Project Summary & Memorandum of Information€¦ · Project Summary & Memorandum of Information Super Dordi Hydropower Project-Kha, 49.6MW Lamjung District, Gandaki Zone, Nepal November

PPrroojjeecctt SSuummmmaarryy && MMeemmoorraanndduumm ooff IInnffoorrmmaattiioonn

SSuuppeerr DDoorrddii HHyyddrrooppoowweerr PPrroojjeecctt--KKhhaa,, 4499..66MMWW Lamjung District, Gandaki Zone, Nepal

November 2012, Kathmandu

DEVELOPED BY:

PPPeeeooopppllleeesss HHHyyydddrrrooopppooowwweeerrr CCCooommmpppaaannnyyy (((PPP...))) LLLtttddd

PO Box: 14165, Anamnagar, Kathmandu, Nepal Tel: +977-1-6222304, 4229124 Fax:+977-1-4229124

Web: www.peopleshydro.com E-mail: [email protected]

Super Dordi Hydroelectric Project-Kha, 49.6MW Nov. 2012

TABLE OF CONTENT

List of Figures ......................................................................................................d List of Tables........................................................................................................d List of Acronyms.................................................................................................. e SECTION-1: COMPANY INFORMATION........................................................................................... 1 1. PROFILE OF COMPANY............................................................................... 1 2. PROFILE OF DIRECTORS & PRINCIPAL PROMOTORS............................ 2

2.1 Board of Directors........................................................................................................2 2.2 Profile of Directors and Major Investors....................................................................2

3. CORPORATE PLAN & ANNOUNCEMENT................................................... 5 3.1 Corporate Announcement ...........................................................................................5 3.2 Provision for Corporate & Other Investors................................................................5 3.3 Provision for Local Peoples........................................................................................5 3.4 Management Core ........................................................................................................5 3.5 Technical Core..............................................................................................................5 3.6 Account/Finance Core .................................................................................................5

SECTION-2: PROJECT RELATED DETAILS..................................................................................... 7 1. INTRODUCTION ............................................................................................ 7

1.1 Background...................................................................................................................7 1.2 Project Location ...........................................................................................................7 1.3 Accessibility .................................................................................................................8 1.4 Project Development & Stages ...................................................................................9

2. PROJECT DESCRIPTION ........................................................................... 11 2.1 General Arrangement.................................................................................................11 2.2 Salient Features..........................................................................................................12 2.3 Hydrology & Design Discharge ................................................................................15

2.3.1 Adopted Mean Monthly Flow for Dordi Intake.......................................................15 2.3.2 Discharge measurement and verification..............................................................16

2.4 Civil Works Components...........................................................................................16 2.4.1 Headworks ................................................................................................................16 2.4.2 Gravel Trap & Side Spillway....................................................................................16 2.4.3 Desander & Flushing Arrangement........................................................................17 2.4.4 Headrace Tunnel, Adits & Prumu Collection works .............................................17 2.4.5 Purmu Khola Collection from Adit .........................................................................17 2.4.6 Surge Shaft ...............................................................................................................18 2.4.7 Pressure shaft ..........................................................................................................18 2.4.8 Powerhouse & Tailrace............................................................................................19

2.5 Infrastructure Facilities..............................................................................................19 2.5.1 Access Road:............................................................................................................19 2.5.2 Camp Facilities .........................................................................................................19

Peoples’ Hydropower Company (p) Ltd a


2.6 Metal Works ................................................................................................................19 2.6.1 List of Metal works Components............................................................................19 2.6.2 Penstock Shaft liner.................................................................................................20 2.6.3 Gates, Trash rack & Stoplogs .................................................................................20

2.7 Electromechanical Components ..............................................................................20 2.7.1 Turbine ......................................................................................................................20 2.7.2 Governor ...................................................................................................................20 2.7.3 Inlet Valve..................................................................................................................20 2.7.4 Generator ..................................................................................................................20 2.7.5 Step-up Transformer................................................................................................21 2.7.6 Outdoor Substation & Switchgears .......................................................................21 2.7.7 Protection & Control System ..................................................................................21

2.8 Communication System ............................................................................................21 2.9 Transmission Line (132kV)........................................................................................21 1.1 Interconnection & Metering Facilities ......................................................................21 2.10 Construction Power ...................................................................................................22

3. CONSTRUCTION PLAN .............................................................................. 22 3.1 Mode of Project Implementation...............................................................................22

3.1.1 EPC Contract ............................................................................................................22 3.1.2 BoQ based contract .................................................................................................22 3.1.3 Mixed contract ..........................................................................................................22

3.2 Contract Packaging....................................................................................................23 3.3 Preparatory Works .....................................................................................................23 3.4 Organization Setup ....................................................................................................24 3.5 Construction Schedule ..............................................................................................24 3.6 Further Activities........................................................................................................25

3.6.1 Environmental Study ...............................................................................................25 3.6.2 Cadastral Survey and Land Acquisition ................................................................25 3.6.3 Further Geotechnical Investigation & Detailed Design ........................................26

4. PROJECT COST & REVENUE .................................................................... 26 4.1 Presumptions .............................................................................................................26 4.2 Total Cost of the Project............................................................................................26 4.3 Detail of Base Construction Cost .............................................................................27 4.4 Detailed Cost calculation...........................................................................................28

4.4.1 Development cost ....................................................................................................28 4.4.2 Access Road.............................................................................................................28 4.4.3 Building & Camp Houses ........................................................................................28 4.4.4 Vehicles.....................................................................................................................28 4.4.5 Land Procurement & Lease.....................................................................................29 4.4.6 Logistics and Office Equipment .............................................................................29 4.4.7 Civil Works................................................................................................................29 4.4.8 Metal and Hydro mechanical Works ......................................................................29 4.4.9 Electromechanical Equipments..............................................................................29 4.4.10 Transmission and Interconnection Facilities ...................................................29 4.4.11 Engineering, Supervision & Management cost ................................................29 4.4.12 Environmental Mitigation Works........................................................................29 4.4.13 Miscellaneous ......................................................................................................29 4.4.14 Project Insurance during construction .............................................................30

4.5 PPA Rate & Project Revenue ....................................................................................30 5. PROJECT FINANCING................................................................................ 31

Peoples’ Hydropower Company (p) Ltd b


5.1 Investment & Financing Structure............................................................................31 5.2 Equity Capital .............................................................................................................32 5.3 Loan Capital ................................................................................................................32

5.3.1 Project Loan..............................................................................................................32 5.3.2 Working Capital Loan ..............................................................................................32 5.3.3 Bridge Gap Loan ......................................................................................................32

5.4 Drawdown schedule & IDC........................................................................................32 6. FINANCIAL PROJECTIONS........................................................................ 33

6.1 Projected Income & Expenditure A/C.......................................................................33 6.1.1 Sales ..........................................................................................................................34 6.1.2 Operation & Maintenance Cost...............................................................................34 6.1.3 Interest on Bank Loan .............................................................................................35 6.1.4 Royalty to Government............................................................................................35 6.1.5 Depreciation of the Assets......................................................................................36 6.1.6 Amortization expenses............................................................................................36 6.1.7 Tax .............................................................................................................................36 6.1.8 Dividend ....................................................................................................................36

6.2 Projected Balance Sheet ...........................................................................................36 6.3 Repayment Schedule .................................................................................................37 6.4 Debt Service Coverage Ratio ....................................................................................37

7. PROJECT EVALUATION............................................................................. 38 7.1 Basic Assumptions ....................................................................................................38 7.2 Financial Analysis ......................................................................................................38

7.2.1 Net Present Value.....................................................................................................38 7.2.2 Internal Rate of Return ............................................................................................39 7.2.3 Benefit Cost Ratio /Profitability Index....................................................................39 7.2.4 Payback Period ........................................................................................................39 7.2.5 Equity Rate of Return ..............................................................................................39 7.2.6 Debt Service Coverage Ratio ..................................................................................39 7.2.7 Cost per unit of Electricity Generation: .................................................................39

7.3 Sensitivity Analysis....................................................................................................39 7.4 Risk Analysis ..............................................................................................................40 7.5 Findings and Discussion...........................................................................................41

8. CONCLUSION & RECOMMENDATION ...................................................... 43 8.1 Conclusions................................................................................................................43 8.2 Recommendations ..............................................................Error! Bookmark not defined.

SITE PHOTOGRAPHS................................................. Error! Bookmark not defined. STATUARY DOCUMENTS ................................................................................. 43

Peoples’ Hydropower Company (p) Ltd c


List of Figures Figure 1-1: Project Location Map Showing its Components.............................................................8 Figure 1-2: Project Location & nearest markets ...............................................................................9 Figure 1-3: Progress Development stages and flow chart for reference ........................................10 Figure 2-1: Components Layout including alternatives ...................................................................11 Figure 2-2: Super Dordi Catchment (Dordi & Prumu Khola) ...........................................................15 Figure 2-3: Flow variation pattern in the river and design discharge...............................................16 Figure 2-4: Typical Section of Underground Structures & Stress Distribution.................................17 Figure 2-5: Location of powerhouse area on left bank of Dordi Khola ............................................18 Figure 3-1: Organizational Setup.....................................................................................................24 Figure 4-1 : Monthly Revenue Generation Trend ............................................................................31

List of Tables

Table 1-1: Road Distance to Project Site...........................................................................................8 Table 2-1: Mean monthly flow available at Intake of Project Site (m3/s).........................................15 Table 3-1: Major milestones for implementation of the Project .......................................................24 Table 4-1: The summary of the project (in 000)...............................................................................26 Table 4-2: The Details of Project Base cost ....................................................................................27 Table 4-3: PPA rate and resulting financial indicators.....................................................................30 Table 4-5: Monthly Generation & Revenue trend as per agreed contract energy table..................30 Table 5-1: Proposed Capital Structure for financing........................................................................31 Table 5-2: Drawdown Schedule and Interest during Construction ..................................................33 Table 6-1: Projected Income Statement ..........................................................................................33 Table 6-2: Estimated O&M for the first year of operation (In NRs, 000)..........................................34 Table 6-3: Royalties Schedule to GoN as per Electricity Act, 2049 Section 11 ..............................35 Table 6-4: Projected Balance Sheet ................................................................................................36 Table 6-5: Summary of Loan Repayment Schedule........................................................................37 Table 6-6: The Debt Service Coverage Ratio for Various Years of Operation................................37 Table 7-1: Revenue Sensitivity result ..............................................................................................39 Table 7-2: Cost Sensitivity Result at 12% interest rate ...................................................................39 Table 7-3: Interest Rate Sensitivity Result.......................................................................................40 Table 7-4: Variation on PPA rate .....................................................................................................40 Table 7-5: Effect of project delay due to any reason or absence of Interconnection Facilities .......40 Table 7-6: Financial Analysis & Sensitivities Results summary ......................................................41

Peoples’ Hydropower Company (p) Ltd d


Peoples’ Hydropower Company (p) Ltd e

List of Acronyms A/C Account AC Alternating Current ACSR Aluminum Conductor Steel Reinforced amsl above mean sea level B/C Benefit/Cost Bi.Bi.Bi Bidhyut Bikash Bivag BoQ Bill of Quantity CA Chartered Accountant CB Circuit Breaker CDMA Code Division Multiple Access CEC Clean Energy Consultants (P.) Ltd COD Commercial Operation Date CT Current Transformer cumecs Cubic meter per second D/S Down Stream DC Direct Current DDC District Development Committee DHM Department of Hydrology and Meteorology DoED Department of Electricity Development DPR Detail Project Report DS Disconnecting Switch DSCR Debt Service Coverage Ratio E&M Electromechanical EIRR Equity Investors’ Internal Rate of Return EL Elevation EMI Equal Monthly Installment EPC Engineering, Procurement and Construction ERT Electrical Resistivity Tomography FDC Flow Duration Curve FY Financial Year GoN Government of Nepal GWh Giga Watt hour HEP Hydro Electric Project HP Hydropower Project HV High Voltage HW Head Works Hz Hertz ICB International Competitive Bidding IDC Interest during Construction IEE Initial Environmental Examination IPPs Independent Power Producers IRR Internal Rate of Return kA kilo Ampere km kilometer kV kilo Volt kVA kilo Volt Ampere kW kilo Watt LA Lightning Arrester LC Letter of Credit


