Nepal: Promoting Private Sector Participation in the Power Sector

Sovereign Project | 41025-012 Status:

Summary

The TA will help the GON to formulate investor friendly PSP policy and enforceable regulations that will be tailored to the market?s need.

The proposed TA will: (i) review and analyze current obstacles for PSP, (ii) recommend updates of relevant policy and regulations (iii) provide public-private partnership (PPP) models in terms of risk mitigations and capital cost reductions, and (iv) provide assistance to the GON in promotion of opportunities, preparation, evaluation of bids and negotiation of contracts.

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Procurement Documents

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Project Name Promoting Private Sector Participation in the Power Sector
Project Number 41025-012
Country Nepal
Project Status
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 4997-NEP: Promoting Private Sector Participation in the Power Sector
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Energy - Large hydropower generation

Gender Equity and Mainstreaming No gender elements
Description

The TA will help the GON to formulate investor friendly PSP policy and enforceable regulations that will be tailored to the market?s need.

The proposed TA will: (i) review and analyze current obstacles for PSP, (ii) recommend updates of relevant policy and regulations (iii) provide public-private partnership (PPP) models in terms of risk mitigations and capital cost reductions, and (iv) provide assistance to the GON in promotion of opportunities, preparation, evaluation of bids and negotiation of contracts.

Project Rationale and Linkage to Country/Regional Strategy

Nepal is entering a period of economic growth that will depend on effective management of one of its main natural resources-river water. To ensure long-term sustainable development, Nepal needs to harness its vast hydroelectric power potential in a socially and environmentally sustainable manner. Nepal is well positioned in terms of the natural resource and physical location to develop hydroelectric energy as a major source of growth and to generate revenues to implement the Government of Nepal?s (GON) poverty reduction and environment conservation initiatives.

GON resources are not available to finance large hydropower projects for export of power. Therefore, private sector participation (PSP) is an integral part of the GON?s development framework, which aims to achieve the country?s medium-and-long-term economic growth and poverty reduction objectives. Nepal will earn foreign exchange from electricity exports which will provide the GON with a major increase in the fiscal revenue needed to fund service delivery and basic infrastructure in the fields of health, education, and other social sectors.

In line with its commitment to increase PSP, the GON has since 1992, introduced several legislation and policies to encourage PSP in the hydro power generation sector. Yet very low levels of investments have been made in this sector. There is a urgent need to review existing policies and regulations, and introduce new legislation to create an enabling environment for increasing PSP by both local and foreign investors in the power sector.

Impact Increase in fiscal revenue funds, service delivery, and basic infrastructure in the fields of health, education, and other social sectors.

Project Outcome

Description of Outcome Increased PSP in power sector
Progress Toward Outcome TA has been completed.
Implementation Progress
Description of Project Outputs

Policy, legislative, and regulatory framework, for PSP in domestic and export-oriented hydropower projects.

Draft competitive bidding guildeines including draft pro forma bidding documents and requests for proposal and quotations.

Capacity building in bid process management, PSP policy frameworks, and implementation of private sector projects.

Methodology for EIA of private sector projects

Status of Implementation Progress (Outputs, Activities, and Issues) Consulting services work and implementation works have been completed.
Geographical Location Kathmandu

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation

Business Opportunities

Consulting Services The TA will require about 10 person-months of international and 20 person-months of domestic consultants. A consulting firm or consortium of firms will be engaged by ADB in accordance with ADB's Guidelines on the Use of Consultants, and other arrangements acceptable to ADB for the selection and engagement of domestic consultants. The simplified technical proposal format and quality and cost-based selection procedure will be used.

Responsible Staff

Responsible ADB Officer Mukhtor Khamudkhanov
Responsible ADB Department South Asia Department
Responsible ADB Division Energy Division, SARD
Executing Agencies
Ministry of Irrigation
Mr. Shanker Prasad Koirala
c/o Ministry of Water Resources, Singha Durbar, Kathmandu, Nepal

Timetable

Concept Clearance 04 May 2007
Fact Finding 25 Sep 2007 to 26 Sep 2007
MRM -
Approval -
Last Review Mission -
PDS Creation Date 11 Jun 2007
Last PDS Update 29 Jul 2011

TA 4997-NEP

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Dec 2007 13 Feb 2008 13 Feb 2008 31 Jul 2009 31 Dec 2010 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 100,000.00 0.00 0.00 0.00 700,000.00 03 Dec 2007 591,946.82

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Related Publications

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