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Rated
peak
U
P
2
. R. T
Loss
. k
E
. D [kUSD / km]
K
O&M
= K
Investment
.
100
&M O
C
. D [kUSD / km]
Where,
P
peak
= Maximum Transmitted Power (MW)
U
Rated
= Rated AC line voltage [kV]
R = AC line resistenace [ / km]
T
Loss
= Loss Duration [hours]
k
E
= Energy Cost [USc / kWh]
D = Discount Factor
C
O&M
= Annual Opeartion & Maintenance cost [% of initial investment]
AC resistance values
The AC resistance in a line is dependent on temperature and thus on loading. The line from
Telia powerhouse to Panchkhal or Banepa or Manthali substation is located in Hilly area. In this
this area, the ambient temperature may approach to 35C. With high power transfer, the
conductor temperature will be high. For economic optimisation, it is preferred to use
conservative resistance values, i.e. resistance at maximum or close to maximum operating
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 58
temperature. In this optimisation it has been selected an operating temperature of 65C. For the
conductors used in this study, the following AC resistances then apply:
ACSR Dog (100 mm
2
) : 0.3349 /km at 75C
ACSR Wolf (150 mm
2
) : 0.2187 /km at 75C
Plant Loss Duration
The equivalent loss duration is calculated from the plant factor. The equivalent loss duration
means the time the plant will have to be operated on rated capacity in order to produce the annual
losses and is calculated from:
T
Loss
=
8760
2
n Utilizatio
T
.
+
2
2
2
8760
1
2
1
1
n Utilizatio
T
[Hours]
The proposed plant has installed capacity of 990 kW and can generate annual energy 5.67 GWh
energy annually, thus giving a plant factor of 69 %. With this plant factor, the Plant Loss Duration
amounts to be 2715 hours.
Energy Cost
The energy cost normally to be used for optimisation of transmission lines is the long run
marginal cost of generation. In Nepal, it has been agreed that an average incremental cost of
generation better reflects the real value and is therefore used. The average incremental cost of
generation is:
Average Incremental Cost of Energy : 3.25 USc/kWh
Average Incremental Cost of Capacity : 121 USD/kW/year
Average Incremental Cost, total : 6.02 USc/kWh
Only the total AIC will be used in the optimisation of transmission lines (as recommended in
Transmission System Master Plan Report 1998).
Operation and Maintenance
The operation and maintenance cost of transmission line has been taken as 1.5 % of initial
investment cost.
Discount Factor
The discount factor represents the discounted value of fixed annual payments of one unit each
year of the lifetime. With 25 years technical lifetime and 10 % discount rate, the discount factor is
9.08.
From above graph, to evacuate power from the project with 3.6 MW capacity and 68.93 % plant
factor, single circuit 33 kV line with ACSR Dog conductor seems to be optimum. The second
optimum option is 33 kV DC with ACSR Dog, followed by 66 kV SC with ACSR Dog
conductor.
10.1.4 Power Evacuation Schemes
General:
With above guidelines and the transmission line network around the project area, a total of eight
alternative schemes have been identified which are explained in the following paragraphs in
detail.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 59
Alternative Evacuation Schemes:
To evacuate power from the project, following four alternative schemes have been developed. The
detail of need and the cost is summarized as per below:
Table 10.1 : Alternative Power Evacuation Scheme: Teliya Khola SHP , Dhankuta (996 kW)
S.N.
