Table of Contents

1. Introduction ................................................................................................................................................ 1 1.1 1.2 1.3 1.4 2. Background ........................................................................................................................................ 1 Objectives of study ............................................................................................................................ 1 Limitations of study ........................................................................................................................... 1 Structure of Report ............................................................................................................................. 1

Overview of project ................................................................................................................................... 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 Introduction ........................................................................................................................................ 2 Location and accessibility .................................................................................................................. 2 Catchment characteristics: ................................................................................................................. 3 Water quality...................................................................................................................................... 3 Land use pattern ................................................................................................................................. 3 Status of endangered species.............................................................................................................. 4 Population .......................................................................................................................................... 4 Women in the Project area ................................................................................................................. 4 Disadvantaged groups ........................................................................................................................ 4 Water supply and sanitation ............................................................................................................... 4 Alternative Analysis........................................................................................................................... 5 Financial Analysis .............................................................................................................................. 5

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Sustainability Assessment .......................................................................................................................... 6 3.1 3.2 3.3 3.4 3.5 Introduction ........................................................................................................................................ 6 Assessment of Environmental aspects ............................................................................................... 6 Assessment of Social aspects ............................................................................................................. 6 Assessment of Economic aspects ....................................................................................................... 7 Overall Assessment Result................................................................................................................. 7

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Conclusion ................................................................................................................................................. 9

1. Introduction
1.1 Background
Nepal is endowed with abundant fresh water flowing Rivers and it is estimated that more than 6000 Rivers and rivulets flow within the country. A whole generation in Nepal has been consumed by the seductive dream of the 83,000 MW hydro potential that the cascading waters of this land is supposed to hold. However, at present, installed capacity in the country is slightly more than 690 MW whereas the demand of electricity at present is around 950 MW. It is evident that to overcome this deficit, hyropower projects should be launched to utilize the abundant water resources. Although, there are many proposed projects in pipeline at the design and implementation stage, one of them is Nyadi Hydropower Project (NHP). The sustainability assessment of hydropower project helps to direct the planner and decision maker towards sustainability of the project. The study on assessment of the sustainability of any hydropower is therefore essential so that it ensures that the plans and activities contribute towards delivery of sustainable development. In this context, the sustainibility of the Nyadi Hydropower Project (NHP) is accessed on social, environmental and economic aspects. This report is purely based on the desk study and analysis of secondary data available regarding the project.

1.2 Objectives of study

The major objective of the study is to access the sustainability of the Nyadi Hydropower Project on the basis of environmental, social and economic aspects.

1.3 Limitations of study

Due to limitation of time and resources availability, the study is confined to fewer details. There are various topics to be addressed under the environmental, social and economic aspects. Only some of them are addressed here. Further, the assessment is purely based on secondary data and this may also be reason for lagging in some of the information.

1.4 Structure of Report

The report is structured in four chapters. The report starts with introduction that highlights the background information of the project, objectives and limitations of the study. The chapter two highlights the overview of different details of project including catchment characteristics, water quality, land use pattern, status of endangered species, population in the project area, women in project area, status of disadvantaged groups and water supply and sanitation in the area. This chapter also reviews financial analysis of the project. The chapter three comprises the sustainability assessment of project. This chapter accesses the environmental, social and economic aspects of sustainability of the project. The report concludes in chapter four with the logical conclusions and recommendations.

2. Overview of project
2.1 Introduction
Nyadi Hydropower Project (NHP) is a Run-of-River (RoR) type project, located in Lamjung District, Western Development Region of Nepal. Initially, installed project capacity was estimated as 20 MW based on Nyadi River. On that basis, feasibility study was carried out and applied for Power Purchage Agreement (PPA). The latest development is that the probability of tapping the tail water flow of Siuri Khola Small Hydropower Project from the nearest tributary Siuri (Doranda) Khola has been explored and decided to incorporate it so that the project become financially viable. As per the latest optimization using the additional tail water flow of SKSHP, the project has an installed capacity of 30 MW and will generate 180.24 GWh of energy annually. Major construction of the Project has been started from the early 2012 and expected to be commissioned in the mid of 2015.

