The Energy Ministry is preparing to introduce a stringent law to eliminate the practice of holding hydropower project licences and delaying project development. 

The proposed new law is in line with the recently announced National Energy Crisis Reduction and Electricity Development Decade Plan, and will supersede the ageing Electricity Act 1992. 

Nepal’s hydroelectricity sector has been stymied by an undesirable tendency among developers to acquire a project development licence and then sit on it. 

“We haven’t made much progress in hydropower generation despite the issuance of such a huge number of licences as developers are not making any move to take the project forward,” said Poshan Chandra Subedi, joint secretary of the Energy Ministry. “The new law will discourage such tendencies.”

As per the concept of the proposed new law, if the developer of a potential hydropower project fails to complete the construction within the stipulated time, the deadline can be extended upon payment of a penalty. If the developer fails to complete the project even within the extended time frame, the permit will be terminated. 

According to Subedi, they are yet to determine the length of time that will be provided to a prospective developer to complete the project. “The time line for project development might be different for different projects,” said Subedi. “So, the law will consider the time limit stated in the agreement signed between the government and the developer.”

The existing Electricity Act gives the developer of a hydro project a time frame of five years to complete the construction, but it says that the permit can be renewed without paying any penalty. 

Last year, the Commission for the Investigation of Abuse of Authority had directed the government to terminate the licences of 10 hydropower projects for non-performance. Some of them had failed to complete even the survey while others had failed to make progress after completing the survey. 

The ministry plans to present a draft of the proposed law to the Cabinet for its agreement in principle within a month. “Once we get the agreement in principle, we will carry out stakeholder consultations before sending the bill to the Law Ministry for its approval,” said Subedi.

After the Law Ministry gives the go-ahead, the bill will be sent to the Cabinet’s bill committee. It will then be sent to Parliament for the final endorsement. 

According to Subedi, if everything goes according to plan, the new Electricity Act will be issued within a couple of months.