Scheme Length
(kM)
Cost (MUS$)
Estimated
Capital
Cost Annuity O&M
Annual
Lost
Total
Annual
(A)
1
33 kV S/C ACSR Dog
conductor from powerhouse
to Tirtire substation and
connection at 33 kV bus bar
needs PH switchyard and
Interconnection Scheme at
Tirtire
30 84 9.2541 1.2600 0.0036 10.5177
2
33 kV S/C ACSR Dog
conductor from powerhouse
to Dhankuta substation and
connection at 33kV bus
bar needs PH Switchyard
and IP facility at Dhankuta
25 75 8.2626 1.1250 0.0030 9.3906
3
33 kV S/C ACSR Dog
conductor from powerhouse
to Basantapur Switching
Station and connection
at 33 kV bus bar needs PH
Switchyard and IP facility at
Basantapur
15 57 6.2796 0.8550 0.0018 7.1364
4
Synchronizing the System at
11 kV at Powerhouse and
making Interconnection
Facilities needs PH
Switchyard with
Interconnection "T" Facility.
3 18 1.9830 0.2700 0.0161 2.2692
*Loss calculation is depicted in Annexure
10.1.5 Economic Analysis, Comparative Study for selected options
Based on mainly technical criteria and to some extent other subjective judgments as discussed
above, four alternatives for the Power evacuation have been formulated. To choose the best
alternative among the different alternatives, economic analysis has been carried out for above
mentioned possible four alternatives.
The economic analysis is carried out by the usual discounted cash flow technique. The tool
applied is the Present Value method. An alternative with the Least Cost in the present value is
obviously the best alternative.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 60
The actual results found for different schemes are summarized below:
A) Comparison with Capitalized cost (MUS$)
The comparison seems like below:
Fig 10.1 : Capital Cost versus different Schemes
B) Comparison with Annual Loss cost (MUS$ per year)
The comparison seems like below:
Fig 10.2 : Annual loss versus different Schemes
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 61
C) Total Annuity (MUS$)
The comparison seems like below:
Fig 10.3 : Total Annuity versus different Schemes
From Table above, it can be seen that the least cost option to evacuate power from the project is
Scheme 4 (i.e. through construction of 3 km long 11 kV single circuit transmission line with
ACSR Dog conductor from Power House to Khaireni and making facility of interconnection on
the powerhouse with 11 kV. The scheme is best suited to NEA itself. The proposed line is the tail
of the 11 kV line. Feeding with a source of almost 1 MW with 11 kV line will be best for the NEA
as well. It will help to make the regulation of the area better as well.
10.1.6 7.0 Conclusion and Recommendation
Owing to investment cost and capitalized cost, Option 4 is recommended for power evacuation.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 62
11. ENERGY AND PROJECT REVENUE
11.1 GENERAL
In Nepal , at present, there is great imbalance between energy supply and demand. Even in
monsoon, the supply of electricity is limited and load shedding is imposed due to supply
constraints. And this situation will prevail for coming several years. Therefore, the installed
capacity of this station has been optimized so as to make the most of generation during monsoon
and thus increase the economic profit of the station. So from the optimization study, this project
has been designed with installed capacity of 996 kW; and the energy generation and the project
revenue has been calculated accordingly.
11.2 POWER GENERATION
Teliya Khola Small Hydropower Project is a runoff type of project. Its installed capacity is 996
kW. Due to wide variation in the flow in the wet and dry period the power produced in the dry
period is less. The least power generated by the plant is only 183 kW in April. The project will be
generating the power in its full capacity for 40% flow exceedence. Rest of the time of the year it
will be operating below its capacity. The efficiency is kept constant and head loss is assumed to
be variable for different flow conditions. The monthly average power generation is 679 kW as
shown in the Fig 11.1.
Power Generation (kW)
0
200
400
600
800
1000
1200
1 2 3 4 5 6 7 8 9 10 11 12
Time in Month
P
o
w
e
r
(
k
W
)
Act ual
Power (kW)
Inst alled Capacit y (kW)
Average Power(kW)
Fig 11.1 Monthly variation of power generated
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 63
11.3 ENERGY GENERATION
The power generated is converted to the energy by multiplying the power by the time period for
which it is generated. The wet and dry energy are calculated separately. Saleable energy is
obtained by deducting the 10% losses. Thus the saleable dry and wet energy obtained are 1.020
GWh and 4.338 GWh respectively. The power and the energy generation by the Teliya Khola
Small Hydropower Project are shown in table 11.1.