2.2 Location and accessibility

Project area of NHP covers two Village Development Committees (VDCs) namely: Bahundanda and Bhulbhule of Lamjung district, Western Development Region of Nepal. However, the major project structures like intake, surgeshaft, waterways and powerhouse are located in Bahundanda VDC. Geographically, the proposed project lies between 84 25' 25 E to 8428' 00 E and 2819' 20 N to 2821' 07 N.

Figure 1: Location Map of Myadi Hydropower Project

The access to the project area from Kathmandu is through an all season 135 km long Prithivi Highway connecting the Bhanubhakta Highway at Dumre in Tanahu district. About 202 km of
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Bhanubhakta Highway from Dumre to Besisahar (district headquarter of Lamjung) and about 15 km road from Besisahar to Thakanbesi followed by the existing track roads leads to the project area.

2.3 Catchment characteristics:

The Nyadi River originates from the Himalayas at an elevation of more than 7,000 m and flows south-west to join the Marsyangdi River about 7 km downstream of the proposed intake area. The length of the catchment area is 20.5 km and the average width is 7.5 km. The Nyadi River catchment has very steep valleys and a steep river profile. During the monsoon, the turbidity of Nyadi River and its tributaries increases due to the large volume of suspended load. The Biological Oxygen Demand (BOD) level will probably be lower because of the higher volume of sediment influx. The concentration of other parameters is not expected to change significantly. The main sources of sediment yield in the drainage basin are steep terrain and associated erosion at upstream areas. The landscape in the project area and the drainage basin is dynamic and unstable. Landslides are visible along the Nyadi River. Some landslides were observed at the Siuri (Doranda) and Nyadi Khola junction or 500 m upstream of the powerhouse site.

2.4 Water quality

The test of water sample reveals that the quality parameters are suitable for sustaining fish and aquatic life. The dissolved oxygen content (an index of water quality in relation to flora and fauna) was found to be between 8.1 mg/L and 9.9 mg/L which is an acceptable level (note that dissolved oxygen content below 5 mg/L is unsuitable for fish and aquatic life). The pH level of the water at sampling site was between 7.8 and 8.0 pH, which is suitable for aquatic life. Water of Siuri Khola is free from anthropogenic source of pollution. The water is clean and seems drinkable. Sediment yield is not serious at Siuri Khola as the catchments are all natural forest and pasture land. The water remains clear even in the months of summer.

2.5 Land use pattern

The land use pattern of the project occupied area can be broadly divided into agriculture land, barren land, forest land, river and flood plain. Agriculture land accounts for the major portion of land, which is 66.164% of total land. Similarly, river and flood plain, barren land and forest land accounts for 24.554%, 8.596 and 0.684% respectively
Table 1 : Land use pattern of project occupied area

S.N. 1 2 3 4 Total

Land use type Forest area Agricultural area Barren land River and Flood plain

Area (ha) 0.2 19.32 2.51 7.17 29.20

Percent 0.684 66.164 8.596 24.554 100

2.6 Status of endangered species

None of the plants species recorded in the NHP area were identified as endangered species. Simal (Bombax ceiba) is a legally protected tree species of Nepal found in the project area. Cutting, transportation, and export of these species are prohibited for commercial purposes and government of Nepal may issue permission for cutting of these tree species for the implementation of national priority projects, like hydropower. Among the faunal species, twelve species are listed in CITES I, II and III, one species is protected under National Park and Wildlife Conservation Act, 1973. (CITES = Convention on International Trade in Endangered Species of Wild Fauna and Flora)

2.7 Population
Lamjung District has an area of 1,692 Km2 (170,872 ha) with a population of 177,149 with an average households size of 4.85. Bahundanda and Bhulbhule VDCs are within the project influence area. These VDCs constitute a total population of 6033. There are no other permanent settlements in the area and only a few seasonal shelters live above 3,000masl altitude.
Table 2 : Population characteristics of project influenced VDCs

S.N. 1 2 Total

VDCs Bahundanda Bhulbhule

Households Population Male 502 703 1205 2556 3477 6033 1282 1652 2934

Female 1247 1825 3062

Sex Ratio 1.02 0.90 0.96

2.8 Women in the Project area

Women constitute about 49 percent of the total population in the project area as per household survey. However, women in the project area are regarded as low class groups. They do all the household works including cooking, cleaning, rearing children, tending cattle and even work in the fields. The literacy rate among them is also low as compared to men.

