--- title: "Hydropower Development Policy 2001 (2058 BS)" subject: "Hydropower Engineering" chapter: 1 key: "semester_7/hydropower_engineering:hdp-2001-objectives-features" source: https://www.bctengineer.com/q/semester_7/hydropower_engineering/hdp-2001-objectives-features site: BCT Engineering --- # Hydropower Development Policy 2001 (2058 BS) Hydropower Engineering · Chapter 1: Introduction - Asked in: 2082 Baishakh, 4 marks; 2074 Ashwin, 6 marks; 2072 Chaitra, 6 marks; 2069 Chaitra, 3+3 marks (asked 4 times) - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/hydropower_engineering/hdp-2001-objectives-features - Whole chapter: https://www.bctengineer.com/md/semester_7/hydropower_engineering/chapter-1 ## Question Discuss the objectives, strategies and key features of the Hydropower Development Policy 2001 (2058 BS) of Nepal. ## Short answer The policy aims to generate low-cost electricity, supply reliable power nationwide, link energy with economic growth, promote export and minimise environmental damage. It encourages private investment through BOOT, simple licensing (survey up to 5 years, generation up to 35/30 years), low early royalty, tax holidays, PPAs with NEA, and compulsory IEE/EIA with local benefit sharing. ## Answer The Hydropower Development Policy 2001 (2058 BS) was issued by the Government of Nepal to develop hydropower as the main driver of the economy, with private sector participation, under the Electricity Act 2049 BS. #### Objectives - Generate electricity at low cost from the country's water resources. - Supply reliable, good-quality electricity at affordable prices throughout the country, including rural areas. - Link electricity development with economic activities (industry, agriculture, tourism) for national growth. - Develop hydropower as an export commodity and promote regional power trade. - Develop the power sector with a minimum of environmental damage. #### Strategies - Encourage private (domestic and foreign) investment through a clear, stable and liberal legal framework. - Reduce the role of government to policy making, regulation and facilitation; NEA remains the main buyer and system operator. - Develop projects for domestic need first, and for export under a long-term plan; encourage joint ventures. - Promote rural electrification and small/micro hydro through local bodies and communities. - Give priority to environmental protection, resettlement and benefit sharing with local people. - Make licensing simple (single window) and the electricity tariff cost-reflective. #### Key features - **Licence:** Survey licence (up to 5 years) and generation licence (up to 35 years for projects supplying the domestic market, and up to 30 years for export-oriented projects) are issued by the government; projects up to 1 MW need no licence. - **Ownership:** Private owners may build, own and operate; the BOOT model is used for large projects, and the project reverts to the government after the licence period. - **Royalty:** Capacity royalty and energy royalty, kept low in the early years and higher later (for domestic projects: Rs 100/kW per year plus 2% of the average energy tariff for the first 15 years, then Rs 1,000/kW plus 10%); part of the royalty goes to the affected districts. - **Tax and duties:** Income tax holiday and reduced customs duty on equipment for a set period. - **Power purchase:** NEA buys power under a PPA at an agreed tariff; the tariff may be indexed to inflation. - **Export:** Power developers may export, provided national demand is met first. - **Environment:** IEE/EIA is compulsory; an environmental flow and local benefits are required. - **Local benefit:** Local people can hold shares in the project and receive free power or a share of the royalty. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Under HDP 2001, what are the maximum validities of the survey and generation licences? A. Survey 5 years, generation 30 years B. Survey up to 5 years, generation up to 50 years C. Survey 2 years, generation 25 years D. Survey up to 10 years, generation up to 100 years Answer: B. The policy gives a survey licence up to 5 years and a generation licence up to 50 years, as per the Electricity Act. (Key point: Licence periods) 2. Which projects need no licence under HDP 2001? A. Projects up to 5 MW B. Projects up to 10 MW C. Only government-owned projects D. Projects up to 1 MW Answer: D. Projects up to 1 MW are free from licensing. (Key point: Licence exemption) 3. What happens to a large BOOT project at the end of the licence period? A. It is sold to a foreign government B. The developer keeps it forever C. It is dismantled D. It reverts to the government Answer: D. BOOT means build, own, operate, transfer: the project reverts to government after the licence period. (Key point: Ownership model) 4. According to the strategies, what is the role of government under the policy? A. Stop private investment in export projects B. Only collect royalty C. Build and own all projects D. Policy making, regulation and facilitation Answer: D. The strategy reduces the government role to policy, regulation and facilitation, with NEA as main buyer and system operator. (Key point: Government role) ## Related in Hydropower Engineering - [HDP objectives, strategies and institutions](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ahdp-objectives-strategies-institutions) — Hydropower Engineering, chapter 1 - [HDP 2001 features and private sector](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ahdp-2001-private-sector) — Hydropower Engineering, chapter 1 - [Licensing provisions in hydropower policy](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ahdp-licensing-provisions) — Hydropower Engineering, chapter 1, asked 2× - [Importance of hydropower development in Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Aimportance-hydropower-nepal) — Hydropower Engineering, chapter 1 - [Institutions in Nepal's hydropower sector](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ainstitutional-setup-hydropower) — Hydropower Engineering, chapter 1, asked 2× - [Current HDP objectives and amendments needed](https://www.bctengineer.com/question.md?key=semester_7%2Fhydropower_engineering%3Ahdp-current-objectives-amendments) — Hydropower Engineering, chapter 1 ## Related in other subjects - [Key features of infrastructure development policies](https://www.bctengineer.com/question.md?key=semester_7%2Ftechnology_environment_and_society%3Ainfrastructure-development-policies) — Technology, Environment and Society, chapter 2 - [Development of hydropower in Nepal](https://www.bctengineer.com/question.md?key=semester_8%2Fpower_plant_design%3Ahydro-development-nepal) — Power Plant Design, chapter 1 - [Government support and startup policy in Nepal](https://www.bctengineer.com/question.md?key=semester_7%2Fentrepreneurship_development%3Astartup-policy-government-support-nepal) — Entrepreneurship Development, chapter 8 - [Public speaking and key strategies](https://www.bctengineer.com/question.md?key=semester_5%2Fcommunication_english%3Apublic-speaking-strategies) — Communication English, chapter 4