Table 11.1: Power and Energy generated
M
o
n
t
h
s
R
i
v
e
r
D
i
s
c
h
a
r
g
e
(
m
3
/
s
)
D
e
s
i
g
n
D
i
s
c
h
a
r
g
e
(
m
3
/
s
)
D
a
y
s
N
e
t
H
e
a
d
(
m
)
C
o
m
b
i
n
e
d
E
f
f
i
c
i
e
n
c
y
P
o
w
e
r
(
k
W
)
N
e
t
E
n
e
r
g
y
w
i
t
h
1
0
%
o
u
t
a
g
e
(
k
W
h
)
R
a
t
e
N
R
s
.
/
K
W
h
A
m
o
u
n
t
N
R
s
.
Jan 0.450 0.432 31 138.94 0.860 507 339303 7.000 2375123
Feb 0.326 0.309 29 138.94 0.860 362 226904 7.000 1588331
Mar 0.240 0.222 31 138.94 0.860 260 174419 7.000 1220933
Apr 0.174 0.156 30 138.94 0.860 183 118685 5.500 652769
May 0.380 0.363 31 138.94 0.860 425 284794 4.000 1139178
June 0.651 0.634 30 138.94 0.860 743 481331 4.000 1925323
July 1.196 0.850 31 138.94 0.860 996 667135 4.000 2668540
Aug 4.735 0.850 30 138.94 0.860 996 645615 4.000 2582458
Sep 3.630 0.850 31 138.94 0.860 996 667135 4.000 2668540
Oct 1.196 0.850 30 138.94 0.860 996 645615 4.000 2582458
Nov 0.868 0.850 31 138.94 0.860 996 667135 4.000 2668540
Dec 0.597 0.580 30 138.94 0.860 680 440452 5.500 2422486
Total 365 5,358,523 24494680
Average Rate 678.5 4.571
Annual Revenue 24494680
Energy (GWh)
Installed
Capacity: 0.996 MW Dry 1.020
Plant Factor 0.6140 Wet 4.338
Total 5.359
11.4 REVENUE
The rate for the power produced by the private developers is fixed by NEA at NRs. 7.00 for the
dry months (mid Dec to mid April) and the tariff of wet months is NRs. 4.00. A price escalation of
3% for 9 years is provided in the above tariff. These rates are used to calculate the revenue
generated by the project.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 64
The presentation of monthly revenue generation is given in the Fig below.
Revenue Generation
0
.
0
0
1
0
0
0
.
0
0
2
0
0
0
.
0
0
3
0
0
0
.
0
0
1 2 3 4 5 6 7 8 9 10 11 12
Revenue (Rs.)
T
i
m
e
i
n
M
o
n
t
h
Mont hly
Revenue
(NRs.x1000
Average
Mont hly
Revenue (NRs. x
1000
Fig 11.2: Monthly and average revenue generation
On seeing the monthly revenue generation graph the revenue generation per month it is seen that
the July, August and October are the months generating highest revenues, whereas April is the
month generating the least revenue (Fig 11.2). The total annual revenue is NRs. 2,44,94,680.00.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 65
12. CONSTRUCTION PLANNING
12.1 GENERAL
This section of the report describes the anticipated construction technology applied for various
works and presents the schedule for the completion of the project in time. Timeline Gantt charts
have been prepared for the major construction activities. Critical activities have been identified
and milestone dates predicted.
12.2 ACCESS AND INFRASTRUCTURE
The project site can be reached after about one hour walking distance from the neaurest roadhead
in Teliya. All weather road is available upto Jorpati and earthen road reaches in Teliya and is
extended in eastern side of Chulachuli. Hence, no significant expenses may be required for the
construction of access road and the construction resources and materials can be easily transported
to project site. Existing 11 kV line passes about 3 kM away from powerhouse area and its distance
upto district headquarter is about 25 kM and the location of proposed substation, is about 3 kM
from proposed powerhouse.