Peoples’ Hydropower Company (p) Ltd f

LCB Local Competitive Bidding mm millimeter msl mean sea level MT Metric Ton MW Mega Watt MWh Mega Watt hour NEA Nepal Electricity Authority NPV Net Present Value NRs Nepalese Rupees O & M Operation and maintenance ONAN Oil Natural Air Natural (Cooling System) PF Power Factor PH Power House PHCPL Peoples Hydropower Company (P).Ltd PLC Programmable Logic Controller PPA Power Purchase Agreement Ppm Parts per million PT Potential Transformer Q40% 40% probability of exceedence RCC Reinforced Cement Concrete RoR Run of River rpm Revolution per minute S/S Sub-Station SF6 Sulpher Hexa Flouride SHP Small Hydropower Project Sq. km square kilo meter SS Substation ST Surge Tank T/L Transmission Line ToR Terms of Reference U$ US Dollar U/S Up Stream UH Unit Hydrograph US Upstream VAT Value Added Tax VCB Vacuum Circuit Breaker VDC Village Development Committee WL Water Level XLPE Cross Linked Polyethylene


Peoples’ Hydropower Company (p) Ltd 1

SECTION-1: COMPANY INFORMATION

1. PROFILE OF COMPANY

LLooccaall PPeeoopplleess aarree aallssoo aabbllee……

Peoples’ Hydropower Company (P) Ltd

Profile of the Company 1. Registration No. : 48657/064/65

2. Place of Registration : Office of the Company Registrar, Ministry of Industry, Commerce & Supplies

3. Date of Registration : 2064/6/22 (9 October 2007)

4. Type of Company : Private Limited Company

5. Registered Address : Kathmandu -9

6. Current Address : KMC-32, Anamnagar Kathmandu, Nepal

7. Postal Address : P.O. Box :14165, Kathmandu 8. Contact Details : Tel: +977-1-6222304,

Fax:+977-1-4229124 E-mail:[email protected]

9. Objectives of Company : • Carryout hydropower project survey, study, construction and distribution from the rivers in the nation

• Carryout Training, Seminar, Workshop to produce manpower related to hydropower

• Purchase power from different producers and distribute • Generate electricity and sell that power to national and

international company to gain foreign currency • Acquire projects under construction or unable to operate on

procurement or lease basis for operation • Explore alternative energy sources like wind power, solar,

biomass etc study them and implement • Collect small investor for the investment on company and

participate on development • Provide investment opportunity to all range of population

like, local level peoples, government bodies, organization, corporations, industrialists, businessman, serviceman, and general peoples etc

• Impart cooperation with government for the construction of infrastructure for the development of the projects

• Manage separate fund for the welfare and cooperation of local peoples on the basic needs line health, education, self employment etc

10. Present Venture : Promoter of Super Dordi-Kha HEP, 49.6MW run-of-river type

hydropower project in Dodri in Lamjung District. 11. Capital Structure : Current Status (Million)

Authorized Capital : Rs. 1000 Issued Capital : Rs. 800



12. Board of Directors : 7

13. Tax Office Registration : PAN NO. 302754315

14. Bank : Janata Bank Nepal Ltd. New Baneshwor, Kathmandu

2. PROFILE OF DIRECTORS & PRINCIPAL PROMOTORS

2.1 Board of Directors

A board of directors has been formed for smooth operation of company as well as project and it has

implimented from 2066/04/01 and current board members of the Peoples’ Hydropower Company Pvt.

Ltd (PHCPL) are as follows:

a) Mr. Udaya Nepali Shrestha, Chairman b) Mr. Keshav Bdr. Rayamajhi, Managing Director c) Mr. Gokul Shrestha, Director d) Mr. Dharma Dhoj Parajuli, Director e) Mr. Arjun Gautam, Director f) Mr. Bhim Pd. Paudyal, Director g) Er. Shailendra Guragain, Director

2.2 Profile of Directors and Major Investors

A. U.N. Shrestha

Presently Mr Udaya Nepali Shrestha is the Chairman in the Board Director of PHPC . Mr Shrestha holds Master's Degree in Management, Economics and Law from Nepal and abroad. Mr. Shrestha has served in Nepal government in different capacity for 30 years. Just before retirement as the Vice chairman of Nepal Law Reform Commission for 3 years (2003- 2006), he was the Secretary of Ministry of Law, Justice and parliamentary Affairs for five years (1997- 2003).He has experience of different national & international conferences, seminars, meetings, course study, trainings etc. in matter relating to law economies and administration. Mr. Shrestha has visited many countries of the world.

His involvement in different corporate and social sectors includes the followings:

Present Involvement:

• Chairman – Janata Bank Nepal Ltd.

• Chairman – International Development Lawyers' Organization

• Chairman – (DEAN) Democracy and Election Alliance for Nepal

• Chairman – Peoples Hydropower Company Pvt. Ltd.

• Executive Member, Nepal Councial of Arbitration

• Excutive Member, Nepal Law Sociaty

• Chief Legal Advisor – Patan Academy of Health Science

• Chief Legal Advisor – Karnali Academy of Health Science

Past Involvement:

• Chairman – Nepal SBI Bank Ltd.

• Chairman – Nepal Investment Bank Ltd.



• Board Director – Nepal Telecommunication Corporation.

• Board Director – Rastriya Banijya Bank.

• Board Director – Administration Staff Collage.

• Board Director – Nepal Guthi Sansthan.

• Member (Judge) – Administration Court of Nepal.

B. K. B. Rayamajhi

Mr. Rayamajhi is Managing Director in the Board of Director of PHPC and is of 50 years in age. Mr. Rayamajhi holds Bachelor’s Degree in Management (B. Com.) from Tribhuvan University, Nepal. Mr. Rayamajhi has served in different hydro companies for last 5 years in various responsible positions. He is currently devoted to hydropower development and other corporate sector with the following professional affiliations: • Managing Director, Peoples Hydropower Company (P) Ltd. • Director, Janata Bank Nepal Ltd. • Propritor, New Kodari Traders • Managing Director, Chandra Surya International Nepal Pvt. Ltd. • Director, Janata Press Pvt. Ltd. • Director, Alpine Live Stock & Bio-Trade Pvt. Ltd. • Director, Sadabahar Trading & Investment Co. Pvt. Ltd.

Mr. Rayamajhi is Senior Vice-President of Nepal Trans Himalayan Boarder Commerce Association.

C. Gokul Shrestha

Mr. Shrestha is Board of Director of PHCPL and is of 52 years in age. Mr. Shrestha holds Bachelors Degree in Business Administration from Tribhuvan University of Nepal. Mr. Shrestha has been serving in woolan business as well as energy sector in various responsible positions. Currently, he is also devoted to hydropower development and other corporate sectors with the following professional affiliations:

• Chairman, Gogang Investment Co. Pvt. Ltd • Director, Peoples Hydropower Company Pvt. Ltd • Advisor,(Founder) Janata Bank Nepal Ltd. • Director, Upper Hewa Hydropower Project 8.5 MW • Director, Janata Press Pvt. Ltd • Director, Alpine Livestock Company Pvt. Ltd • Propriter, Koshi conacern (woolan Business) • Propritar,sachidananda Hojiyari

D. Dharma Dhoj Parajuli

Mr. Parajulil is Director of the Board of Director of PHPC and is of 43 years in age. Mr. Parajulil holds Bachelor’s Degree in Economics and Bachelors Degree in Law. Mr. Parajuli has been serving in Educational sector as well as business sector in various responsible positions. Currently, he is devoted to the hydropower development and other corporate sectors with the following professional affiliations: • Director , Peoples Hydropower Company Pvt. Ltd • Director, Janata Bank Nepal Ltd • Chairman, Merchant Investment Company Ltd. • Founder, Santona Memorial Multiple Campus

E. Arjun Prasad Gautam

Mr. Gautam is Director of the Board of Director of PHPC and is of 48 years in age. Mr. Gautam has served in different hydro companies for last 7 years in various responsible positions. Currently, he is



devoted to the hydropower development and other corporate sectors with the following professional affiliations: • Director , Peoples Hydropower Company Pvt. Ltd • Director , Barun Hydropower Company Pvt. Ltd (4.5 MW in operation) • Founder, Janta Bank Nepal Ltd. • Managing Director, Sadabahar Trading & Investment Co. Pvt. Ltd. • Director, Alpine Live Stock & Bio-Trade Pvt. Ltd. • Director, Janata Press Pvt. Ltd. • Founder, Silk Road International College

Mr. Gautam is Secretary of Nepal Trans Himalayan Boarder Commerce Association.

F. Bhim Lal Paudyal

Mr. Paudyal is Director of the Board of Director of PHPC and is of 47 years in age. Mr. Paudyal has served in different hydro and other companies for last 5 years in various responsible positions. Currently, he is devoted to the hydropower development and other corporate sectors with the following professional affiliations: • Director , Peoples Hydropower Company Pvt. Ltd • Founder , Barun Hydropower Company Pvt. Ltd (4.5 MW in operation) • Chairman, Forever Business Group Pvt. Ltd. • Director, SOPAN Investment Company Ltd. • Chairman, Richmond College • Founder, Janata Bank Nepal Ltd. • Chairman, Janata Press Pvt. Ltd. • Chairman, Janata Traders Pvt. Ltd. • Chairman, Saugat Footwear International Pvt. Ltd. • Founder, Innovative Development Bank Ltd. • Founder, Lumbini Insurance Company Ltd • Managing Director, Sadabahar Trading & Investment Co. Pvt. Ltd. • Director, Alpine Live Stock & Bio-Trade Pvt. Ltd. • Founder, Agni Cement Industries • Founder, Kisan Pipe Industries Pvt.Ltd • Proprietor, Saugat Impex • Director, Royal Shoes Industries Pvt. Ltd Mr. Padyal is Executive member of Nepal Chamber of Commerce and also First Secretary of Nepal Trans Himalayan Boarder Commerce Association.

G. Mr. Shailendra Guragain

Mr. Guragain is Director of the Board of Director of PHPC and is of 45 years in age. Mr. Guragain is an Environmental Engineer with postgraduate M. Sc. degree in Environmental Engineering from Mascow, Russia; and als Executive MBA from Pokhara University Nepal and internship on soil and ground water quality in OMEHAM Amsterdam and Chemilinco Engineering in The Netherlands. Mr. Guragain has served for last 10 years in various responsible positions. He is currently devoted to hydropower development with the following professional affiliations: • Chairman, Barun Hydropower Development Company P. Ltd. (Hewa Khola 4.5 MW in operation) • Chairman, Bojini Hydropower Company P. Ltd. (Jiri 2.4MW under construction) • Director, People’s Hydropower Company P. Ltd. (Dordi Khola 50 MW) • Chairman, ScHEMs College • Director, Arun Valley Hydropower Dev. Company Ltd. (Piluwa Project 3 MW in operation) • Director, Nyadi Group P. Ltd. (Siuri Khola 5.0MW under construction final stage) • Director, Upper Hewa Hydropower Project 8.5 MW • Director, Down Piluwa Project 10MW • Director, Janta Bank Nepal Ltd.

Mr. Guragain is an Executive Member as well as life member of Small Hydropower Developers Association and member of Mitra Kunj, Nepal.



3. CORPORATE PLAN & ANNOUNCEMENT

3.1 Corporate Announcement

The Board has announced some important notice and information about the development, investment, construction and operation of the project through its corporate planning and management of the company. A general information paper has been issued in Nepali language to attract the potential investor around the globe. Specially, there is provision for potential investors including NRN, locals, and other investors inside the nation and abroad.

3.2 Provision for Corporate & Other Investors The board has allocated share for the provision of incorporating corporate investors which infact contributes primarily on financing of the project leading to implementation. The corporate investment can be as high as 49%. Any other investors are kept open for investment in this window.

3.3 Provision for Local Peoples The local peoples are encouraged to invest in this project as much as they can and allocated up to 10% of the share. The participation of local is considered as token of good faith from the local peoples and sign of prosperity. The local peoples can invest in organized way by formation of a cooperative and can send their representative on the board representing the local peoples.

3.4 Management Core The board has delegated some of the personnels in major role as functional management. Four members of the Board of directors are deputed for overall day to day management and operation of the company. Besides the core there is technical and financial cores helping the implementaiton of the project in time.