2.9 Disadvantaged groups

Like in the other parts of the country, Kami, Damai and Sarki are the disadvantaged groups in terms of economy, social behavior and status in the community and society. Kamis make agriculture tools, Damais provide tailoring services and Sarkis are engaged in making leather items such as shoes. In reality, they are providing enormous services to the community. However, their efforts are not valued in society.

2.10

Water supply and sanitation

The supply of tapped drinking water is satisfactory in the project area. As per the district profile of Lamjung district, 95% and 96% households in Bahundanda and Bhulbhule VDCs respectively have access to tapped drinking water supply. Others use wells, stone taps and spring water for drinking purpose. However, as per the sampled HH survey, on an average, 90% have access to tapped drinking water supply (Table 3). Rest use wells, river, spring for the drinking purpose. However, sanitation condition is not good in the project area and only 40% people have toilets.
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Table 3 : Use of different sources of water for drinking purpose in the project area

VDCs

Private Tap Bahundanda 1 Bhulbhule 1 Total 2 Percentage

Public Tap 29 47 88

Well 2 2

River

Other spring 3 4

3 4

Total Sampled HH 32 54 100

2.11

Alternative Analysis

Initially optimum project capacity was calculated as 20 MW based on Nyadi River. On that basis, feasibility study was carried out and PPA was applied. However, the estimated cost of project and the revenue from power generation based on prevailing rates indicated that the project was only marginally feasible. Thereafter, the study team explored the options to increase power generation by possible ways. The latest development is that the probability of tapping the tail water flow of Siuri Khola Hydropower Project from the nearest tributary Siuri (Doranda) Khola has been explored and decided to incorporate it so that the project become financially viable.

2.12

Financial Analysis

The financial analysis consists of a cash flow during the project life, a financial evaluation, which suggests the Net Present Value (NPV), a Benefit Cost (B/C) ratio and the Internal Rate of Return (IRR) on project and equity. Capital cost for the project is US$ 67.349 million with installed Capacity 30 MW.Energy generated by 30 MW power plant is estimated to be 180.24 GWh (Dry energy = 29.82 GWh, Wet energy = 150.41 GWh). Estimated consumption is 0.27 GWh for rural electrification and 1.78 GWh for Siuri tailrace water pumping mechanism. The estimated sellable energy will be 178.19 GWh.
Table 4 : Results of financial analysis

S.N. 1 2 3

Economic indicators Project Cost, US$ 000 Project Cost/kW, US$ B/C Ratio

Value 67349 2245 1.37

3. Sustainability Assessment
3.1 Introduction
Sustainable development is defined by World Commission on Environment and Development, 1987 as the development which meets the needs of the present without compromising the ability of future generations to meet their own needs. Now, after extensive discussion on this issue for decades, the sustainable development is expressed on the basis of three important aspects- social, environmental and economical (people-planet-profit). According to this concept, for a project to be sustainable, it should be socially equitable, environmentally bearable and economically viable.

3.2

Assessment of Environmental aspects

The sustainability of the project regarding environmental aspects can be explained in the following points: The catchment is steep and sediment yield in the monsoon is higher, it has negative impact on the hydropower plant operation. Without addressing the problem, the implementation of the project may exacerbate the situation. Also, the river bank is more prone to landslide so the construction of retaining structures and the implication of bioengineering are required to maintain the sustainability of the project. The water quality of siuri khola is free from pollution as well as contains less sediment even in monsoon. This should be maintained after the implementation of the project. During the construction period, the pollution may increase in water due to construction materials which is medium term problem. During the operation, the degradation of water quality is likely to occur due to reduced flow from the dam. Due to low discharge, the sediment carry will be high reducing the dissolved oxygen affecting aquatic flora and fauna adversely for longer term. The forest coverage in the project area is low. There are community preserved forests in the area which are to be protected during the construction of the hydropower project. One of the species, which is legally protected, should be preserved during construction. The project will follow the rule of GoN if it is required to cut the trees in the project area. The land used for agriculture and land containing forest will be used for the project structures. This will change the land use permanently. The faunal species in the project area shall be affected by the hydropower project as some of the forest area in which they live will be used for the hydropower project. Due to decreased flow to downstream and also flushing of sediment from hydraulic structure will directly affect the aquatic species.