12.3 ACTIVITIES ON THE CRITICAL PATH
The critical sequence of major construction activities following award of the main civil
contract leading to commissioning of the first unit are summarized as follows:
Construction of headrace canal
Installation of Generating equipements
The length of penstock length is relatively shorter and hence does not lie in critical path.
12.4 CONSTRUCTION MATERIALS
The construction materials required for the project will be procured from the domestic
producers/suppliers. The main construction materials required are as follows:
Blasting materials and detonators
Cement
Reinforcement bars and timber
Fuels
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
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Coarse and fine aggregates and cohesive materials will be produced from the rocks
obtained from the quarries.
Some coarse aggregates will also be processed from the excavated materials.
The materials for backfill and rockfill will be processed from the excavated materials.
12.5 DISPOSAL OF EXCAVATED MATERIALS
The excavated foundation materials will be dumped and deposited in landfills. The excavated
materials will be transported to the land fills. For enhancing the environment of the area the
landfill will be planted with grass, shrubs and trees.
12.6 CONTRACT PACKAGE
The contract package will be prepared separately fro civil and electro-mechanical works. For
civil works the whole works can be carried out by single contractor. The electro- mechanical
works could be divided into sub works. Electro-mechanical works will be divided in to
following sub groups:
Supply and installation of turbine and generator
Supply and installation of hydro mechanical equipment like gates, hoists, valves,
penstock, crane etc.
Supply and installation of 11 kV substation, switchgear and transmission line.
12.7 CONSTRUCTION POWER
Alternatives for supply of construction power during construction of the Teliya Khola Small
Hydropower Project are:
Pre-building of 11 kV transmission line from existing line to powerhouse site. This
will require installation of 11 kV switchyard and 11/0.4 kV, 3 phase step-down
transformer at the construction site and its length is about 3 kM. In this case, 11 kV
substation can be made near powerhouse area.
Diesel generator on site. Depending on the load it will be necessary to install diesel
generator unit and LV distribution board for power distribution to the different load
centres around the construction site. Although the unit installation time is shorter,
the overall cost for operation and maintenance are high. Due to problems related to
fuel supply, transport, handling, this solution is not considered to be the best option.
For the construction site essential loads, a back-up emergency diesel generator unit is
recommended. This emergency diesel set would be provided by the general contractor.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 67
12.8 CONSTRUCTION SCHEDULE
The details of the construction schedule are presented in Annex B. The planning shows the two
years construction period from detail design stage to demobilization of the field workers and
equipment.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 68
13. COST ESTIMATES
13.1 INTRODUCTION
This Cost Estimation Report, describes the methodology used, and presents the project cost
estimate. The project cost estimate is carried out as per the basic norms of the Government of
Nepal for civil construction works and market price for electro mechanical items.
13.2 CRITERIA, ASSUMPTIONS AND COMPONENTS
The following criteria and assumptions are the basis of the cost estimate:
All costs are in September 2010 price level.
For currency conversion, the following rate, valid in September 2010 is used: $1 =
NRs.75.00
Identifiable Nepalese taxes and custom duties are included.
Royalties and cost associated with rights of way for quarries, borrow and disposal areas are
not included.
A key assumption is that the project management and procurement policy will stress open
competitive bidding and that government policies will not hinder cost-effective construction.
13.3 ESTIMATING METHODOLOGY
The major component breakdowns for the estimating process are:
support facilities, access roads and other general items
main civil construction works
electromechanical equipment
transmission facilities including substation
camp and housing accommodation facilities
engineering, management, and administration
miscellaneous expenses
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13.4 ESTIMATING METHODOLOGY
The cost estimate is prepared on the basis of the sequential execution of the following steps:
Subdivision of the total project into a number of distinct structures (Headworks, diversion
structures, intake, headrace canal including high pressure penstock, powerhouse, tailrace etc.).
