BHILWARA ENERGY LIMITED IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY ISSUES

Transcription

1 BHILWARA ENERGY LIMITED IMPLEMENTING HYDRO PROJECTS IN NEPAL - KEY ISSUES Vipin Arora, Vice President (Civil) 25 th September, 2014

2 OUTLINE OF PRESENATATION STATUS OF PROJECTS UNDER DEVELOPMENT Ventures in Nepal Project Developers Project Location Status of Clearances Power Evacuation Arrangement Pre-construction Activities Infrastructure Works Invitation of Bids

3 OUTLINE OF PRESENTATION ISSUES RELATED TO HYDRO POWER DEVELOPMENT IN NEPAL Country specific Issues Policy Framework related Issues Financial Issues Infrastructure issues Social and Environmental Issues

4 HYDRO VENTURES IN NEPAL LIKHU-IV (120 MW) & BALEPHI(50 MW) Joint Venture of LNJ BHILWARA GROUP, INDIA & TRIVENI GROUP, NEPAL

5 JOINT PROJECT DEVELOPER - LNJ BHILWARA GROUP A WELL DIVERSIFIED LARGE BUSINESS HOUSE HAVING MORE THAN FOUR DECADES OF INDUSTRIAL EXPERIENCE IN INDIA. THE GROUP HAS PRESENCE IN: TEXTILES GRAPHITE ELECTRODES POWER & CONSULTANCY I T *Turnover USD 1,114 (Million) 42.91% Exports USD 478 Million Gross Fixed Assets USD 1,331 Million

6 LNJ BHILWARA GROUP IN POWER MW Group Implemented Projects Project Tawa HEP, MP Malana HEP, HP Allain Duhangan HEP, HP Wind Power Capacity 14 MW 86 MW 192 MW 105 MW Captive TPP Total 119 MW 516 MW Under Implementation Projects Project Nyamjang Chhu HEP, AP UBDC-III HEP, PB Chango Yangthang HEP,HP Bara Bangahal HEP Stage-1, HP Capacity 780 MW 85 MW 180 MW 92 MW * Likhu IV HEP, Nepal 120 MW * Balephi HEP, Nepal 50 MW Total 1307 MW 30 Likhu IV HEP, Nepal 31 Balephi HEP, Nepal * The Projects are being done in JV with Triveni Group

7 JOINT PROJECT DEVELOPER - TRIVENI GROUP A WELL DIVERSIFIED LARGE BUSINESS HOUSE IN NEPAL. THE GROUP HAS PRESENCE IN: TEXTILES & SPINNING Triveni Textiles Tanush Textiles Triveni Spinning Mills POWER Triveni Energy Triveni Hydro Power CEMENT Vishwakarma Cement Shree Pashupati Cement Ghorahi Cement POLYMERS AGRICULTURAL PRODUCTS Triveni Synthetic Yarn Triveni Synpack Triveni Plasto Polymers Annuapurna Veg Product Triveni Dal & Oil Mills Nepal Tea Dev Corp Momkor Sugar & Chem Ind Makalu Agrofirm

8 VENTURES IN NEPAL 120 MW Likhu IV Hydroelectric project Project to be implemented by Green Ventures Pvt. Ltd. a joint venture company of Bhilwara Energy Ltd, India and Triveni group, Nepal. Project is located on Likhu river in Ramechhap and Okhaldunga districts. Project is at a distance of 222 km from Kathmandu in North-East Nepal.

9 VENTURES IN NEPAL 50 MW Balephi Hydroelectric project Project to be implemented by Balephi Jalvidhut Company Ltd. a joint venture company of Bhilwara Energy Ltd, India and Triveni group, Nepal. Project is located on Balephi river in Sindhupalchowk district Project is at a distance of 94 km from Kathmandu central-eastern Nepal. in

10 PROJECT LOCATION From PLACE To DISTANCE (km) Kathmandu Balephi 72 Balephi Chanaute 19.2 Chanute Powerhouse Balephi HEP 3.1 KATHMANDU BALEPHI HEP HEADWORKS CHARIKOT From PLACE To DISTANCE (km) Kathmandu Charikot 133 Charikot Haldibeshi 49 Haldibeshi Sirese 35 Sirise Bimire Headworks Likhu IV HEP 10 HALDIBESHI LIKHU IV HEP HEADWORKS SIRESE

11 LIKHU-IV -STATUS OF CLEARANCES Status of Various Clearances Letter for export orientation issued on 7 th July Connection Agreement signed with NEA on 19 th July EIA approved on 15 th April Fallback Power Purchase Agreement (PPA) signed with NEA on 2 nd Feb, Generation License granted by MOE on 11 March Financial Closure achieved on 9 th January 2012.

12 BALEPHI STATUS OF CLEARANCES 50 MW Balephi Hydroelectric project DPR approved in 2009 Letter for export of power issued on 7 th July Connection Agreement executed with NEA On 27 th July IEE report approved on 17 th May Fallback PPA signed with NEA on 22 nd December, 2010.

