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Steps to build a hydro project and sell to NEA

Short answer

Obtain a survey licence from DoED, complete feasibility and EIA studies, sign a PPA with NEA, then get a generation licence. Arrange financial closure, construct, commission, and start commercial operation to sell power to NEA under the PPA for the licence period.

Assume that you have identified a suitable hydropower site for electricity generation. Discuss the steps/stages how would you proceed to own, build that project and finally sell power to Nepal Electricity Authority.

To develop a hydropower project in Nepal as an Independent Power Producer (IPP), one must obtain licences from the Department of Electricity Development (DoED) under the Electricity Act 2049 (1992) and Electricity Regulation 2050, sign a Power Purchase Agreement (PPA) with NEA, and then finance, build and operate the plant.

Steps / stages

  1. Site identification and desk study: Check maps, hydrology data and existing licences to confirm the site is free.
  2. Company registration: Register a company at the Office of the Company Registrar (needed to hold licences).
  3. Survey licence: Apply to DoED for a survey licence (valid up to about 5 years) with a pre-feasibility report and fee. For large projects (above 200 MW) the Investment Board Nepal (IBN) is the approving body.
  4. Feasibility study: Hydrological, topographical, geological and sediment studies; optimise design discharge (e.g. Q40–Q45), head, installed capacity, layout; cost estimate and financial analysis.
  5. Environmental study: IEE or EIA as per the Environment Protection Act 2076 and Rules, with public hearing and approval from the concerned ministry.
  6. Grid connection: Apply to NEA for a connection agreement; NEA does a grid impact/connection study and fixes the substation and voltage of connection.
  7. Power Purchase Agreement (PPA): Sign the PPA with NEA (Power Trade Department) at the posted rates (separate wet- and dry-season rates per kWh with limited annual escalation), fixing the required commercial operation date (RCOD).
  8. Generation licence: Apply to DoED with the feasibility report, EIA/IEE approval, PPA and connection agreement; the licence is normally for up to 35 years, after which the project is handed to the government.
  9. Financial closure: Arrange debt (banks, typically 70%) and equity (promoters, about 30%); later issue shares to the public and to project-affected locals (IPO).
  10. Land and permits: Land acquisition, forest clearance, permits for explosives, roads.
  11. Construction: Tendering and contracts for civil, hydro-mechanical and electro-mechanical works and the transmission line to the NEA substation.
  12. Testing and commissioning: Wet tests, synchronisation and protection tests witnessed by NEA.
  13. Commercial operation (COD): Start selling energy to NEA as per the PPA; pay royalty to the government (shared with provinces and local levels).
  14. Operation and maintenance for the licence period, then transfer.
Site -> Survey licence -> Feasibility + EIA
     -> Connection agreement -> PPA (NEA)
     -> Generation licence -> Financial closure
     -> Construction -> COD -> Sell to NEA

✓ Answer checked by Claude Opus 5.5 (high effort)

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