Nepal Hydropower Development Project Quarterly Report FY16Q4

The project focuses on facilitating the development and financial closure of large and medium hydroelectricity projects, as well as supporting policy and sector restructuring initiatives in the Ministry of Energy (MoE). NHDP works closely with the Investment Board of Nepal (IBN) and other stakeholders to reduce risks associated with hydropower projects. During the fourth quarter of Fiscal Year 2016 (Q4 FY16), NHDP identified and described approximately 60 distinct risks hindering hydro power development in Nepal. The project team developed a Risk Baseline Matrix to enumerate and update these risks. Some of the frequently encountered risks and NHDP interventions to reduce them include policy risks reflected in Project Development Agreements (PDAs) and other contracts. NHDP experts worked with IBN to address various PDA-related issues, such as identifying and categorizing risks, developing a Project Dashboard Tool, determining a sound way forward for the stalled Tamakoshi 3 HPP, and developing approaches to financial participation by local populations in HPPs. The project also developed a standard form Joint Venture (JV) template and a process note on the valuation of existing project documents for the West Seti project. In addition to reducing policy risks, NHDP also focused on financial risks, institutional capacity risks, legal and regulatory risks, environmental and social risks, and risks inherent in local benefits and investment participation. The project worked with IBN and MoE to acquire data and develop tools to reduce or remove barriers to project completion. NHDP also supported other activities at IBN during Q4 FY16, including sector support, development of a comparison of EPC-F and project finance models, review and approval of the Communication Unit's Work Plan for NHDP Year 2, and support for the development of a comprehensive local compensation and benefits plan for each HPP. The project made progress towards its results, including providing transactional advice leading to financial close for large and medium hydropower projects and supporting policy and sector restructuring initiatives in the MoE. NHDP also forecasted its activities for the next quarter, including continuing to reduce risks and support policy and sector restructuring initiatives. Implementation issues, obstacles, and delays were also addressed, and proposed changes to the workplan were made. The project team continued to develop and update the Risk Baseline Matrix and worked with IBN and MoE to reduce risks and support project completion.