Group Members Chairman - Mr. Udaya Nepali Shrestha Managing Director - Mr. K. B. Rayamajhi, Director - Mr. Gokul shrestha Director - Mr. Dharma Dhoj Parajuli Director - Mr. Arjun Gautam, Director - Mr. Bhim Pd. Paudyal,

3.5 Technical Core Some experienced and energetic technical persons are considered as trechnical core as well as development partners with the major function related to technical and implementation issues of the project. Following members are present in the technical core group leading to overall technical matter and decision for the construction of the project. There are other experts in contact roster but the following core is responsible for technical matters of the project and implementaiton:

Group Members Design Coordinator - M. R Dahal Eng. Geologist - Dr. Ananta Gajurel Tunnel Design - Babu Kr Bhandari Economic /Finance - Mr. Narayan Pd Paudel, CA Hydraulic Design - Er. G. P. Pantha E&M and Transmission Line - Er. Santosh Dhakal Hydrological Study - Mr. Jagat Bhusal

3.6 Account/Finance Core The core is delegated for day to day function relating to finance, tax, record keeping and operation of Accounting system for prompt reporting. Four members are working as Account Core, dealing all financing and accounting matters, and informing the Board of Directors about the status and smooth



operatin of company. The team will also be devoted for fund raising and cash flow planning with the help of other board members time to time, having the follows members presently:

Group Members Representation of Board and Management Committee - K. B. Rayamajhi Finance Controller - N. Pd. Paudel, CA Accountant - Ram Kafle



SECTION-2: PROJECT RELATED DETAILS

1. INTRODUCTION 1.1 Background

Super Dordi Hydropower Project-Kha is located in Dordi Khola in Lamjung District of Nepal. There are

lots of projects in Marsyandi basin under detailed study and construction stage. The developers have

started the activities for the preparation of construction of the project.

This current report presents summary of the company and project information with financial projections

based on feasibility study produced on July 2011 and updated including informations on Mar 2012

incorporating some changes on company structure and new market financing scenarios. This report

includes the followings:

• Company related information

• Corporate plan for the development of the project

• Basin parameters description like discharge, head, geological study

• Technical information about project general arrangement and planning

• Cost breakdowns of different headings and potential revenue analysis of the project.

• Financial projections, financial indicators with sensitivity analysis.

The outcome of this report is expected to be useful for the purpose of reference to potential investors,

funding agencies to quickly understand the project details.

1.2 Project Location

Super Dordi Hydropower Project-Kha (49.6MW) site is located in Dhodeni and Phaleni VDCs of

Lamjung District in western part of Nepal. Geographically the project area is located between longitudes

84034’15” E and 84031’00” E and latitudes 28018’50” N and 28016’20” N which is Survey License

boundary provided by DoED.

In the physiographical regions, the project area belongs to middle and higher mountains with upper

catchments of Dordi Khola extended up to the elevation of 7893 m above the mean sea level. The Dordi

Khola originates from the south-eastern slope of Himal Chuli (7893amsl), and western slope of Baudha

Himal (6672amsl) of Lamjung district. The river has contribution of snow catchment mostly in the lean

season. The location map of the project site is shown in figure below:



Figure 1-1: Project Location Map Showing its Components

1.3 Accessibility

There is transportation and access facility is available from Bhoteodar, on the way to Besisahar, up to

Jhumswara Village which is just 3.5km d/s of powerhouse. Super Dordi Hydropower Project -Kha has to

build access road from Jhumswara village to PH, adits and headworks site.

Table 1-1: Road Distance to Project Site SN Distance from To Distance (Km) Type of Route 1 Kathmandu(Kalanki) Dumre 128.97 Prithivi Highway 2 Sunauli Narayanghat 137.9 Siddhartha-Mahendra Highway 3 Narayanghat Dumre 60.52 Black Topped Highway 4 Dumre Bhoteodar 33.43 Black topped district road 5 Bhoteodar Jhumswara

Village(Chhote Khola)

22 Earthen road already built

6 Jhumswara Village Power House 3.5 To be constructed

7 Power House Proposed headworks site

12 To be constructed

Total Road Length From Kathmandu to PH 187.9

Total Road Length From Narayanghat to PH 119.45

Total Road Length From Sunauli to PH 257.35

Although there is earthen road from Bhoteodar to Jhumswara Village, this project has to take the

responsibility of widening the road, clearing and maintenance in coordination with the other projects in

Dordi Khola and the VDC's near the road alignment.



Figure 1-2: Project Location & nearest markets

Project Area

1.4 Project Development & Stages

After identifying the project in 2007, PHCPL applied for survey license in Department of Electricity

Development (DoED), Ministry of Energy, GoN. PHCPL obtained the survey license (Bi.Bi.Bi. 065/066

Bi.U. Sa.) to develop the project of 21 MW capacity.

After site visit of experts and detailed investigation, the project has been upgraded to 49.6MW capacity

and feasibility study has been completed, the forthcoming activities like IEE, power evacuation

agreement, detailed design, PPA and financial closure are in line. The developer are planning to start

infrastructure works at site for the implementation of the project



The following development chart can be useful to understand the concurrent status of the project and

respective action ahead.

Figure 1-3: Progress Development stages and flow chart for reference

Site Visits, Topographical, hydrological, Geological & T/L Surveys

Further Geotechnical Investigations and tests

Scoping and TOR for IEE and its approval

Final Feasibility Study Report

Interconnection Agreement and evacuation details

Power Purchase Agreement (PPA)

Generation License Loan arrangement & Financial Closure

Construction Detailing

Construction, Testing & Commissioning

Tender Document Detailed Engineering

Tendering, Evaluation Award & Mobilization

IEE Study Approved

Letter of Interest from Bank/FIs

Alternative Study Project Optimization & Up-gradation,

General arrangement

Commercial Operation

Survey License & Study of 21MW option



2. PROJECT DESCRIPTION 2.1 General Arrangement

The discharge of Dordi Khola shall be diverted to the left side of the river and follows towards Dhodeni

VDC. Course material shall be settled in surface Gravel Trap. There will be inlet portal below the forest

of Nalekharka at the rocky outcrop and fine sediment shall be settled down in underground desander.

Figure 2-1: Components Layout including alternatives

Headrace tunnel alignment follows the left bank of Dhodeni VDC and finally joins underground surge

shaft U/S of Taje Village in the ridge line.

There will be one Access adit for desander; and other flushing tunnel at the end of desander. For 4.8km

long headrace, two intermediate adit at Prumu Khola and Kyame Khola are proposed. Prumu Khola

discharge will be collected in headrace tunnel from the same access tunnel.

After the surge tank, there will be underground inclined penstock shaft which finally connects to the

surface power house having vertical axis Pelton turbines. Finally, the discharge from the tailrace is

released back into Dordi Khola. The power shall be evacuated to National grid through 132kV single

circuit transmission line.



2.2 Salient Features

The following is the brief salient feature of Super Dordi Hydropower Project-Kha.

1. Project Details

Project Name :

Location of Project Site : Dhodeni and Phaleni VDC of Lamjung

Type of Scheme : Run of River

Installed Capacity : 49.6MW

Gross head : 601.42m

Rated Design head : 584.36 m

Design Plant Discharge : 9.9 m3/sec at Q40%

2. Hydrology

Catchment Area Dordi : 142.50 sq km

Catchment Area Purmu : 9.10 sq km

Average annual precipitation : 2035 mm/year

100 years Design Flood (HW) : 300 m3/sec

Design Discharge Dordi Intake : 9.30 m3/sec (Q40%)

Design Discharge Prumu Intake : 0.60 m3/sec (Q40%)

3. Headworks

Diversion structure : Free flow weir

Length of weir : 17.0m

Weir crest elevation : EL 1847.0msl

Undersluice : 1 Vertical Sluice gate

Side Intake : 3.5x1.2 - 3 nos

4. Gravel Trap

Type : Rectangular

Particle Size to be settled : 5mm

Size of Gravel Trap : 3.0mx1.75-5.5 m; 40 m length

Bed Slope : 1:10(Main Part)

5. Desander

Type : Dufour Double Chamber

Particle Size to be settled : 0.15mm

Size of Desander : 2 Chambersx82x10.0mX7.57m-9.81m;

Bed Slope : 1:50

Flushing Tunnel Length : 191.0m

6. Headrace Tunnel

Tunnel Length : 4864 m

Size of Tunnel : D shaped(2.6m and 1.3 radius at top)

Flushing Tunnel at Desander : 2.0mx2.0 Inverted "D" shaped



Access Tunnel to Desander : 2.6mx 2.6m "D" Type x 90m

Adit Tunnel at Purmu : 2.6mX2.6m (189m)

Adit Tunnel at Kyame : 2.6mX2.6m (390m)

Rock Trap : 2.6mX2m; 20 m length

7. Surge Shaft and Adit to Shaft

Type : Underground, Cylindrical, Concrete Lined

Dia of Tank : 6.0m

Dia Of orifice : 2.0m

Total Height : 43.85m

Adits for Surge Shaft : 58.0m length

Size of Adits : 2.6mX2.6m inverted "D" Type

8. Penstock Shaft

Type : Steel Lined Inclined Shaft

Length : 1185.0m (Including All Branches)

Pipe Material : High Strength steel

Size of Pipe : 2.0m dia, 10-50mm

Number of Adits for Shaft : 1 nos

Penstock Access Adit : 1x Inverted “D” (2.6mX2.6m) 186m

9. Power house

Type : Surface with bedrock cutting

PH dimension (l x b) : 45 x 15 m

Height of PH building : 10.2 from Floor Level

10. Tail race

Type : Rectangular RCC

Size (wxh) : (2.0 to 4.0m) x2m

Length : 96.0m (Including all Units)

11. Turbine

Type of Turbine : 3 units of Pelton in vertical arrangement

Rated discharge for each turbine : 3.3 m3/s

Rated Output for each unit : 17500 kW

Rated Efficiency : 91 %( at 100% discharge)

12. Generators

Generator : 3 nos x AC Synchronous

Excitation : Brushless excitation

Rated Voltage : 11.0 kV

Power Factor : 0.85

Layout : Vertical

Rated Efficiency : 96 %



Rated Output : 19500 kVA

13. Power Transformer

Type : Step up power transformer

Rated Efficiency : 99 %

Rated Capacity : 20500 kVA

No of Unit : Single phase x 3 units and 1 spear unit extra

Type of Cooling : ONAN(oil natural air natural)

Voltage Ratio : 11 /132 kV

14. Station Supply Transformer

Type : Indoor type

Rate Power output : 200 kVA

No of Unit : 2

Type of Cooling : ONAN

Voltage Ratio : 11.0/0.4 kV

15. Transmission & Interconnection

Power House – Proposed Kirtipur S/S : 132kV x 5.2 km

Type of Circuit : Single circuit

Line Conductor : ACSR WOLF 150 mm2

Proposed Interconnection Point : Dordi 132kV Hub Substation at Kirtipur

16. Power and Energy

Installed Capacity : 49.6 MW

Total Gross Energy : 301.525 GWh

Bill Energy after Evacuation Loss : 289.464 GWh

Wet Saleable Energy : 244.105 GWh (84%)

Dry Saleable Energy : 45.360 GWh (16%)

17. Construction Period : 2+3 years

18. Financial Indicators

Base Cost of the Project (without IDC) : NRs 6,795.326 millions (13.7 coror/MW)

Cost per kW without IDC : U$ 1,612 (1 US $ = NRs. 85)

Cost after Interest During Construction : NRs. 8,011.536 millions (U$ 100.144 million)

Yearly Gross Revenue (1st year) : NRs. 1,655.736 millions(US$ 20.696 millions)

Loan/Equity Ratio : 70:30

Loan Interest Rate : 12%

IRR : 16.07%

B/C Ratio : 1.37

EIRR : 26.58%



2.3 Hydrology & Design Discharge

Dordi Khola is one of the major tributaries of Marsyandi River flowing from North to South and westward

direction in Lamjung district of Western Development Region, Nepal. Dordi Khola joins Marsyandi River

near Bhoteodar Lamjung, D/S of Middle Marsyandi Hydropower Project’s headworks.

