Kathmandu, January 27:

Entrepreneurs and experts today blamed government’s policies and lengthy procedures as major discouraging factors for private domestic investment in hydropower sector.

They further pointed out that instability in government policy and discriminatory provisions for power developers for domestic consumption as well as exports have stalled the domestic investment despite an adequate capital to finance up to 100 mega watt (MW) power projects.

Speaking at an interaction on ‘Investment in Hydropower Development by Nepali Investors’ organised by Nepal Chamber of Commerce (NCC), they also lamented government’s failure at implementing one-window policy for power development and lack of coordination between different government agencies.

“Ambiguity in policies, lengthy process and unnecessary interventions of different government agencies have been discouraging the investors in power development projects,” said NCC president Surendra Bir Malakar, adding that the concerned authorities still underestimate Nepali investors.

“Nerve-racking power purchase accord (PPA) system and license holding trends caused less power generation in the recent past, which must be put to an an end to lure more private investment,” He further said. “The Nepali private investors are keen to establish their market share rather than making profits by investing in power projects.”

As a result, Nepal has been facing acute power shortage for last couple of years and it will continue for at least five to seven years more. Duration of load shedding has increased substantially with 36 hours a week these days. The power shortage has also hit the industries making the state loose billions of rupees in revenue.

According to a study carried out by NCC, Nepal lost about two billion rupees in revenue last year and it is estimated at Rs 2.5 billion this year. The industries are forced to cut down their production by 25 per cent, whereas the cost of doing business has gone up by 20 per cent.

Former minister and hydropower expert Deepak Gyawali said that Nepali investors are reluctant to invest in the sector mainly due to lack of intra-departmental coordination. “Going through many processes and administrative hassles before starting a project, it takes years to get clearance from all the concerned authorities,” he said.

Gyawali claimed that power development wouldn’t foster unless the government takes bold initiatives in issues like policy stability, environment and soil conservation as well as basic infrastructure development.

Subarna Lal Shrestha, a private developer, stressed the need of policy coherence with regards to PPA, environment, taxation and the government support in basic infrastructure like roads, transmission line and security. He underscored the need of national transmission policy and development of nationwide grid connection to ensure smooth supply of power in the long run.

Shrestha was also of the view that the government needs to encourage more big investors in storage or dam-based power projects, while giving continuous priority on run-of-river projects as well.

“Although Nepali banking sector has adequate capital to finance up to 100 MW power projects, the commercial banks are reluctant to invest in power development because of associated risks,” said Sanjeev Sainju of Kumari Bank Ltd, adding that the government’s assurance to mitigate these risks can spur the investment.