Breaking down of structures into a number of distinct construction tasks. These are
overburden excavations, rock excavation, fill work, concrete works, etc.
Calculation of the quantities of each items according to the above mentioned tasks for the two
units of cumulative 996 kW installed capacity are considered. Details estimations of quantities are
made in 1:1000 scale maps.
Unit rates had been adopted from comparing the number of project studied by Nepal
Electricity Authority as well as private developers.
The summation with allowances for, contingency and allowances for engineering and
management and provision for camp facilities gives the total project cost.
Table 13.1:Unit Rate: Unit rates for the estimation of the cost are as follows:
S.No. Description Unit Rate (NRs.) Remarks
A Labour Rate
1 Skilled Labour man day 300.00 8 hrs/day
2 Unskilled Labour man day 175.00
3 Blaster man day 400.00
B Material Rate
1 Cement Bag 700.00
Rs. 2 per kg
transportation cost
2 Sand Cum 400.00
3 Aggregates Cum 500.00
4 Stone Cum 300.00
5 Riverbed gravel Cum 300.00
6 Sal wood Cum 10,000.00
7 Low quality wood Cum 7,063.97
8 CGI sheet Bundle 400.00
9 Reinforcement bar Kg 72.00
Rs. 2 per kg
transportation cost
10 Binding wire Kg 80.00
11 Gabion wire Kg
75.00
12 Salvage wire Kg
75.00
13 Nail Kg 90.00
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14 Filling materials Cum 450.00
15 Mud Cum 150.00
16 Plywood m
2
400.00
The total estimated cost for civil works including penstock pipe, trashrack, intake gate, trashrack
at forebay, sluice gate etc. is NRs. 6,66,05,190.00 equivalent to US$ 8,88,069.00.
13.5 ELECTRO MECHANICAL EQUIPMENTS
The two numbers of 498 kW unit capacities are installed to generate 996 kW of power. The cost
of supply and installation of Turbines, generators,substation, Inlet valve and other auxiliary
equipments, are NRs. 4,09,02,500.00 equivalent to US$ 5,45,367.00.
13.6 TRANSMISSION LINE AND SWITCHYARD
The total length of the transmission lines is estimated from the available maps. Considering the
installed capacities of the plant, the necessary power evacuation line is designed and estimated as
per the capacities of the transmission lines. Estimated length of transmission line is 3 km upto
existing 11 kV line in Parewadin VDC. The total cost of transmission line is estimated to be NRs.
45,00,000.00 equivalent to US$ 60,000.00.
13.7 SITE FACILITIES, ACCESS ROAD AND ENVIRONMENTAL PROVISIONS
Total estimate cost for site facilities , access road and environmental provisions is NRs. 1,14,42,500.00.
which is equivalent to US$ 1,52,566.00.
13.8 OTHERS
The cost for engineering, management , administration and miscellaneous work during
construction is provided on lump sum basis. The total cost for this is NRs. 3,67,88,160.00
which is equivalent to US$ 4,90,509.00.
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13.9 PROJECT COST
The summary of the project cost is presented in the table below. More details are provided in
the annex.
Table 13.2 : Summary of Project Cost
SN ITEM DESCRIPTION
Table
No.
Amount
NRs. X 1000
Sub-Total NRs.