DHM has a gauging station in Dordi Khola at Ambotebagar and there is discharge record from 1986

from this station which is reliable source for discharge at the river. Additionally, Purmu shall be collected

on the way on headrace tunnel alignment through construction adit in Purmu Khola. The hydrology is

considered as reliable and safe for power generation.

Figure 2-2: Super Dordi Catchment (Dordi & Prumu Khola)

Ganesh Himal Buddha Himal

Dordi River

Purmu Khola

Tunnel Alignment

Intake

2.3.1 Adopted Mean Monthly Flow for Dordi Intake

The long term mean monthly flows of Dordi Khola for the power generation are adopted from regional

regression method and the value of MIP method is used for Purmu discharge. The available mean

monthly flow available for power generation in the project is presented below:

Table 2-1: Mean monthly flow available at Intake of Project Site (m3/s) Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Dordi Intake 3.48 2.93 2.93 3.08 6.68 13.19 40.97 47.15 32.85 14.66 8.31 5.11

Purmu Intake 0.26 0.19 0.14 0.11 0.28 0.64 1.55 2.67 1.76 0.85 0.44 0.33

Tot. Available discharge 3.74 3.12 3.07 3.19 6.96 13.83 42.52 49.82 34.61 15.51 8.75 5.44

10% minimum release 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31 Flow to Turbine 3.43 2.81 2.76 2.88 6.65 9.60 9.60 9.60 9.60 9.60 8.44 5.13



Flow Veriation Pattern

0

10

20

30

40

50

60

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecMonths

Dis

char

ge (m

3/s)

Flow toTurbine

AvailableDischarge

Figure 2-3: Flow variation pattern in the river and design discharge

Super Dordi Hydropower Project-Kha will utilize the design discharge as indicated in table above and

the project can be developed with Q40% discharge as per prudent utility practice or even lower based

on optimization study. The design discharge equivalent to 9.3 m3/s and 0.6 m3/s from Dordi and Prumu

irrespectively may be utilized for power generation for the proposed project.

2.3.2 Discharge measurement and verification

Since the identification of the project, a gauging station was established near intake site. The data at

Dordi intake and Prumu collection intake are being collected since Jan 2009. The spot measurements

show the sufficiency on predicted data.

2.4 Civil Works Components

There will be major components like Headworks, Gravel Trap, Desander, and Headrace Tunnel, Surge

shaft, Pressure Shaft, Powerhouse, Tailrace and Switchyard etc. Besides these, for the access of tunnel

there will be adits and portals with muck disposal facilities and protection structures.

2.4.1 Headworks

There will be free flow weir of spillway length 17m having crest at 1847m elevation. There will be side

intake with three orifices each of 3.5 m x1.2 m. Vertical gate of 3.0 m x3.0 m size shall be provided

before the orifice of side intake used as undersluice for flushing. There will be trash rack in the intake.

The top of the weir shall be fully armored with selected hard stone lining to prevent from erosion.

2.4.2 Gravel Trap & Side Spillway

Gravel of size up to 100 mm can enter from the intake to the gravel inlet chamber and gravel trap. The

proposed gravel trap is located just downstream of the intake in left bank provided with a side

spillway.Gravel size up to 5 mm shall be settled and flushed back to the river from the gravel trap



2.4.3 Desander & Flushing Arrangement

Based on the topographic condition, underground Dufour type of continuous flushing Desanding basins

have been proposed for settling of finer particles. Since Super Dordi is a high head project, the basin

has been designed in order to settle the particle size up to 0.15 mm at minimum of 90% trap efficiency

and the desander has been designed for sediment load of 5000 ppm.

There is a flushing tunnel (2m diameter, 191m long) provided at the end of Desanding basin connected

to flushing duct and flushing gates of 0.8m wide and 1.0m deep. There will be an access tunnel of

Inverted D-shape, 2.6 m in diameter purposed having length of 90m

2.4.4 Headrace Tunnel, Adits & Prumu Collection works

The project area lies in the Lesser Himalayan unit in Western Nepal. The Lesser Himalaya is occupied

by medium to high grade metamorphic rocks such a, phyllite, dolomite, quartzite, schist and gneiss. The

schist and gneiss are main rock types found in the project area.

Underground Desander Stress pattern Support & plastic zone thickness in HR Tunnel

Figure 2-4: Typical Section of Underground Structures & Stress Distribution

The geology of the project area favours for tunnelling works, low pressure tunnel has been proposed to

carry clear water from desander to surge tank. The headrace tunnel has been designed as inverted D

shaped with 2.6m finished diameter. The support thickness varies depending on rock mass class.

There will be two adits from two locations e.g., one 189m long from Prumu Khola and another 390m

long from Kyame Khola of size similar to that of headrace tunnel for supporting construction works and

transportation.

2.4.5 Purmu Khola Collection from Adit

Purmukhola Adit-1 is also used to collect maximum of 0.60m3/s of design discharge from Prumu Khola

in dry season. There will be diversion weir, gravel trap/desander and collection pipe to the adit tunnel on

Purmu Khola.



2.4.6 Surge Shaft

A cylindrical underground Surge Shaft is proposed at end of headrace Tunnel and starting of pressure

shaft having 6m diameter and 43m high with restricted orifice for the following reasons.

To relief the pressure wave developed due to the water hammer at the time of sudden load rejection

from turbine through an open atmospheric zone as closest to the plant.

To protect headrace from the harmful pressure waves and water hammer.

To improve the regulation of flow by the supply required for isolated operation at fast load changes.

There will be a 58m long surge shaft Adit to facilitate construction of headrace tunnel providing a

working face form the end. For removal of loosed rock and displaced shotcrete during construction and

operation a rock trap is proposed just before surge shaft at the last of headrace tunnel.

2.4.7 Pressure shaft

An 1185 m long inclined pressured shaft with an internal diameter of 2.0m to 1.15 m is proposed to

delivery water from surgetank and headrace tunnel to powerhouse. There will be extra steel lining

varying from 10mm-50mm confirming to high pressure to be provided inside the shaft in order to resist

the water hammer.

At the middle section of the shaft, there will be an Access adit to the shaft at horizontal portion for ease

of construction works.

Figure 2-5: Location of powerhouse area on left bank of Dordi Khola

Dordi PH

Pressure Shaft

Camp Area



2.4.8 Powerhouse & Tailrace

A surface powerhouse has been proposed to install three units of Pelton turbines. The size of

powerhouse will be about 45m in length, 11 m in width and 10.2m in height from the plinth level with

outdoor switchyard.

The tail race channel is provided having length of 96m. There will be boulder rip rap at the outlet of

tailrace for protection.

2.5 Infrastructure Facilities

There will be requirement of infrastructure facilities line access road, camp facilities, storage & godown

and construction power facilities for the project for construction and operation of the project.

2.5.1 Access Road:

From Bhoteodar to Jhumswara (Chhote Khola), there is already 22 km long earthen track in operation

which needs maintenance each year after monsoon. From Chhote Khola to Power a new 3.5Km long

track needs to be opened and from PH to Headworks 11.7Km long earthen road is planned from PH to

headworks crossing through intermediate adits. In Kyame Khola, and Phurmu Khola.

2.5.2 Camp Facilities

The project requires camping facilities including staff quarter, cafeteria/kitchen, storage godown, office

building, guest house etc for construction and operation of the project. These facilities have to be

constructed before starting the project so that they can be used for construction purpose. There is the

requirement of a staff quarters near powerhouse, headworks and temporary at the middle of alignment.

Temporary facilities at intermediate places like Taje village have to be rented out during the

construction.

2.6 Metal Works

2.6.1 List of Metal works Components

The project requires various metal works for steel lining at pressure shaft, gates and specials including

MS sheet supply, fabrication, erection, testing & commissioning.

The following lists of components are needed in the project and are categorized as follows.

Supply of Mild Steel sheets for manufacturing of liner pipe for pressure shaft.

Transportation of mild steel sheets to workshop.

Fabrication of pipe, transportation to site, erection and testing.

Specials in penstock like bell-mouth, manhole etc.

Hydro mechanical works for gates, trash racks, stop logs, etc.

Supply and installation of PH roof truss, entrance gate etc.

The different items are estimated for metal works totalling to 1957MT of the steel for Super Dordi

Hydropower Project- Kha.



2.6.2 Penstock Shaft liner

The fabricator has to perform the following tasks for liner pipe and its bends:

Fabrication of liner & its bends.

De-rusting and painting.

Transportation to site.

Erection at site.

X-ray/NDT tests.

Pipe material proposed for the liner is of high strength steel confirming to IS standard. Zinc rich primer

and epoxy paint with total film thickness of 250-300 micron shall be coated for corrosion protection..

2.6.3 Gates, Trash rack & Stoplogs

There will be requirement of gates, trash rack and stop logs, for effective operation, control and

maintenance located at various places in the project. There as 7 different type of gates proposed for the

project mostly placing manual option for operation.

There are two Trashrack at the inlet of the project. There is requirement of stoplog to facilitate the repair

and maintenance of gates while being in operation.

2.7 Electromechanical Components

2.7.1 Turbine

Three units of Pelton turbine each of 17500 kW are proposed in vertical shaft arrangement on gross

head of 601.42 m and rated flow of 3.3 m3/s each having 91% efficiency. The turbine shall be provided

with a complete set of inlet valve, runner, spear valves, jet deflectors, auxiliary control equipment and

other accessories.

2.7.2 Governor

Under different load conditions, water flow is regulated and controlled with the help of governor. The

system shall allow speed and/or frequency control, water level control and external power control. It

should also have manual opening facilities as well as automatic system with an electronic controller

and hydraulic actuator.

2.7.3 Inlet Valve

Inlet valve is provided for opening and safe closure of the flow under maximum static as well as dynamic

heads including operations on sudden rejection of load and speed overrun beyond certain limit. The

operating mechanical operation shall be hydraulic with pressurized oil system provided with gravity

counterweight.

2.7.4 Generator

Three sets of 3-phase, 50 Hz AC, each of 19500 kVA vertical shaft synchronous generator are proposed

for power generation. The rated efficiency of the generator is considered 96%. The generators shall be

possible to operate in black start during the absence of grid



2.7.5 Step-up Transformer

The power generated at 11kV level shall be delivered to 132 kV voltage level with the help of step up

power transformers. Four single phase transformers including one spear of each of 20500 kVA capacity

shall be installed in an outdoor switchyard. There will be 2 x 200kVA station supply transformers in

powerhouse switchyard.

2.7.6 Outdoor Substation & Switchgears

There will be outdoor substation incorporating the system for controlling and protection of the

equipments. The substation shall consists of SF6 circuit breaker in 132 kV voltage level, Isolator for

disconnecting on offline mode, Lightning Arresters , CT/ PT for measurement and control and also 2

nos of 200kVA station supply transformers

2.7.7 Protection & Control System

A protection scheme with an automatic control circuit will be provided to operate machine in manual as

well as automatic operation. The control system shall isolate generator in case of fault or abnormal

operation. The following protection schemes shall be incorporated

- High voltage/low voltage, Over current, Short Circuit current, earth fault/phase unbalance

- Over temperature, low pressure

- Over/Under frequency, Reverse Power, loss of excitation,

- Grounding system

- Automatic Synchronising equipment

- Battery and Battery charger

2.8 Communication System

The numbers of telephone lines are proposed in the project mainly at powerhouse, one for remote

control and the other at staff quarter of the project. The area is already facilitated by CDMA phone

facilities. Similarly, the reliable communication shall be provided between powerhouse, intake and 132

kV interconnection Substation.

2.9 Transmission Line (132kV)

A 132 kV single circuit transmission line with 5.2 km in length is proposed from PH to proposed 132kV

interconnection Dordi Corridor Hub by NEA at Kirtipur. The length of the line shall be 5.2km up to

Kirtipur. Ultimately, the power shall be evacuated through. Wolf conductor shall be used in this

transmission line.

1.1 Interconnection & Metering Facilities Interconnection facilities include 132kV line bay with SF6 circuit breaker, isolators, Lightening arrestor

metering and control facilities with CT, PT and energy meter for the purpose of trading power to the 132

kV common busbar. There will be control panels inside control room and switchgears outside in outdoor

switchyard. The Energy meter of 0.1 accoracy class shall be installed in the interconnection point



2.10 Construction Power

There is at least 12 km 11kV line needs to be constructed by the project from the nearest NEA 11 kV

distribution line for construction power. Around 750-1000 kVA load will be consumed for mechanical

workshop with 200 kVA load and, 4 units of 200 kVA transformers each near Adits.