13 LIKHU AND BALEPHI -POWER EVACUATION Alternative 3 has been Proposed: Construction of 400 kv D/C Transmission line from Nyamjang Chhu HEP to Balipara & 2 Nos. bays at existing 400kV s/stn. of PGCIL at Balipara

14 PRE-C0NSTRUCTION ACTIVITIES Geological and Geotechnical Investigations - Likhu IV Drilling completed in Power house, Dam Area, Pressure shaft and Surge Shaft. Plate Load tests completed 5668 m 2D ERT Surveys completed along Head race Tunnel.

15 PRE-C0NSTRUCTION ACTIVITIES Private Land Acquisition Likhu IV Private lands at Powerhouse, Head Works, Surge Shaft, Adit Portal and for Engineering Camp are almost procured. Status of Acquired Land- Private Location Total Private Land (Ha) Total Private Land Acquired (Ha) Remaining Land to be Acquired (Ha) Powerhouse Headworks Surge shaft Adit Portal Adit Portal Adit Portal Engineering Camp Ponding Area Total

16 PRE-C0NSTRUCTION ACTIVITIES Government Land on Lease Likhu IV Status of Government Land Lease Location Total Government Land Lease (Ha) Powerhouse 0.29 Quarry,Crusher plant and Batching Plant 2.72 Dumping Site 2.22 Ponding Area 8.70 Total Acquisition of Government land was initiated after obtaining the Generation License in 2012 and is still under process

17 LAND ACQUISTION PROCESS Likhu IV LAND ACQUISITION- A REMARKABLE FEAT Almost 90% of private land acquired within a period of one year without any help & involvement of Govt due to: Experienced staff and Good Team work in the field. Formation of local road user committees and obtaining suggestions from them. Educating people about benefits of the project. Strictly following up the schedule of acquisition Quick decision making process. Transparency in all land acquisition deals. Local manpower mobilization for the jobs. Maintaining good relationships with stakeholders.

18 PUBLIC HEARING PUBLIC HEARING AT LIKHU IV SITE

19 INFRASTRUCTURE WORKS Haldibesi to Dhobi Section (20 km)) Soling and Strengthening work completed. Spent NRs. 90 millions on 20 Km section.

20 Likhu IV INFRASTRUCTURE WORKS Dhobi to Sirese Section (15 km) New Road cutting, road widening and grade improvement of existing tracks. Stone soling, sub base and road side drains. Retaining walls and breast walls. Spent NRs. 134 million on 15 Km section.

21 LIKHU IV INFRASTRUCTURE WORKS Strengthening works of Access Road from Dhobi to Sirese

22 PHOTOGRAPHS Panoramic view of Access Road from Dhobi to Sirese

23 LIKHU IV INFRASTRUCTURE WORKS Sirese to Powerhouse(4.3Km) and Steel Bridge Complete new road cutting, road widening and grading. Retaining walls, breast walls and road side drain. 50 m span truss bridge over Likhu river completed. Spent NRs. 114 million on 4.3 Km section and Steel Truss bridge.

24 INFRASTRUCTURE WORKS 50m Span Steel truss Bridge on Likhu River & side Abutments

25 INFRASTRUCTURE WORKS Powerhouse to S. Shaft and Link Roads Track opening, widening and grade cutting completed. Retaining walls, breast walls and Stone soling in certain sections completed. Spent NRs. 32 million on this section.

26 PHOTOGRAPHS Panoramic view of Surge Shaft area

27 LIKHU IV INFRASTRUCTURE WORKS Powerhouse to Intake Section - Track opening of left bank bank 75% completed. completed and right Road widening and grade cutting of left bank progress. Retaining walls and breast walls in progress. Spent NRs. 103 million on left bank and right bank roads. in

28 INFRASTRUCTURE WORKS Access Roads on right and left banks (Power House Intake)

29 INFRASTRUCTURE WORKS Strengthening works of Access Road ( Power House Intake)

30 INFRA STRUCTURE WORKS Infrastructure Works Pre Fabricated Office Building at PH site erected. Guest House was established at Sirese. Staffs, Engineers & Office Accommodations-Bidding in process.

31 INVITATION OF BIDS Bids for Main Packages LIKHU IV Bids invited for the construction of Civil works and Electro mechanical works. Six international companies participated in the Technical and Financial bids for civil packages. Eleven international contractors participated in the bids for Electro-mechanical packages.

32 CONTRACTS NOT AWARDED Construction put on hold the following reasons: because of Wheeling charges for NEA system and crossborder line still not decided by the Govt. Uncertainty in the construction of cross- border transmission line. Permission to transfer Private land in the name of company still awaited. Process of taking Govt. land on lease (started in Nov, 2012) still not complete.

33 ISSUES RELATED TO DEVELOPERS ISSUES RELATED TO HYDRO POWER DEVELOPMENT. Country specific Issues Policy Framework related Issues Financial Issues Infrastructure Issues Social and Environmental Issues

34 COUNTRY SPECIFIC ISSUES ISSUES RELATED TO PROJECT FINANCING No Credit rating and no sovereign guarantee by the Govt. of Nepal. Indian or Foreign banks are reluctant to lend money for Hydro Projects in Nepal Lenders would require PDAs covering basic guaranties against political and exchange risks and assurance against change of law etc.