X 1000
1 CIVIL WORKS 66605.19
1.1 Headworks 1.1
22,721.784
1.2 Desilting Basin 1.2
1,203.860
1.3 Headrace Power Canal 1.3
25,347.600
1.4 RCC Crossing 1.4
983.401
1.5 Forebay Basin 1.5
3,331.980
1.6 Anchor Block, Support Pier and Penstock 1.6
7,681.735
1.7 Powerhouuse and Tailrace 1.7
5,334.826
2 ELECTRO-MECHANICAL EQUIPMENT 40902.50
2.1 Power house equipment plus 11 kV Substation Cost 1.8
40,902.500
3 TRANSMISSION LINE 4500.00
3.1 11 kV line erection 1.9
4,500.000
4 ROAD AND SITE FACILITIES 8797.50
4.1 Project /or Access Road 1.10
5,520.000
4.2 Site Facilities with Operators' Village 1.11
3,277.500
5 ENVIRONMENTAL COSTS 2645.00
5.1 Environmental costs and compensation 1.12
2,645.000
Sub-total 123450.19
6
ENGINEERING & ADMINISTRATION
COSTS
6.1
Detailed Design, construction management, and
administration cost 8%
9,876.015 9876.01
7 MISCELLANEOUS COST 10%
12,345.019 12345.02
145671.22
8 INTEREST DURING CONSTRUCTION
8.1 Interest During Construction
14,567.122
50% of total
project cost for
2 year -10%
interest rate
TOTAL ESTIMATED COST (NRs)
160,238
Cost per kW ( 1 US$ = NRs. 75.00)
2,145.00
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14. FINANCIAL ANALYSIS
14.1 INTRODUCTION
This section of the report describes the financial analysis carried out in order to determine
viability of the project in terms of expected returns. Financial evaluation uses the real term
monetary values of the cost and benefits and is inclusive of taxes, transfers, duties and escalation.
The financial evaluation concerns only with the developer of the project and monetary evaluation
of the project. Hence, from the perspective of a private developer, financial evaluation is the most
important aspect of the project to determine whether to finance it or not.
14.2 CRITERIA AND ASSUMPTIONS
The evaluation method is based on conventional practice of developing the cost and the benefit
streams for a period of time on the same basis. The financial evaluation procedure involves a
number of assumptions. These parameters are described in the following paragraphs.
14.2.1 Project Financial Cost
The project capital cost derived in the previous chapter-Cost Estimate, has been taken as the
project financial cost with modification of electro-mechanical cost to reflect national policies of
taxation.
14.2.2 Project Financial Benefits
Financial evaluation requires use of energy selling prices in real terms, that is, the price the
developer gets in the market. It is generally governed by the Power Purchase Agreement (PPA)
between the Developer and the power distribution agency and is quite often negotiable after the
feasibility study. For the feasibility study purpose, current prevailing rates should be used.
These energy prices are divided into wet season energy and dry season energy. For projects below
5 MW, NEA has published a rate of wet season energy as Rs. 4.00 /kWh and dry season energy as
Rs. 7.00/kWh. Price escalation of 3% on first year cost is made for 9 years.
14.2.3 Discount Rate
The discount rate is also an important parameter in the financial evaluation. The reference
discount rate of capital selected for the study is 10%.
14.2.4 Cost Datum
All cost and benefits are expressed in constant prices (i.e., excluding general escalation)
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
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14.2.5 Planning Horizon
The financial life of the project has been taken as 50 years. This period is expected to be long
enough to fully include all benefits from the project and also equals or exceeds the expected
economic life of the facilities. Replacement of electrical and mechanical components is
considered after 25 years of operation. Costs and benefits may occur after the planning horizon,
however, their inclusion will have little effect on the evaluation results because of the discounting
procedures employed in the analysis.
14.2.6 Currency Exchange Rate
The exchange rate used in the economic analysis is NRs 75.00 per US dollar (September 2010).
This rate has been used as the official exchange rate in the conversion of all costs to and from
the US dollars to the Nepalese Rupees. Exchange rate for subsequent years has been derived
based on the local and foreign escalation.
14.2.7 Operation and Maintenance Cost
It has been assumed that 1.5% of the project cost will be required annually to meet operation and
maintenance cost including repair and replacement costs. This value has been derived from the
experience of hydropower projects in the country.
