Nepal Hydropower Development Project Quarterly Report FY16Q02

The project is implemented by Deloitte Consulting LLP and is submitted to USAID/Nepal on April 10, 2016. Major technical activities during the quarter included policy and transactional guidance to the Investment Board of Nepal (IBN) and the Ministry of Energy (MoE). At IBN, advisors participated in negotiations with developers for Upper Trishuli 1, Mars Y' TGandi, West Seti, and Upper Karnali. They also delivered a report on Risk Mitigation Measures, finalized a report on the Indian Power Market, and commenced work on development of a Communications Plan and other Public Outreach initiatives. Advisors at IBN supported the development and negotiation of a Joint Venture Agreement for the West Seti HPP and worked with Department for International Development (DFID) and IBN to determine how best to utilize DFID's substantial legal support. They also presented the second and third series of presentations to IBN on the Indian power sector, held a workshop on Land Acquisition and Easements for Transmission Lines, and conducted extensive review of the Electricity Act and Draft Nepal Electricity Regulatory Commission (NERC) Act and the National Electricity Authority (NEA) Act. At MoE, advisors supported the development of energy security components of a Government Concept Paper on National Energy Crisis Prevention and Electricity Development, Decade 2016. They gave presentations to high-level bodies on institutional, legal, and regulatory initiatives to be undertaken by MoE to implement the Energy Crisis Concept Paper and delivered Draft Bill for an Act to establish NERC to implement the power sector restructuring plan. The project has made significant progress towards its results, with major achievements including the development of a Communications Plan and other Public Outreach initiatives, the delivery of a report on Risk Mitigation Measures, and the commencement of work on development of local compensation and benefits. The project has also made progress in addressing barriers to completion of hydroelectricity projects, including the development of a policy and mechanism for the allocation of equity shares in HPPs to affected populations. The project has identified several implementation issues, obstacles, and delays, including the need for further work on social and environmental issues, including Resettlement Action Plans (RAPs) and Stakeholder Engagement Plans (SEPs). The project has proposed changes to the workplan to address these issues and has outlined a forecast for the next quarter, including the completion of the Communications Plan and other Public Outreach initiatives and the development of local compensation and benefits. The project has made significant progress in reducing Policy Risk, with the development of a Communications Plan and other Public Outreach initiatives and the delivery of a report on Risk Mitigation Measures. The project has also made progress in reducing Utility Risk, with the development of a policy and mechanism for the allocation of equity shares in HPPs to affected populations and the commencement of work on development of local compensation and benefits. The project has identified several areas for further work, including the development of a Regulatory Agency to reduce Regulatory Risk and the implementation of a sector restructuring plan to reduce Utility Risk. The project has proposed changes to the workplan to address these issues and has outlined a forecast for the next quarter, including the completion of the Communications Plan and other Public Outreach initiatives and the development of local compensation and benefits. Overall, the Nepal Hydropower Development Project has made significant progress towards its results, with major achievements including the development of a Communications Plan and other Public Outreach initiatives, the delivery of a report on Risk Mitigation Measures, and the commencement of work on development of local compensation and benefits. The project has identified several implementation issues, obstacles, and delays, but has proposed changes to the workplan to address these issues and has outlined a forecast for the next quarter.