The government is preparing an Energy Crisis Reduction Bill containing a provision that hydropower projects with a capacity of more than 10 MW should be awarded only through competitive bidding. The proposed law is expected to facilitate the implementation of the 10-year National Energy Emergency Decade. 

According to an Energy Ministry official, such a provision is necessary to ensure that only companies or individuals with a willingness and ability to develop a project are awarded the contract. Currently, projects are being awarded on a first come, first served basis. As an exception, six hydropower projects, known as the Super Six, were awarded through competitive bidding a few years ago.

“We haven’t made much progress in hydropower generation despite the issuance of a huge number of licences as developers have not been showing much interest in constructing the projects they have been awarded,” said Koshal Chandra Subedi, joint secretary of the Energy Ministry. “Developers apply for a licence only to get hold of it and then sell it to others who are actually interested in developing the project. Once the bill becomes law, only developers with the required technical and financial ability will be able to obtain a licence.” In order to implement the provision, the Department of Electricity Development will make a list of projects of more than 10 MW capacity by conducting a preliminary survey.

Once the study is completed, it will publish a notice asking interested developers to come forward. The department will also set the criteria to evaluate the eligibility of hopeful developers.

The Energy Ministry has sent the bill to the Finance and Law ministries for their approval. After it is okayed by the Law Ministry, it will be submitted to the Cabinet’s bill committee. The bill will then be tabled in Parliament for its final endorsement. According to Subedi, the proposed law should be passed within a couple of months. Meanwhile, the Energy Ministry plans to make a number of amendments to Electricity Act 1992 and introduce stringent laws to prevent the trend of holding on to hydropower project licences and not getting on with the construction of the project.

As per the proposed amendment, the developer of a hydropower project failing to complete its construction within the deadline will be granted an extension upon payment of a penalty. If the contractor does not finish the project within the extended period too, the licence will be terminated.

The Electricity Act says the contractor should finish the construction of a hydropower project within five years of the issuance of the permit, but it allows time extensions without paying a penalty.