14.2.8 Taxes, Duties and VAT
Taxes, duties and VAT payable to the government or its agencies have to be considered in the
financial evaluation. At present, the government is planning for VAT exemption for small
hydropower project and hence this cost is not included in the total project cost.
14.2.9 Royalties
Royalties are payable to the government for natural resource usage. As per Electricity Regulation
1992, the following royalties are levied:
For the first fifteen years: Capacity royalty NRs 100 per kW of the installed capacity per year and
energy royalty 2% of energy sales revenue for project above 1 MW. Since, this scheme has
installed capacity of 996 kW only, such royalty will not apply here.
14.2.10 Debt Equity
As hydropower projects are highly capital intensive, funds has to be obtained from various
financial institutions. Such a project could not be built solely on loans as the lenders will require
the developer also put some funds. Generally, loan portion of the cost varies from 70 to 85%. For
the present study, debt-equity ratio of 75:25 has been assumed.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
Volcano Hydropower Pvt. Ltd., KMC: 09, Gairigaun, Kathmandu Page 74
14.2.11 Interest Rate
The loan amount will require some interest to be paid on the amount borrowed. The interest will
be capitalized till the project starts producing revenue. Generally, the banks charge 8 to 18% for
such loans. For the present study, an interest rate of 10% has been considered.
14.2.12 Loan repayment Period
The repayment starts after the revenue generation starts. The repayment of the loan will be made
within 10 years. The loan repayment schedule is given in table 14.1.
Table 14.1 Loan Repayment Schedule
S.
No.
Debt Service Schedule
Year (Amount in million Rupees)
0.00 1.00 2.00 3.00 4.00 5.00
1 Annuity payment (Rs) 19.56 19.56 19.56 19.56 19.56
2 Principal payment(Rs) 7.54 8.29 9.12 10.04 11.04
3 Interest payment at 10% (Rs) 12.02 11.26 10.43 9.52 8.52
4 Principal remaining (Rs) 120.18 112.64 104.34 95.22 85.18 74.14
Year
5.00 6.00 7.00 8.00 9.00 10.00
1 Annuity payment (Rs) 19.56 19.56 19.56 19.56 19.56
2 Principal payment(Rs) 12.14 13.36 14.69 16.16 17.78
3 Interest payment at 10% (Rs) 7.41 6.20 4.86 3.39 1.78
4 Principal remaining (Rs) 74.14 62.00 48.64 33.94 17.78 0.00
In addition, the banks may charge guarantee money for the loan provided, insurance charges,
registration charges, if any, to be levied from the project. These charges are bank specific and are
unknown at this stage. Hence, such charges have not been considered in the study.
14.2.13 Financing Structure
The total capital expenditure is expected to amount approximately NRs 160.238 million rupees,
and will be financed by a combination of equity and debt as follows. The debt is a local currency
commercial bank loan. The financing structure of 75% debt and 25% equity (of the capital
investment excluding the financing fees and IDC) are assumed.
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Table 14.2 : Source of Financing
Mode of Financing Percentage Sources NRs, Crore
Shareholders Equity 25 Equity 4.00
Bank Loan 75 Loan 12.20
Total 100 Total 16.02
14.3 SENSITIVITY ANALYSIS
Sensitivity analysis of this scheme is made in the following variable for following variations as
shown in the table below.
Table 14.3 Financial Parameters for different scenarios
NPV in Million Rupees.