Additionally, backup diesel generators of at least 2 x 250 kVA will be utilized so that the project won’t be

disturbed due to load shedding or absence of power.

3. CONSTRUCTION PLAN

The company has plan of implementing the project as soon as PPA and Financial closure are

completed. This chapter describes some of the basic planning for the construction of the project.

3.1 Mode of Project Implementation

Hydropower projects can be implemented by one of the following procedures:

i. EPC (Engineering, procurement and construction) Turnkey Contract ii. Completely BoQ based contracts with supervision from client iii. Mixed contracts with some direct supervision, some lump sum contract, and some BoQ based

contracts supervised by clients team and backup by consultants

3.1.1 EPC Contract

EPC Turnkey mode of contract is the easiest to Client as the Contractor is responsible for all activities in

Lumsum basis including design, construction, supply, erection and commissioning but it requires foreign

contractors fully capable for all works and ultimately makes project cost too high.

3.1.2 BoQ based contract

The second mode of contract execution would require hiring of highly experienced construction team

which and coordination of several contractors. Not all works can be controlled in BoQ based contract

which will require lots of sub-ordinations and management efforts,

3.1.3 Mixed contract

A mixed type of contract management, involves various mode of implementation contracts. Some works

can be done on direct supervision from the client (Amanat) and some can be done on BoQ based and

some can be done on Lump Sum based contract depending upon the nature and ease of contract

administration.

This type of contract may be effective for Super Dordi Project. Various works can be done on different

type of contracts eg

Infrastructure works : Direct supervision Civil works : BoQ based contract Metal Works : BoQ based contract after Company buy sheets Electromechanical : Lump Sum basis (Water to wire contract) Transmission Line : BoQ based contract Interconnection : BoQ based contract



3.2 Contract Packaging

It is essential to consider the local resources, contractor’s capability, local expertise, supervision etc to

prepare the contract packages and their scope of works so the timely completion can be ensured and

cost is minimized. For Super Dordi Hydropower Project, the following contract packages are envisaged:

Package 1: Infrastructure Works Access Road construction and maintenance

Supply and installation of Bridge

Camp facilities

11kV Construction power and distribution lines

Package 2 : Civil Works Headworks construction

Supply and management of Blasting material

Headrace Tunnel construction

Surgetank and surge shaft construction

Powerhouse and Tailrace

Package 3: Metal Works Supply of MS Sheet

Transportation of Sheet to Workshop

Penstock liner Fabrication, Errection and testing

Fabrication and Erection of Gates, trash rack and Specials

Package 4: Electro-Mechanical & Switchyard Equipments Water to Wire Electromechanical Equipment inside powerhouse

Out door switchyard equipments

Package 5: Transmission and Interconnection facilities 132kV Transmission line

Interconnection Facilities at interconnection point

For reducing costs, many small supportive works for infrastructure and supplies can be done by the

company itself as much as possible to reduce cost.

3.3 Preparatory Works

The preparatory works of are land acquisition followed by the construction of access road, camp

facilities, access tracks, transmission line for construction power up to headworks site and adits. There

will also requirement acquiring of working area, drinking water supply, fixing of quarry sites, sites for

construction equipment, workshop area, contractors camp & batching plant etc to be managed for the

construction works.

All these works are scheduled to be completed before mobilization of main contractors for the project components.

Land procurement and lease Access Road Camps facilities, water supply, electricity and sanitation facilities Temporary facilities and Godowns Construction Power Communication System etc.



3.4 Organization Setup

The construction setup of Super Dordi Kha HEP requires management of internal and external

resources regarding manpower and logistics for project supervision and management. There is

requirement of head office at Kathmandu and site office at Super Dordi HP Site. An experienced

technical team comprising of project engineers, supervisors and site inspectors shall be deputed at site

for construction supervision for each sites. The following organizational setup is recommended for the

construction and supervision of the project.

Figure 3-1: Organizational Setup.

General Assembly

Board of Directors

Managing Director

Resource Consultants Finance & Legal Advisors

Project Office Head Office

Project Manger

Administrator

Design & Support Cell (Hydropower, Geology, Civil) Accountant & Assistant

Site In-charges • Eng. Geologist • Civil Engineer • Mechanical Eng

Project Engineer

Drivers/Runners

Field Geologist, Surveyor, Electrician, Mechanics

Support Staff/Helpers

Accountant/ Store keeper

Lab In-charge & Assistants

Social-Mobilizers, Logistics

Watchman, Cook, Drivers

3.5 Construction Schedule

Super Dordi-Kha HEP construction shall be started by 2013 as presented on the schedule. The construction period of the project is estimated as 36 months from the starting of the construction activities. The major activities and milestones of the project are presented on the table below:

Table 3-1: Major milestones for implementation of the Project

SN Activities Latest Completion Target



1 License Update and application for PPA 2011 July 20th

2 Connection agreement Aug 2012

3 PPA Apr 2013

5 Detailed Investigations (ERT & Drilling) May 2012

6 Land Procurement / lease Mar 2013

7 Generation License Jun 2013

8 Financial Closure Mar 2014

9 Staff quarters May 2013

10 Access Road Dec 2013

11 Tendering award and finalization Feb 2013

12 Contractors Mobilization Apr 2013

13 River Diversion & Headworks construction Nov 2013

14 Adit Tunnel Completion May 2014

15 Headrace Tunnel Construction July 2016

16 Surge tank and Pressure Shaft May 2016

17 LC Opening for Electromechanical Equipments Oct 2014

18 Machine Transportation Nov 2016

19 Installation of Machine and Finishing Works Mar 2017

20 Trial production & COD 01 Aug 2017 Note: Milestone dates are expected progress dates only and subject to change as per progress status. \

3.6 Further Activities 3.6.1 Environmental Study

There is no adverse impact which destroys the project environment; rather the construction of the

project shall make the life of local people more prosperous. By regulation, the project has to complete

IEE study according to the approved ToR. The IEE needs to be approved for getting generation licence.

From the initial study the following are observed.

The Project has no significant socio-economic impacts.

Local people have positive attitude towards the project implementation.

The study area does not fall in any restricted areas, National Park, Conservation Area, Buffer Zone, historical monuments, places of cultural importance.

Investment and Employment opportunity should be given priority to the local people on the basis of their skill and interest.

3.6.2 Cadastral Survey and Land Acquisition

Most of the structures are underground and do not need land acquisition. Some land is required for

access road within project alignment, camps and construction facilities. The road up to Taje Vollage

(Located at the middle of headrace tunnel) shall be developed as community road constructed by

community themselves with their own land contribution in the assistance of the project. Rest of the road

inside project alignment only needs land to be procured from the private owner but most of the land in

this area is government land which can be obtainted in lease from Government easily.



3.6.3 Further Geotechnical Investigation & Detailed Design

The further detailed geotechnical investigations like ERT, Drilling, and Seismic refraction etc shall be

carried out to verify the geological condition and quantity of rock for underground structure. The

discharge measurement shall also be continued to get more data for verification.

The detailed design shall be continued followed by tender document preparation so that there will not

be any delay in the implementation schedule.

4. PROJECT COST & REVENUE The details of estimate on project construction cost and the revenue from the project is presented for the

reference of construction planning, equity arrangement and financial management.

4.1 Presumptions

The Bill of quantity (BoQ) of the project is based on quantity estimate and item rate from Rate Analysis

The quantity estimate is based on feasibility design and drawings produced during this feasibility study

Rate analysis is prepared with prevalent Norms and market rates of construction material, manpower and machines.

The material rates and manpower rates are taken from Lamjung DDC office.

The local construction material like aggregate, stone can be managed around the project area and is available in the site.

Tunnelling rate analysis is carried out based on local ‘drill and blast technique’ for the excavation.

In rate analysis an overhead of 15% is considered for surface works contracts and for tunnelling & underground works 35% overhead has been considered based on national and international trend

The construction will be carried out using machinery and equipment as far as possible

There will be BOQ based contract and the contractors who undertake the works will be selected through competitive bidding.

The rate of machine is based on ICB contract on comparative basis on water to wire type of contract

Physical contingency 10% for surface works, 5% for metal works and electrical works, and 15% for underground works are added from the base cost.

The cost estimate is made in Nepalese Rupees and 1U$= NRs. 80 conversion

4.2 Total Cost of the Project The cost of the project is categorized on various headings for the reference of different nature of works. The rate are taken based on 2011 price level and the cost is escalated for 2 years @ 6% to find the basic construction cost to be started by 2013. The details of the cost are presented below on Table 12.1:

Table 4-1: The summary of the project (in 000)

S.No. Particulars/Cost headings Amount, (NRs, 000) Amount (US$, 000) Percentage Remarks 1 Pre-Operating Expenses 202,248 2,528 2.5% 2 Civil Construction 2,839,388 35,492 35.4% 3 Metal Works 462,910 5,786 5.8% 4 Plant and Machinery 2,026,545 25,332 25.3% 5 Transmission line & Switchyard 214,420 2,680 2.7% 6 Land Purchased & Dev 21,651 271 0.3% 7 Site Office Building 15,069 188 0.2%



8 Office Equipment 16,854 211 0.2% 9 Vehicle 57,304 716 0.7%

10 Infrastructure Development 210,866 2,636 2.6% 11 Environment Metigation 91,009 1,138 1.1% 12 Engineering & Management 576,389 7,205 7.2% 13 Project Insurance 60,673 758 0.8%

Cost without Financing 6,795,326 84,942 84.8% 14 IDC 1,216,210 15,203 15.2%

Cost with Financing 8,011,536 100,144 100.0%

4.3 Detail of Base Construction Cost The different headings have base cost as calculated value from the Quantity and rate, there is certain value of contingency, the cost after contingency is applied with VAT, the cost after VAT is escalated with 6% for 2 years to find the level of cost at the year of construction starting.

Table 4-2: The Details of Project Base cost

S. Description Base Cost

Contin- gency

Contin- gency

Total Cost

VAT/ Tax

Cost with VAT, 2011

Cost with VAT, 2013

Cost with VAT

No. in NRs % Amount in NRs in NRs in NRs in NRs in US$ A DEVELOPMENT & INFRASTRUCTURE 1 Development Cost 180,000 180,000 2 Access Road 150,981 10.0% 15,098 166,079 21,590

3 Camping Facilities near powerhouse 8,190 10.0% 819 9,009 1,171

4 Camping Facilities Near headworks 2,000 10.0% 200 2,200 286

5 Camping Facilities Rent @ Taje Village 600 10.0% 60 660 86 6 Vehicles 51,000 51,000 7 Land procurement and lease 19,270 19,270

8 Logistics and office equipments 15,000 15,000

Sub Total of A 427,041 16,177 443,218 23,133 466,351 523,992 6,550 B CIVIL WORKS 1 Headworks 56,136 10% 5,614 61,749 8,027 2 Gravel Trap 12,399 10% 1,240 13,639 1,773 3 Phrumu Collection (HW,Desander) 5,637 10% 564 6,200 806

4 Grand Total Connecting Tunnel & Portal 25,910 15% 3,886 29,796 3,874

4 Desander & Its Adit , Flushing Tunnel, Portals 292,777 15% 43,917 336,694 43,770

5 Grand Total Headrace Tunnel , Two Adits, Portals 1,016,428 15% 152,464 1,168,893 151,956

6 Grand Total Surge Shaft, Its Adit & Portal 65,164 15% 9,775 74,939 9,742

7 Grand Total Penstock Shaft, Its Adit & Portals 314,205 15% 47,131 361,335 46,974 8 Power House & Tailrace 149,176 10% 14,918 164,094 21,332 9 River Training Structure 12,574 10% 1,257 13,831 1,798

10 Switchyard 4,685 10% 468 5,153 670

Sub Total of B 1,955,090 281,233 2,236,324 290,722 2,527,046 2,839,388 35,492 C HYDRO MECHANICAL WORKS

1 Sheet Procurement (High Tensile strength) 161,367 8,068 169,436 4,236 2 Transporter to Factory 17,010 851 17,861 3 Pipe Febrication and Errection 129,747 6,487 136,235 17,710 4 Y-Furcations 20,189 1,009 21,199 2,756 5 Man hole 325 16 341 44 6 Linings 10,328 516 10,844 1,410