35 COUNTRY SPECIFIC ISSUES CROSS BORDER LINE ISSUES- Three Cross Border connections have been envisaged between Nepal and India. (i) Butwal Gorakhpur (ii) Dhalkebar Muzaffarpur (iii) Duhabi Purnea So far only Dhalkebar Muzaffarpur taken up for implementation. Early commissioning of these lines is essentially required. Investment decisions can not be taken in absence of firm time schedule for cross border connections.

36 COUNTRY SPECIFIC ISSUES ISSUES RELATED TO WHEELING No commitment by Govt. on wheeling charges and losses for export oriented projects. Back to Back Agreement between Developers and PTCN and CPTC are still awaited. Wheeling charges may be much more as compared to charges in India. Accurate Financial analysis and investment decisions not possible in absence of any firm commitment on wheeling charges and losses.

37 COUNTRY SPECIFIC ISSUES POWER EXPORT FROM NEPAL- Policy framework required for open access to India. (PTA between Nepal and India still awaited) Regulations for importing power from Nepal need to be formalized in Indian side also. Comprehensive guidelines are required for operations and synchronization of the two grids. Open Access policy for sale of power within Nepal is required to be framed. An independent regulatory authority is required for regulation of flow of electricity inside and out of Nepal.

38 POLICY RELATED ISSUES (NEPAL SIDE) REGULATIONS- Hydropower Development Policy, 2001 is yet to be ratified and related Acts NERC & New Electricity Act are yet to be promulgated. Whereas, Electricity Act, 2049 (1991) is still in place. Harmonization is required in Hydro power related laws. Royalties and free power required to be redesigned. Policy for multiple buyers and multiple sellers is required for competitive market including Merchant Power sale within Nepal.

39 POLICY RELATED ISSUES (NEPAL SIDE) GOVT POLICIES AND PROCEDURES: Cumbersome procedures for procurement of explosives and import of materials & equipments. Present regulations allow only 75 ropani of land in the name of one company instead of 400 to 500 ropani required by a Hydro Project. This limit may be suitably increased. Coordination required between Ministries of Energy, NEA, Finance, Environment & Land Reforms.

40 POLICY RELATED ISSUES (NEPAL SIDE) TENURE OF GENERATION LICENSE In India, the MOU term is for 35 years from COD. In Nepal it is 35 years for Domestic supply and 30 years for Export projects from the date of Issue of Generation License including 4-5 yrs of construction period. Generation License tenure may be increased to 40 yrs for both Domestic and Export projects.

41 FINANCIAL ISSUES PPAs with NEA for sale within Nepal may be allowed in Foreign Currency to attract more foreign investment. Expediting approval process for remitting foreign currency to foreign vendors. Capacity royalty rate for export NRs 400/Kw per year for 15 years and NRs 1800/Kw/year beyond, with 5% increment every year. This is over and above energy royalty.

42 ROYALTIES EXPORT ORIENTED PROJECTS Up to 15 Years After 15 Years S.No Type Annual Capacity Royalty, Per kw Energy Royalty Per, kwh Annual Capacity Royalty, Per kw Energy Royalty Per, kwh 1 Export- oriented run- Of - the river Projects NRs % NRs % 2 Export- oriented Storage Projects NRs % NRs. 2,000 15%

43 SOCIAL AND ENVIRONMENT ISSUES Interference by local people during project construction phase. NGOs should be restricted from initiating petty issues leading to court cases and stoppage of work. Effective tackling of Law and order issues at project site is required. Strong security arrangements are required during construction phase. Only the elected representatives may be allowed and encouraged to approach project authorities for local issues.

44 INFRASTRUCTURE ISSUES INFRASTRUCTURE CONSTRAINTS- Poor basic infrastructure because of tough terrains and adverse climate conditions. The first developer in any river basin has to make heavy investment on infrastructure before taking up Project construction. Govt. may provide basic infra structure OR Develop mechanism to facilitate infrastructure with contribution from all Developers in the same river basin.

45 INFRASTRUCTURE ISSUES OTHER CONSTRAINTS Dependence on costly diesel based generation. Establishment of own telecommunication setup. Cost of explosives very high, due to requirement of high security provisions. Strengthening of existing roads and bridges with own resources, for carrying heavy equipment

46 SUGGESTIONS- Financial viability is must for private investors. IPPs would like to have reasonable returns on their equity(15% or more from Indian context).following measures may be considered for boosting confidence of investors- Capacity royalty may be completely abolished. Concessions may be considered on custom duty on all project imports & equipments. Common basic infrastructure may be constructed by the Govt. CONCLUSION Transmission line may be constructed by Govt. up to the nearest NEA Sub Station.

47 CONCLUSION SUGGESTIONS contd. Construction power may be provided at nominal rates wherever available. Govt. of Nepal should accelerate the process signing PDAs incorporating basic guaranties. Setting up of Regulatory authority as early as possible. Single Window required for coordination amongst various Ministries and departments. Security provisions in the transportation and storage of explosives may be reviewed. Lead agency consisting of representatives of different political parties may be nominated for coordination of all CSR activities. of

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