Hydel projects above 10 MW through competitive bidding

The government has announced that licences of hydropower projects above 10 MW will be awarded through competitive bidding process.

This is the first time that the government has decided to call tenders for hydropower projects above 10 MW. Earlier, the government used to provide survey licences to developers on first-come first-served basis.

With the Energy Ministry unveiling ‘Hydroelectricity Licence Management Work Procedure’ on Monday, developers now have to go through a competitive bidding process to acquire survey licences of projects above 10 MW. The rationale behind the new work procedure, according to the ministry, is to make the licensing process easy, transparent and accountable, and discourage the trend of acquiring licence through political contacts.

Now, all applications for hydropower projects above 10 MW lying at the Department of Electricity Development have been automatically scrapped. There were 192 applications for hydropower projects above 10 MW at the department.

The department will call tenders through public notice. It will prepare criteria for the bidding process which will be based on electricity demand, regional balance, and geographical viability of project site, infrastructure facilities and potential export scenario. In order to make the new provision transparent, restructuring of the department will be carried out.

According to the ministry, the department will call for bidding for first priority projects within 90 days of implementation of the work procedure. “The first priority projects will be opened for bidding within next 90 days,” said Energy Minister Gokarna Bista, unveiling the new work procedure here on Monday. According to him, the new licensing provision will have a long-term impact on the country’s hydropower development. The new provision even forces NEA to go through the bidding process. “Even NEA should follow the bidding process, except for the projects that are prioritised by the government as national interest projects and those opened for international funding,” said Bista.

With private developers only capturing rivers instead of developing projects, only 8 MW of additional electricity was generated in the last fiscal year, whereas electricity demand is increasing by 80 MW annually.

The new licensing mechanism has barred government officials associated with the hydropower sector from applying for survey licences or investing in hydropower projects as promoters. If someone is found violating this provision, the survey licence of that project will be scrapped. As per the new provision, promoters of hydropower projects have to submit a self-declaration form stating that none of them hold public posts in the energy sector.

Henceforth, except for entities that are fully or partially owned by the government, no hydropower promoters will be awarded licences for more than three projects.