Increments Project Cost Discount Rate
Annual
Revenue Project Life
-0.20 86.18 95.61 12.03 41.86
-0.10 70.47 73.57 33.40 47.77
0.00 54.76 54.76 54.76 54.76
0.10 39.06 39.06 76.13 58.43
0.20 23.35 24.79 97.50 62.78
Variation of IRR
Increments Project Cost Discount Rate
Annual
Revenue Project Life
-0.20 17.97% 14.26% 10.99% 13.67%
-0.10 15.95% 14.26% 12.67% 13.97%
0.00 14.26% 14.26% 14.26% 14.26%
0.10 12.82% 14.26% 15.79% 14.39%
0.20 11.58% 14.26% 17.27% 14.53%
Variation of BC Ratio
Increments Project Cost Discount Rate
Annual
Revenue Project Life
-0.20 1.69 1.58 1.08 1.27
-0.10 1.50 1.46 1.21 1.31
0.00 1.35 1.35 1.35 1.35
0.10 1.23 1.25 1.48 1.37
0.20 1.12 1.16 1.62 1.40
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The above analysis shows that project will be in loss only when there is 20% dropdown in annual
revenue assuming all other variables constant. This scenario is also presented in the Figs below.
Variation of NPV
0.00
20.00
40.00
60.00
80.00
100.00
120.00
Increments -0.20 -0.10 0.00 0.10
Increments
N
P
V
i
n
M
i
l
l
i
o
n
R
s
.
Project Cost
Discount Rate
Annual Revenue
Project Life
Fig 14.1 : Variation of Net Present Value for different alternatives
Variation of IRR
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
Increments -0.20 -0.10 0.00 0.10
Increments
%
I
R
R
Project Cost
Discount Rate
Annual Revenue
Project Life
Fig 14.2 : Variation of Internal Rate of Return for different alternatives
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
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Variation in BC Ratio
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Increments -0.20 -0.10 0.00 0.10
Increment
B
C
R
a
t
i
oProject Cost
Discount Rate
Annual Revenue
Project Life
Fig 14.3 : Variation of Internal Rate of Return for different alternatives
The sensitivity analysis shows that for the selected options for the variation of project cost, project
revenue, discount rate and project life; the project is infeasible only when there is 20% drop in
revenue. In all other cases, the financial indicators are at acceptable level.
14.4 CONCLUSION AND RECOMMENDATION
Hence, the above analysis shows the project is feasible.
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
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CONCLUSION AND RECOMMENDATIOIN
14.5 CONCLUSION
Teliya Khola Small Hydropower Project has been studied to the feasibility level; this report
supplements the details regarding to feasibility study. After detailed field investigations like
topographical mapping, field visit, site observation and hydrological data collection, design and
layout works were carried out with its project cost estimation. Financial evaluations were also
carried out to determine the viability of the project.
The conclusions drawn are as following.
The waterway alignment is very simple and geologically stable.
It requires only 3 kM of access road.
Adverse environmental impacts are minimal.
The Project concept is simple, involving a small weir, contour canal/ penstock
and surface power station;
The Project cost is reasonable with an attractive rate of return based on the tariff
on which NEA is purchasing power from private power developers;
The project has a , NPV of NRs.44.76 million rupees , B/C ratio of 1.35, FIRR of 14.26 % with
net energy sale of 5.36 GWh, which shows that the project is attractive.
14.6 RECOMMENDATION
14.2.1 GENERAL
The Feasibility Study Stage of the project was performed due to the promising and attractive
technical and financial parameters that have evolved during the design and analyses in the current
Study. So, it is recommended that this Project be further studied and investigated for
implementation.
14.2.2 DETAILED DESIGN
The following studies should be done prior to the construction phase to find the in depth details.
The detailed design would lead to the preparation of the tender documents for various aspects of
the Project since the details provided in this section might still need some detailed study on some
of the issues as:
Detailed topographical survey for waterways and transmission line
Geological and geotechnical investigation for major structure locations
Review of hydrological investigations
Teliya Khola Small Hydropower Project, Teliya and Parewadin VDC, Dhankuta Feasibility Study Report
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Hydraulic, Structural and Hydro and Electro-mechanical Designs including transmission
line.
Detailed study of 11 kV substation versus 33 kV substation.
Preparation of Land Acquisition Plan.
Preparation of separate tender document for civil/hydraulic steel structures;
electromechanical equipment supply, erection and commissioning and Transmission line.
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