Is the Existing Hydropower Development Policy, 2001 Investment Friendly?

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Volume 2 - Issue 1

Is the Existing Hydropower Development Policy, 2001 Investment Friendly?

Dr. Bijay Lal Pradhan; Dhun Bahadur Budhathoki & Dr. Rajeshwori Malla-Pradhan


Nepal is endowed with an abundance of hydro-resource. Its gross hydropower potential is estimated to be 83,290 MW. Out of which, 42,133 MW is ascertained as economically exploitable. However, in the span of 112 years only 2,900 MW i.e.3.48 percent have been exploited. It is obvious that development of hydropower is a public policy related matter. Previous studies exhibit several complications in hydropower development policy, 2001 such as private sector participation in electricity trade, lack of one window system, term of project, hedging mechanisms, foreign direct investment, and so forth. In this regard, this study aims to investigate its efficiency and effectiveness. To investigate efficiency and effectiveness quantitative research design was undertaken. Herein, for the sake of empirical research three independent variables namely, Financial Incentives Sufficiency (FIS), Return on Investment Sufficiency (RoIS), and Market Access Sufficiency (MAS) and one dependent variable namely, Investment Friendliness (IF) was dealt. To collect the opinion of respondents a set of questionnaires comprising 11 questions was developed and approached to 108 informants with 25 diverse sectors of hydro-industry. The population and unit of analysis were determined based on judgmental sampling techniques. To examine the perception of informants on hydropower development policy, 2001 five-point Likert scale was employed.  Herein, a deductive reasoning was persuaded. For analyzing data, statistical tools such as arithmetic mean, standard deviation, factor analysis, Chi-Square tests, Mann Whitney “U” test and Kruskal-Wallis “H” test were computed. Based on empirical analysis this study concludes that the hydropower development policy, 2001 is investment friendly. However, the study manifested numbers of rooms that were to be addressed as changing expectations of investors. In this ground, the finding of this study will be applicable with a view to formulating a more investment friendly hydropower policy in future.

Paper Details

Keywords: Hydropower Development Policy (HDP) 2001, Power Purchase Agreement (PPA), term of project, , investment friendly, policy environment, and policy advocacy
Year: 2024
Month: February
Pages: 19-34