7 Powerhouse Roof Truss & Gate 1,980 99 2,079 270

8 Gates, Trashracks & Stoplogs 23,234 1,162 24,396 3,171

Sub Total of C 364,181 5.0% 18,209 382,390 29,598 411,988 462,910 5,786 D ELECTROMECHCANICAL EQUIPMENTS

1 Powerhouse Electromechanical Equipment 1,667,700 83,385 1,751,085 43777

4 LC Charge 8,339 417 8755

Sub Total of D 1,676,039 5.0% 83,802 1,759,840 43,777 1,803,618 2,026,545 25,332 E TRANSMISSION & INTERCONNECTION

1 Interconnection point equipment in Proposed Kirtipur Substation 72,675 7,268 79,943 10,393

2 132 kV T/L PH-Proposed Kirtipur S/S 62,101 6,210 68,311 8,880

3

Construction Power and connection with the NEA

18,750 1,875 20,625 2,681

Sub Total of E 153,526 10.0% 15,353 168,879 21,954 190,833 214,420 2,680

SUB-TOTAL A-E 4,575,877 414,774 4,990,651 409,185 5,399,835 6,067,255 75,841 F ENGINEERING & MANAGEMENT 1 Engineering, Supervision & Management cost 7.5% 404,988 2 Environmental Mitigation Cost (Except Land) 1.5% 80,998 3 Miscellenious 2.0% 107,997

4 Insurance during Construction 1.0% 53,998

Sub Total of F 12.0% 647,980 647,980 728,071 9,101

BASE CONSTRUCTION COST,2011 LEVEL 414,774 5,638,631 409,185 6,047,816 6,795,326 84,942

4.4 Detailed Cost calculation The total cost of the project has been derived based on detailed items under each heading. The details

of costs included in different heading are presented below:

4.4.1 Development cost

This includes investment before starting project construction on development works, promotional

expense, feasibility study, investigations, staff salary and office expenses, cost for licenses, connection

agreement, PPA etc. This preliminary cost shall be capitalized on project as asset.

4.4.2 Access Road

The cost of road in order to facilitate the construction & supervision works, transportation of goods and

machines at various project sites. It includes all the construction and maintenance budget for till the

completion of the project.

4.4.3 Building & Camp Houses

There will be camp facility required including site office, buildings for staff quarter, godown for th

construction and operation period as well. Also some temporary house shall be taken in rent as per

necessity.

4.4.4 Vehicles

The transportation of personnel, experts, goods and services needs dedicated vehicles for the project

and there is provision for procurement of 6 nos of 4 wheeler vehicles for the project and 5 nos of

motorcycles.



4.4.5 Land Procurement & Lease

The private land has to be procured by registration pass and government land shall be acquired by

leasing. There can be temporary use of land along the alignment which shall be rented out for the

construction period providing suitable compensation

4.4.6 Logistics and Office Equipment

The office shall have office facilities for construction supervision and operation of the project. Many

logistics like survey equipment, testing equipments, lab, furniture’s, Kitchen utensils, computer,

photocopy, fax, communication facilities etc.

4.4.7 Civil Works

This cost includes cost for river diversion, construction of diversion weir, Intake, Gravel Trap and

Desander, Tunnel, Adits, Portals, Purmu Collection works, Surge Shaft, penstock shaft, powerhouse,

tailrace and protection works etc.

4.4.8 Metal and Hydro mechanical Works

The Metal works for penstock shaft, specials like bends, Bellmouth, Y and gates and Trashracks are

included in this group.

4.4.9 Electromechanical Equipments

There will be three units of Turbine and Generators with adequate control panels and outdoor switchgears

with 132kV bus and main transformer and station supply transformer. The package includes everything

from water to wire form ICB contract.

4.4.10 Transmission and Interconnection Facilities

The power generated from Super Dordi Hydropower Project-Kha shall be evacuated through 5.2km long

single circuit 132kV Transmission line to the NEA 220/132 kV Udipur Substation via Dordi 132kV hub

located at Kirtipur of Lumjung district in Dordi Basin. Additionally, there will be metering and protection

equipment at interconnection point.

4.4.11 Engineering, Supervision & Management cost

The detailed engineering, construction supervision and management are envisaged in this heading.

Expenses of site office and head office with the cost of the manpower, overhead, travel, and

maintenance cost shall also be included in this heading.

4.4.12 Environmental Mitigation Works

The cost of mitigation is also estimated in the cost of the project. Presently, a lump sum cost is allocated

in percentage basis but more details shall be available after IEE study. Cost of land procurement is

separated to different heading as that belongs to non depreciable asset.

4.4.13 Miscellaneous

For the consideration of new items or new heading during implementation, there is 2% provision in cost

allocated as misc budget not to let project management a matter of headache to finance such variations.



4.4.14 Project Insurance during construction

There will be requirement of insurance for the safety of investment made by the project and contractor

for their equipments, manpower and materials. This is mandatory for the financing institutions now and

is not included on the rate analysis. So, a separate provision is made about 1% of the construction cost

for Insurance.

4.5 PPA Rate & Project Revenue

A scenario was prepared with PPA rate resulting different financial indicators, which states that

5.72Rs/unit is required to ensure IRR of 16% based on interest rate of fourteen percent taken as highest

referential rate on recent years.

Table 4-3: PPA rate and resulting financial indicators

SN

Rate on FY 68-69 (base year)

Rate on FY 73-74 @ 3% escalation/year

IRR

Remarks

1 4.49 5.20 14.98%

2 4.66 5.40 15.56%

3 4.93 5.72 16.07% Proposed Rate

4 5.00 5.80 16.69%

5 5.18 6.00 17.24%

The revenue is expected to increase at the rate of 3 percent per year for the first ten years from the date

of commercial operation. The ‘Deemed Generation Table’ of the project is as follows:

Table 4-4: Monthly Generation & Revenue trend as per agreed contract energy table

Installed Capacity 49600 kW Rated Eff. Design Discharge 9.9 m3/s Generator 96.50% Minimum Release 0.29 m3/s Turbine 91.30% Outage+Losses 4 % Transformer 99.00% Gross Head 602 m Combined 87.20%

Months of Nepali Calender

Plant Q

m3/s

Net Head (m)

Days of

Month

Average Power output (kW)

Max Monthly Power (kW)

Gross Energy (kWh)

Outage &

Losses (%)

Deemed Energy after Outage &

Losses

Bill Amount @

Rs 5.72/unit (Rs, 000)

Baisakh (Apr/May) 4.64 597.81 31 23,745 49,104 17,666,334 4% 16,959,681 97009

Jestha (May/Jun) 8.19 590.22 31 442,006 49,104 31,252,150 4% 30,002,064 171612 Ashadh (Jun/Jul) 9.9 585.04 32 49,104 49,104 37,711,872 4% 36,203,397 207083 Shravan (Juy/Aug) 9.9 585.04 31 49,104 49,104 36,533,376 4% 35,072,041 200612 Bhadra

(Aug/Sep) 9.9 585.04 31 49,104 49,104 36,533,376 4% 35,072,041 200612 Ashwin

(Sep/Oct) 9.9 585.04 31 49,104 49,104 36,533,376 4% 35,072,041 200612 Kartik

(Oct/Nov) 9.9 585.04 30 49,104 49,104 35,354,880 4% 33,940,685 194141 Mangsir

(Nov/Dec) 6.41 594.55 29 32,601 49,104 22,690,471 4% 21,782,852 124598 Poush

(Dec/Jan) 4.19 598.48 30 21,457 28,775 15,448,951 4% 14,830,993 84833 Magh

(Jan/Feb) 3.08 599.83 29 15,818 20,311 11,009,304 4% 10,568,932 60454



Falgun (Feb/Mar) 2.87 600.05 30 14,710 21,902 10,591,124 4% 10,167,479 58158

Chaitra (MarApr) 2.76 600.15 30 14,128 36,835 10,200,223 4% 9,792,214 56011

Total Energy 365 301,525,437 289,464,420 1655736

With the proposed rate, project can generate Rs 1655.736 millions in the first year of commercial operation. The revenue generation trend is also varying as per discharge variation as the rate of energy has been taken as an average. Monthly revenue generation trend is shown in following below:

Gross Revenue Trend

0

50

100

150

200

250

Baisakh

(Apr/May)

Jestha

(May/J

un)

Ashadh (Jun/

Jul)

Shravan

(Juy/A

ug)

Bhadra (

Aug/Sep)

Ashwin (Sep/Oct)

Kartik (O

ct/Nov)

Mangsir

(Nov/Dec)

Poush (D

ec/Jan

)

Magh (Ja

n/Feb)

Falgun (F

eb/Mar)

Chaitra (M

arApr)

Mill

ions

NR

s

Figure 4-1 : Monthly Revenue Generation Trend

The revenue generation trend is also varying as per discharge variation as the rate of energy has been taken as an average.

5. PROJECT FINANCING Super Dordi Hydropower Project is possible to develop with finance from sound financial or lending

institutions under project financing considering PPA with NEA. Energy generated from this project shall

be sold to Nepal Electricity Authority (NEA) in mutually agreed rate for Power Purchase Agreement

(PPA).

5.1 Investment & Financing Structure

The Base Cost of the Project for the year, 2013 is estimated to be NRs. 6795.326 millions (US $=84.942

millions). This requires investment from equity as well as from financial institutions.

A 80:20 debt equity ratio has been proposed based on the total capitalized cost of the project including

IDC. The total capitalized cost and its ratios as equity and loan is presented in table below:

Table 5-1: Proposed Capital Structure for financing

Before Financing (NRs, 000) After Financing (NRs, 000) Total Cost 6,795,326 100.00% Total Cost 8,011,536 100.00%Cash Loan 5,193,041 76.42% Total Loan 6,409,252 80.00%Equity 1,602,284 23.58% Equity 1,602,284 20.00%

The interest calculations are based on 12% per year and drawdown is scheduled as per main

construction time of 3 years and Loan arrangement fee is considered as 2% of total loan at one time.



5.2 Equity Capital

The equity investment shall be in 20% ratio in each payment during the progress of the project. The

company will arrange equity capital to initiate the project. The 20% portion is NRs. 1602.284 (US

$=20.029) million as equity capital. The equity injecting plan is as follows for the project

Upfront Equity (Commitment 1st year) - 10%

Within the end of second year - 20%

Within the end of third year - 10%

Within the period of fourth year - 45%

Within the period of fifth year - 15%

5.3 Loan Capital

The company needs 80% loan commercial banks which can be paid back with its interest and principal

within 10 years. The loan can be considered as secured for the following reasons:

There will not be any bad debts as NEA purchases all the energy for at least for 30 years on

Pay basis. NEA is owned by the government and has backup as an assurance.

The level of electricity generation will be consistent for the foreseeable future as the hydrological

base is reliable

There would be a limited O&M expenses for operation and management of hydropower project,

which is very limited for underground structure.

There is insurance provision for loss of profit and its assets

There can be following type of loan account required for the project in long run.

5.3.1 Project Loan

The company needs NRs.5193.041 (US$=64.913) millions as cash loan which needs disbursement

within 3 years after the project is started. The IDC components

5.3.2 Working Capital Loan

The company requires working capital loan facility worth NRs.100 millions which will be adjusted within

the limit of the term loan approved. This working capital loan will be utilized for administration and

operations of the project as and when necessary.

5.3.3 Bridge Gap Loan

The company require bridge gap loan of up to Rs. 200 millions for the construction works. This amount

will be utilized for the smooth construction process and fulfills the gap till the drawdown of term loan and

between the bill submission period and its approval.

5.4 Drawdown schedule & IDC

The Project shall borrow total of NRs. 6409.252 (US$=80.115) millions loan from the commercial

banks/financial institutions in various instalments and form of loan as per the work progress and

requirement of the project. The following assumptions are made:

The interest rate on bank loan is assumed to be 12%.



The total main construction and disbursement period of the Project shall be 36 months.

The interest on borrowed capital shall be capitalized and converted into investment at the end of

the project construction work.

