfund (50%)
Business objective: To invest in clean, renewable energy projects on commercial basis in selected emerging markets
Long-term investment strategy
Capitalizes on its owners’ technical and financial strength and international hydropower experience
Transfer of Norwegian hydropower expertise
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SN Power presenceEstablished in Asia and Latin America
IndiaNepalSri LankaBhutan
PeruChile Brazil
Philippines VietnamLaos
MozambiqueZambia
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Portfolio & ambition
Operating plants 636 2575
Construction 272 1086
Total 908 3666
Pipeline 1800 8000
Net Portfolio 2008 (equity) MW GWh
5X
Ambition 2015
4000 MW
15 - 20 TWh
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Himal Power Limited (HPL) Experience
The overall experience has been good
Profitable project Good and stable hydrology
High plant availability
There have been challenges Silt and operational conditions
Legal and political instability
Security situation
Local community development crucial to success
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Project Development Situation
Opportunities
Many physically good projects in Nepal
Strong long-term market possibilities
International companies interested to invest in Nepal
Requires strong international hydropower and peaking power experience to develop the potential in the long run
Challenges
Long term political stability
Financing: FDI/ Country rating risk
Ineffective “one window policy”
Two-step (survey and generation) licensing procedures
Time consuming Environmental Impact Assessment process
Future challenge: Division of resources in Federal Nepal
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Project Development & Licensing Situation
Project Development
Sanctity of Contracts – not honored
Weak Implementation of Policies, Acts and Regulations
Inconsistency among various line ministries
Licensing
Licenses not awarded in stipulated time
Real developers not incentivized
Trading in licenses is in vogue
Royalty and Tax level not competitive in the region
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Human and Institutional Resources Situation
Positive:
Hydropower: a national priority
Low cost level
Good quality hydropower institutions
Challenges:
Investment-unfriendly labor laws
Frequent labor disputes
Shortage of qualified hydropower, legal and finance professionals at all levels
Limited manufacturing and construction capacity
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Conclusions
Our portfolio in Khimti River Basin can be increased to about 150 MW
Development of 640 MW Tamakoshi 2&3 has begun, with construction to start in 2010-2011
We are looking at other possibilities in Nepal
We believe in integrated river basin development for:
• Operational efficiency
• Optimum utilization of water resources
• Optimum utilization of Logistic and resources
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Conclusions
Nepal is an emerging economy coming out of a very difficult and unstable political situation
SN Power (through HPL) has lived with Nepal through the insurgency and wants to live with Nepal into a brighter future
SN Power believes in Nepal and is already taking part in the 10,000 MW Vision
Many challenges ahead in meeting this Vision
SN Power ready to work with the Government of Nepal to overcome these challenges and to contribute to the Vision
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