Nepal Hydropower Development Project Quarterly Report FY16Q01

The project is implemented by Deloitte Consulting LLP and is submitted to USAID/Nepal on a quarterly basis. Major activities during the first quarter of Fiscal Year 2016 included policy and transactional guidance to the Investment Board of Nepal (IBN) and the Ministry of Energy (MoE). The NHDP Team provided principal support to IBN, including guidance on how to effectively deal with claims under the Force Majeure clause of concluded Project Development Agreements for the Arun 3 and Upper Karnali hydro projects. The team also developed a standard form Project Implementation Agreement for non-hydro projects being managed by IBN and provided presentations on the Indian power sector, hydropower financing and structuring, and risk management. The NHDP Team also provided principal support to MoE, including comments on the existing and proposed legal and regulatory foundation to support hydropower projects. The team supported MoE's off-site event aimed at introducing and familiarizing the government's project negotiating team with the elements of the standard form PDA and specifically with the Upper Trishuli PDA. The team also provided training and presentations on credit risk guarantee mechanisms in Nepal. During the quarter, the NHDP Team continued to revise and refine the risk matrix developed by the team during the prior quarter. The team worked with IBN and GoN stakeholders on specific elements of the matrix that affect the suite of project documents that will be developed for each hydro project, including the PDAs concluded and under development. Risks specifically dealt with during the quarter included Policy Risk, Country Risk, and Barriers to completion of projects as they emerge. The NHDP Team also supported IBN in its continuing negotiations with a number of project developers and the Millennium Challenge Corporation (MCC) as it concluded its report identifying principal issues facing the sector and recommended projects to address those issues. At the end of December, NHDP submitted a draft six-month work program covering January through June, 2016. The project is currently supporting IBN and MoE efforts to facilitate the development of the following high-priority hydropower projects: West Seti (750 MW), Upper Karnali (900 MW), Arun – 3 (900 MW), and Upper Trishuli 1 (216 MW). The NHDP Team will continue to work with IBN and MoE stakeholders to address risks and barriers to project completion and to facilitate the financial closure of these projects. The project's progress towards its results is being closely monitored, and the team is working to address any implementation issues, obstacles, and delays that may arise. The project's workplan has been revised and refined to reflect the changing needs and priorities of the project, and the team is committed to delivering results that meet the project's objectives.