Loan Administration Fee is 2% at one time

Table 5-2: Drawdown Schedule and Interest during Construction

Construction Year

Drawdown %

Loan Drawdown (A) (Rs. million)

Loan (US $. million)

Interest for Months

IDC Amount (B) (Rs. million)

IDC Amount (US$ million)

Year I 40% 2,077,217 25.965 30

623,165 7.790

Year II 45% 2,336,869 29.211 18

420,636 5.258

Year III 15% 778,956 9.737 6

46,737 0.584

Total 5,193,041 64.913

1,090,539 13.632Loan Administration fee 2% of (A+B)

125,672

1.571 GD IDC

1,216,210

15.203 With this drawdown, Interest during construction estimated to be Rs.1,216.21 (US$ 15.203$) millions ie 15.2% percent of the total project cost at the COD.

6. FINANCIAL PROJECTIONS This project will start receiving monthly payments from the sales of energy. The income and

expenditures, cash flows, balance sheet, Debt service coverage ratio etc are projected till loan

repayment period.

6.1 Projected Income & Expenditure A/C There will be income from sales of electricity and the expenditures are O&M, royalties, Tax, Loan

payments, dividend etc which are reflected on Cash flow series.

Table 6-1: Projected Income Statement

Particulars 1 2 3 4 5 6 7 8 9 10 Gross Income from Sales of Electricity

1,646,664

1,696,064

1,745,464

1,794,864

1,844,264

1,893,664

1,943,063

1,992,463

2,041,863

2,091,263

Others Income - - - - - - - - - -

Gross Income 1,646,664

1,696,064

1,745,464

1,794,864

1,844,264

1,893,664

1,943,063

1,992,463

2,041,863

2,091,263

Less: Operating Expenses 129,478 133,363 137,363 141,484 145,729 150,101 154,604 159,242 164,019 168,940 Interest on Bank Loan 750,095 705,280 654,782 597,880 533,761 461,511 380,097 288,357 184,983 68,499 Royalty Paid to Govt 33,777 34,641 35,506 36,370 37,235 38,099 38,964 39,828 40,693 41,557 Depreciation of Assets 266,329 266,329 266,329 266,329 279,653 279,653 279,653 279,653 279,653 291,671 Amortization - - - - - - - - - - Penalty to NEA - - - - - - - - - - Replacement/Repair - - - - - - - - - -

Total Expenses 1,179,679

1,139,613

1,093,981

1,042,064 996,378 929,364 853,317 767,081 669,348 570,666

Net Profit before tax 466,985 556,450 651,483 752,800 847,885 964,300



1,089,746 1,225,383 1,372,515 1,520,597 Less:

Bonus to Staff 2% 9,340 11,129 13,030 15,056 16,958 19,286 21,795 24,508 27,450 30,412 Profit After Bonus Provision 457,645 545,321 638,453 737,744 830,928 945,014

1,067,951

1,200,875

1,345,065

1,490,185

Tax 20% - - - - - - - 122,538 137,251 152,060

Profit aftert Tax 457,645 545,321 638,453 737,744 830,928 945,014 1,067,951

1,078,337

1,207,813

1,338,125

Less Dividend to Equity Share holders 240,343 240,343 320,457 320,457 320,457 320,457 320,457 400,571 400,571 400,571 Profit For Current Year (After Dividend) 217,303 304,979 317,996 417,287 510,471 624,557 747,494 677,766 807,242 937,554 Reserve Transfer to Balancesheet 217,303 522,281 840,278

1,257,564

1,768,035

2,392,592

3,140,087

3,817,852

4,625,094

5,562,649

Rate of Dividend (%) 15 15 20 20 20 20 20 25 25 25

Equity Capital 1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

1,602,284

Amount for Dividend 240,343 240,343 320,457 320,457 320,457 320,457 320,457 400,571 400,571 400,571

6.1.1 Sales

The energy generation shall very as per availability of water to the turbine and loss on transmission

There is provision of 4% plant outage and 0.34% line loss and 0.55% non payable hour's (ie 48 hrs) for

calculation of net energy for billing at interconnection point.

6.1.2 Operation & Maintenance Cost

It needs regular expenses for its operation and maintenance. O&M includes salary, allowances,

insurance, meeting expenses, travelling, telephone, fuel, etc for the day to day operation of the head

office as well as site office. There should be provision made for the routine maintenance of the project.

Table 6-2: Estimated O&M for the first year of operation (In NRs, 000) Month Staff Salary Maintenance Office Exp. Insurance TotalShrawan (Juy/Aug) 2048 2500 600 32827 37975Bhadra (Aug/Sep) 2048 2500 600 5148Ashwin (Sep/Oct) 4096 2500 600 7196Kartik (Oct/Nov) 2048 2500 600 5148Mangsir (Nov/Dec) 2048 2500 600 5148Poush (Dec/Jan) 2048 2500 600 5148Magh (Jan/Feb) 2048 2500 600 32827 37975Falgun (Feb/Mar) 2048 2500 600 5148Chaitra (MarApr) 2048 2500 600 5148Baisakh (Apr/May) 2048 2500 600 5148Jestha (May/Jun) 2048 2500 600 5148Ashadh (Jun/Jul) 2048 2500 600 5148Total 26624 30000 7200 65654 129478 Staff Number Scale Per Month Remarks



Head Office Staff Manager 1 100,000 100,000 Section Incharge 2 60,000 120,000 Accountant/Adm 2 60,000 120,000 Office Assistant 3 25,000 75,000 Driver 3 12,000 36,000 Peon 3 12,000 36,000 Site Office Staff Project Incharge 1 75,000 75,000 E&M Incharge 7 40,000 280,000 Machine Operators 24 30,000 720,000 Accountant 2 45,000 90,000 Guard/Peon 18 12,000 216,000 Assistanant 18 10,000 180,000 Total 66 2,048,000 Yearly (Total Month =13) 26624000

There is 3% increment considered each year in O&M expenses and some budget is also allocated for

regular maintenance of the project

6.1.3 Interest on Bank Loan

Interest on bank loan is calculated on the basis of loan repayment plan as monthly basis. The rate of

interest is taken as 12%. Loan administration fee is considered as 2% of loan amount one time.

6.1.4 Royalty to Government

As per electricity policy there is capacity royalty of 100 Rs/kW/year and 2% of revenue from sales of

energy to the government for the first 15 years of operation. After 15th year the capacity royalty will be

1000 Rs/kW and 10% tax on sales of energy according to present rules and regulations.

Table 6-3: Royalties Schedule to GoN as per Electricity Act, 2049 Section 11

Royalty Up to 15 years After 15 years Annual Capacity Royalty NRs. 100/kW

Rs 49,60,000/- per year NRs. 1000/kW Rs 496,00,000/- per year

Annual Energy Royalty 2 % of average tariff/kWh generated Rs 329,33,279/- per year

10 % of average tariff/kWh generated Rs. 2091,26,322/- per year

Total Royalties Rs. 378,93,279/- per year Rs. 2587,26,322/- per year

The Section 220 of Local Self Governance Act, 2055 has provision of allocation of revenue in local

bodies like DDC and VDCs around the project area as follows:

12 % revenue for DDC laying Powerhouse ie Rs. 45,47,193/- @ 1st year of operation which

increases upto NRs. 310,47,159 per year after 15th year of operation

38 % revenue for DDCs within Development Region ie 143,99,446/-@ 1st year after COD which

increases upto NRs. 983,16,002 per year after 15th year of operation

The local shall be benefitted from this schedule as there will be regular source of income for the local

bodied.



6.1.5 Depreciation of the Assets

The rate of depreciation of hydropower plant and other structure is defined in Income Tax Act, 2058. As

per the prevailing practice, the depreciation can be written off up to the valid period of PPA, i.e. 30

years. This financial analysis assumes depreciation rate on the basis of Straight Line method covering

entire period of project service life.

6.1.6 Amortization expenses

The pre-operating expenses of the Project can be write-off up to the period of 5 years and is normal

practice of accounting as per company act but in this case all pre operating costs have been capitalized

to project as assets.

6.1.7 Tax

The corporate tax rate applicable is normally 20% in hydropower sector. However, the Finance Bill 2066

allows exemption of corporate tax for the first 10 years after generation of power. Only 10% of corporate

tax rate will be applicable for next 5 years after completion of project.

6.1.8 Dividend

Dividend to the shareholders is also proposed as per profit projection starting from the 1st year of

operation @ 15 to 25% even during loan repayment period based on the assumed PPA rate. There will

be requirement of timely completion of the project for expecting this dividend.

6.2 Projected Balance Sheet The projection and distribution of assets and liability over the loan repayment period has been presented

for the first 10 year of operation.

Table 6-4: Projected Balance Sheet (in Rs 1000)

Sources of Fund 0 Year/ COD 1 2 3 4 5 6 7 8 9 10

Shareholders Fund Equity Share Capital 1602284 1602284 1602284 1602284 1602284 1602284 1602284 1602284 1602284 1602284 1602284 Reserve and Surplus (From P/L) 0 217303 522281 840278 1257564 1768035 2392592 3140087 3817852 4625094 5562649

Total 1602284 1819587 2124566 2442562 2859849 3370320 3994877 4742371 5420137 6227379 7164933 Loan Fund Bank loan 6409252 6055897 5657727 5209060 4703490 4133802 3491863 2768510 1953417 1034951 0 Others Loan 0 0 Total 6409252 6055897 5657727 5209060 4703490 4133802 3491863 2768510 1953417 1034951 0

Total Liabilities 8011536 7875484 7782293 7651622 7563339 7504122 7486739 7510881 7373554 7262330 7164933 Application Of Funds Fixed Assets 8011536 8011536 7745207 7478877 7212548 7186564 6906911 6627257 6347604 6067951 6028643 Less Depreciation 266329 266329 266329 266329 279653 279653 279653 279653 279653 291671 Net Block 8011536 7745207 7478877 7212548 6946218 6906911 6627257 6347604 6067951 5788297 5736973 Current Assets 0 370620 543759 759531 937578 917668 1179939 1483733 1706174 1874603 1828531 Receivable 0 194141 199965 211963 231039 258764 297579 351143 424883 526855 669106 Cash and Bank Balance 0 176479 343794 547568 706538 658904 882360 1132590 1281291 1347748 1159425



Loan and Advances 0 0 0 0 0 0 0 0 0 0 0 Deposit 0 0 0 0 0 0 0 0 0 0 0 Less Current Liabilities 0 240343 240343 320457 320457 320457 320457 320457 400571 400571 400571 Current Liabilities (Ret Money) 0 0 0 0 0 0 0 0 0 0 0 Dividend Provision 0 240343 240343 320457 320457 320457 320457 320457 400571 400571 400571 Provision for Tax 0 0 0 0 0 0 0 122538 137251 152060 Net Working Capital (CA-CL) 0 130277 303416 439074 617121 597211 859482 1163277 1305603 1474032 1427960 Amortization 0 0 0 0 0 0 0 0 0 0 0

Total Assets 8011536 7875484 7782293 7651622 7563339 7504122 7486739 7510881 7373554 7262330 7164933

6.3 Repayment Schedule The company will have 80% loan which is scheduled be paid back with interest and principal within 10

years of operation. The interest of 12% has been considered for this project. The summary of the

repayment schedule is presented below:

Table 6-5: Summary of Loan Repayment Schedule

Year

Total Principle NRS, 000

Principle in ,000

US$

Total Interest

NRs, 000

Interest in US$,

000

Principal+ Interest

(NRs, 000)

Annuity in 000,

US$

Balance Loan

In NRs, 000

Balance Loan in

,000 US$ 1 353,355 4,417 750,095 9,376 1,103,450 13,793 6,055,897 75,699 2 398,169 4,977 705,280 8,816 1,103,450 13,793 5,657,727 70,722 3 448,667 5,608 654,782 8,185 1,103,450 13,793 5,209,060 65,113 4 505,570 6,320 597,880 7,474 1,103,450 13,793 4,703,490 58,794 5 569,688 7,121 533,761 6,672 1,103,450 13,793 4,133,802 51,673 6 641,939 8,024 461,511 5,769 1,103,450 13,793 3,491,863 43,648 7 723,353 9,042 380,097 4,751 1,103,450 13,793 2,768,510 34,606 8 815,092 10,189 288,357 3,604 1,103,450 13,793 1,953,417 24,418 9 918,466 11,481 184,983 2,312 1,103,450 13,793 1,034,951 12,937

10 1,034,951 12,937 68,499 856 1,103,450 13,793 0 0 Total 6,409,252 80,116 4,625,245 57,816 11,034,497 137,931 - -

6.4 Debt Service Coverage Ratio

The calculation for debt service coverage ratio is presented for analyzing the capability to payback the loan principal and interest from the projected cash flow up to the period of loan repayment.