3.3

Assessment of Social aspects

The sustainability of the project regarding social aspects can be explained in the following points: During the construction period, huge number of skilled and unskilled manpower will be required. The priority will be given to the project affected villages. So, the people from the villages will be employed based on their skills and qualifications. But, shortly after
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completion of project, there will be job deficiency which may force the men to migrate out of project area in search of job leaving more responsibility to women (their wife) on household activities. The project will also support for public facilities such as clinics and building access roads during the construction period. These will serve the villagers for long time i.e. during the operation phase also. Due to tunneling, the depletion of water sources along the tunnel alignment is likely to occur. So, a detailed study on technical assessment of tunnel alignment should be done to find out the likely affects on tunnel alignment. After the production of hydropower from the project, the plant will be able to provide electricity to the villages in the project area at low costs. This will facilitate the introduction of electrically driven mills compared to less efficient water mills. The access to electricity will enable the non-formal adult education classes that take place in the evenings. Electricity will facilitate access of communication technologies such as television, radios which will enhance public awareness to the villagers along with entertainment.

3.4

Assessment of Economic aspects

The sustainability of the project regarding economic aspects can be explained in the following points: The project area is located near the tourist area of the country, famous trekking route to ACAP region. The availability of electricity will enhance other facilities and services will further contribute to increase tourism in the area which will improve the rural economy. At present, less than 40 % of the total population has access to electricity. There is a severe shortage of power in the National Grid, which in the near future is going to increase further if new hydropower projects are not developed. As the industrial sector needs huge amount of electricity, the proposed hydropower will contribute 30 MW of electricity to the country which will be a significant contribution to the national grid of Nepal considering the supply of only 700 MW of electricity at present. The financial indicators shows that the project has good B/C ratio, the project will serve well. But the capital cost per KW is $2245, which is higher amount compared to other hydropower plants (e.g. Chilime hydropowers per KW capital cost=$1547.00, Hydropower Pricing in Nepal, Jalsrot Bikash Sanstha(JVS)).

3.5

Overall Assessment Result

In summation, the hydropower project has adverse effect on environment affecting forest areas as well as aquatic species. The amount of possible threats to environment and actions taken to minimize the effects is a measure of sustainability of the project. This project cannot be decided as sustainable by looking into environmental aspects alone.

Further, the availability of employment facilities during the construction and benefits of access to electricity is the positive aspects for the society. Further, the villagers will benefit from the health facilities during and after the project. The project can be called sustainable on the social terms. Although the unit cost of production is high but the Benefit to Cost ratio is good which indicate the soundness of the project. Also, the project area will be benefited more through tourism after the area will have electricity supply. So, the project can be said to be sustainable in economic terms.

4. Conclusion
The NHP will provide a significant contribution in reducing the deficit between present production and present demand of electricity. This project will also contribute to the growth of local economy for longer terms. The potential negative effects of the project on the local environment and community are likely to be moderate and range from short term to medium term (some may be long term too). Overall, it can be concluded that the proposed works may have some adverse effects, during construction and operation, the benefits it will bring to the local people and to nation itself has the potential to be significantly greater. On expense of some of adverse affects, within tolerable limit, the project shall ultimately be sustainable and serve the target group for longer period.

References
1. Hydropower Sustainability Assessment Protocol, International Hydropower Association, November 2010. 2. Sustainability and Sustainable Development, Jonathan M. Harris, 2003. 3. Updated Report, Environmental Impact Assessment of Nyadi Hydropower Project, Hydro Consult Private Limited, March 2011. 4. http://nhl.com.np/general.php?pg=introduction&type=about 5. http://www.bpc.com.np/index.php?option=com_page&task=details&id=23

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