Table 6-6: The Debt Service Coverage Ratio for Various Years of Operation

Year 1 2 3 4 5 6 7 8 9 10 Profit After Tax 457645 545321 638453 737744 830928 945014 1067951 1078337 1207813 1338125

Add Interest 750095 705280 654782 597880 533761 461511 380097 288357 184983 68499 Depreciation 266329 266329 266329 266329 279653 279653 279653 279653 279653 291671 Amortization 0 0 0 0 0 0 0 0 0 0 Total Amount Available for loan Repayment 1474069 1516931 1559565 1601953 1644342 1686178 1727701 1646347 1672450 1698295 Loan Principle 353355 398169 448667 505570 569688 641939 723353 815092 918466 1034951 Interest 750095 705280 654782 597880 533761 461511 380097 288357 184983 68499

Total Loan+Principle 1103450 1103450 1103450 1103450 1103450 1103450 1103450 1103450 1103450 1103450



Debt Service coverage Ratio 1.34 1.37 1.41 1.45 1.49 1.53 1.57 1.49 1.52 1.54 The average DSCR of 1.47 shows enough debt service capacity of the project based on the cash flow projections.

7. PROJECT EVALUATION Project evaluation is carried out in order to determine the financial indicators of the project. Different

indicators like Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit Cost Ratios (B-C

Ratio) etc are calculated and sensitivities are checked.

7.1 Basic Assumptions The major assumptions considered while preparing the financial analyses and calculating indicators are

as follows:

i. The economic life of the project is 30 years based on usual project license and PPA duration.

ii. Construction period is total of 5 years including 2 years of development period and 3 years of project construction after contractor’s mobilization in the project.

iii. The interest rate is taken as 12% as per prevailing bank interest rate

iv. The salvage value of the project at the end of economic life is neglected. The project needs to handover back to government hence, financially there is no value left over for the developers

v. The total cost of the project is US$ 100.144 millions including IDC. This cost will be financed with debt-equity ratio of 80 to 20.

vi. Loan and equity injection is proposed simultaneously on each payment based on construction schedule, prospective procurements and bills.

vii. Royalty for Capacity Rs 100/KW for first 15 years and Rs 1000/kW from 16 years and revenue Royalty is 2% of revenue for 15 years and 10% of revenue from 16 years has been applied.

viii. A total service fee and loan administration fee for arranging finance for the project is considered as 2% of the total loan amount one time.

ix. Repayment period of the loan is taken as 10 years. Equal Monthly Installment (EMI) is considered since payment is received every month from NEA.

x. The interest during construction for the disbursement amount shall be capitalized every quarter of the fiscal year at 12% interest rate and considered as loan amount for the next year interest.

xi. Annual O&M cost is escalated by 3% increments each year on the basis of previous year amount.

xii. Corporate Tax is taken as 20% of net profit after 15 years but there is100% tax holiday for 10 years and 50% tax holiday for 5 years considered in analysis.

xiii. Rate of sale of energy is considered as Rs. 5.72 (US 72 $ cents) per unit as a target rate.

xiv. Revenue is escalated by 3% per year for next 10 years on the basis of last year rate.

7.2 Financial Analysis Financial analysis has been carried out to find out different indicator like present values, internal rate of

return, payback period, B/C ratios, debt service coverage ratio etc.

7.2.1 Net Present Value

Net present value (NPV) is the value obtained by discounting all cash outflows and inflows of a capital

investment project by a chosen target rate of return. Net present value NRs. 2409.198 million is found

which is highly positive. It indicates that the project is financially viable and worth investing.



7.2.2 Internal Rate of Return

Internal rate of return (IRR) considering cash inflows from the project over its life of 30 years is

calculated as 16.07% which is 4.07% higher than the cost of capital and shows attractive.

7.2.3 Benefit Cost Ratio /Profitability Index Benefit Cost Ratio or Profitability Index of the project is found 1.37 based on 12% cost of capital.

7.2.4 Payback Period The simple payback period of the project is found to be 5.1 years and discounted payback period is 7.7

years considering 12% interest to be paid for the capital.

7.2.5 Equity Rate of Return The EIRR of the project is found to be 26.58% which shows more than 20% return on investment can be

ensured for the project developers from this project. An average of 26.58% return over the project life is

a good indicator and is worth investing.

7.2.6 Debt Service Coverage Ratio This indicates the capacity of the project and company to pay the debt on time. The cash availability

after interest, depreciation, amortization from the profit after tax is considered for repayment of the loan

of the project. An average DC ratio of 1.47 is found for this project which is very good for financers.

7.2.7 Cost per unit of Electricity Generation: A simple and understandable method to evaluate the project cost and viable PPA rate is the unit cost of

electricity generation. The levellised cost of generation form the plant is found to be Rs 4.21/unit.

7.3 Sensitivity Analysis The impacts on financial indicators have been carried out through sensitivity analysis looking at different

scenario as indicated below:

Decrease in Sales : -5%,-10%, -15%, -20%

Project Cost Overrun : +10%,+15%, +20%, +25%

Interest Rate : 13%,14%,15%

Change in PPA rate : 5.37, 5.56, 5.72 in average

Delay on completion : 1 year, 2 year

Result of analysis from the calculation for each scenario is presented below:

Table 7-1: Revenue Sensitivity result Sales Decrease NPV, 000 Project IRR Project B/C ratio EIRR 0.0% 2,409,198 16.07% 1.37 26.58%-5.0% 1,889,980 15.24% 1.29 24.11%-10.0% 1,402,308 14.43% 1.21 21.82%

-15.0% 914,637 13.61% 1.14 19.57%

-20.0% 426,965 12.76% 1.06 17.38%Similarly the cost overrun are also analyzed and the following result is found

Table 7-2: Cost Sensitivity Result at 12% interest rate



Cost Increment NPV,000 Project IRR Project B/C Ratio EIRR +0% 2,409,198 16.07% 1.37 26.58%+10.0% 1,731,507 14.72% 1.24 22.59%+15.0% 1,408,435 14.13% 1.19 20.96%+20.0% 1,085,363 13.59% 1.14 19.48%

Table 7-3: Interest Rate Sensitivity Result Interest Rate NPV,000 Project IRR Project B/C Ratio EIRR

12% 2,409,198 16.07% 1.37 26.58%

13% 1,573,506 15.86% 1.24 24.95%14% 874,084 15.70% 1.13 23.47%

Table 7-4: Variation on PPA rate PPA Rate NPV, 000 Project IRR Proj. B/C Ratio EIRR5.37 1,810,467 15.11% 1.27 23.73%5.56 2,104,828 15.59% 1.32 25.13%5.72 2,409,198 16.07% 1.37 26.58%

Table 7-5: Effect of project delay due to any reason or absence of Interconnection Facilities

CoD Date NPV,000 Project IRR Project B/C Ratio EIRROn time 2,409,198 16.07% 1.37 26.58%1 year delay 389,319 12.54% 1.08 19.54%2 year delay (470,586) 11.38% 0.98 18.02%

7.4 Risk Analysis Risk associated with hydropower projects can be of several dimensions. For Super Dordi Hydropower

Project-Kha the following are presented for reference to management to take necessary action avoiding

financial accidents.

Construction Risk: The competency and experience of local contractors in the field of civil works

specially tunneling, hydro-mechanical works and transmission line works are most important. Not only

good contractor but also good supervision and monitoring are essential for this project. Any delay in

completion of the project can adversely hit the financial projections. There is need of taking precautions

for completion on time.

Hydrological Risk: The decrease in revenue or meeting deemed generation will not be the case in

Dordi khola as it is a perennial river and design discharge is in safer side although some variation can

occur on the transitional months like Jestha and Kartik depending upon early or late monsoon.

Geological Risk: In present level of investigation, there is no any severe risk reported regarding

geology. There should be adequate level of subsurface investigation and developer should not hesitate

to invest a quantum of money on geophysical and geotechnical investigations, which will ultimately pay.

This risk can be mitigated by provisioning sufficiently on time for mitigating any problems if any during

construction.

Revenue Risk: This risk is mitigated by Power Purchase Agreement with NEA. The financial health of

NEA has been considered to be more improving in the coming years. As NEA is backed up by the

government and there will be take or pay PPA that should not be the case. Rather the exchange risk of

the currency only is in risk. The trend of IC and dollor can given indication that it will not be the case in

very near future.



Social Risk: The developments on peace process and positive attitude of local peoples are the

scenarios for less social risk for investment; however the project should be developed in close

cooperation with local peoples with greater participation on ownership as much as possible from the

district.

7.5 Findings and Discussion Specific Cost is found to be around US $ 2019/kW (1 $=80NRs) with IDC.

The IRR of 16.07%, B/C Ratio of 1.37 and Simple Payback Period of 5.1 year are positive

indicators from financial analysis. The other indicators are also found to be viable for

implementation of the project.

Cash Flow indicates that there will be sufficient money to pay the debt from the first year of

operation. The average debt service coverage ratio in first 10 year of operation is found to be

1.47 times which indicate the project can pay the debt including interest for each year up to loan

repayment period.

In the case of sensitivities the implementation time is more sensible then other variations.

Insurance of the project and due care on construction and supervision will be necessary and

worth investing.

The project is found technically feasible and finically viable if the construction and completion can be

done on time.

Table 7-6: Financial Analysis & Sensitivities Results summary Assumptions

1 Loan Equity Ratio (With IDC) 80 20 2 Loan repayment period (EMI basis) 12 Years 3 Construction Period 2+3 Years 4 Bank Loan Interest 12% % 5 Bank Loan arrangement Fees 2 % 7 Revenue is increase by 3% for 10 years as per PPA 8 Operation & maintenance cost yearly increase by 3 % 9 Income Tax -(Holiday for 7 years- 50% holiday for 3 years) 20 %

10 Discount factor 12 % 11 Depreciation rate is as per Life of Project 266329 ,000 12 Machine replacement cost 3% of Machinery (Every 5 Years)

Replace Cost 1071000 Basic Data Rs,000

1 Total Project Cost (Without IDC) 6,795,326 2 Total Revenue (After Outage,Loss) for First year 1,655,7363 Yearly O& M cost 129,478 4 NEA Penalty 05 First Year Royalty (At the statting) 33,777 6 Yearly Royalty After 15 years 263,666

Results

1 IRR 16.07% % 2 EIRR 26.58% % 3 NPV 2409198 Amount



4 Cost per kW Before Financing (1 US$=85) 1613 Amount in $ 5 BC Ratio 1.37 Ratio 6 Pay back Period –Simple 5.1 Years 7 Pay back Period – Discounted 7.7 Years 8 Cost Sensitivity 36.7% 9 Revenue sensitivity 24.8%

10 Average DC Ratio 1.47 Times 11 EMI 1103450 Rs 12 Revenue Per MW in NRs 33199 ,000 13 Revenue Per MW in NRs (After Royalty & O& M Cost) 29907 ,000 14 Cost After Financing 8011536 ,000



8. CONCLUSION 8.1 Conclusions

It is a run-off-river (ROR) type of hydropower project having installed capacity of 49.6MW

found with gross head of 601.4m and the design discharge of 9.9 m3/s (Q40) collecting Purmu

also.

The geological study has shown that there is no severe geological risk with this project.

The discharge is reliable as the watershed is covered with all forest and snow catchment with

2 peaks.

There is financing possible with 12% interest rate at 80:20 debt equity ratios, financial

projection are found supportive.

Financial analysis shows IRR of 16.07%, the B/C ratio 1.37, EIRR of 26.58% and the project

can pay the loan and interest on 10th year even distributing dividend of 15-25% at that period.

Project is found worth investing if careful planning for timely completion of the project as well

as the transmission and interconnection faculties can be ensured on time.

STATUARY DOCUMENTS













Documents

Project Summary & Memorandum of Information€¦ · Project Summary & Memorandum of Information Super Dordi Hydropower Project-Kha, 49.6MW Lamjung District, Gandaki Zone, Nepal November