Khani Khola Hydropower Company Limited

  khanikhola.hpc@gmail.com   + 977-01-4436325

Tungun–Thosne Hydropower Project(4.36MW) and Khanikhola Hydropower Project(2MW)

1. PROJECT DESCRIPTION

The Tungun-Thosne and Khani Khola Hydropower Projects are located about 25 km from the Ring Road of Kathmandu and are easily accessible via Tikabhairavand KantiLokpath. Access road from Chhapeli at KantiLokpath near Bhattedanda to Tungun-Thosne and Khani Khola powerhouses have been completed by PEDC with local support. Similarly a 2.5 km access road from Bhattedanda to Thosne Khola, recently completed by the local community with financial assistance from PEDC provides easy access to the headworks of Thosne and Tungun Khola.

The project is a cascade project where the water of Tungun River is diverted to Thosne River after which the first stage generation of 4.360 MW is achieved. The tailrace water from the first stage generation yields the generation of 2 MW (Khani Khola Hydropower Project). Hence the total installed capacity of the two projects is 6.43 MW. The annual energy saleable by generation from the two projects is 32.27 GWh.

The power evacuation to NEA was initially intended to be made at the switchyard at Kulekhani – 1 through a 33 kV transmission line of 19 km length. Connection Agreement in the regards was signed on February 2010. However signing of the PPA with NEA was not done in view of the low PPA rate available then from NEA and the high interest rate of loans from commercial banks.

In the meanwhile, Laxmi Cement Udhyog Ltd. is being initiated in the project area for the project and NEA is constructing a 33 kV transmission line between Matatirtha and Malta. Land for substation in Malta has been provided by Laxmi Cement to NEA. NEA has already appointed a Bangladesh contractor for construction of the 33 kV substation at Malta This has provided PEDC a good opportunity to interconnect at Malta which is only 1.45 km away from the Khani Khola powerhouse. Interconnection agreement was signed by the Proponent with NEA for interconnection at the NEA Malta substation on 23 March 2012. The PPA between NEA and PEDC was signed on 20 July 2012.

With the signature of the PPA the road became open for undertaking all measures required for financial closure and acquisition of generation licenses for the projects.

For implementation of the projects Pashupati Energy Development Company (P.) Ltd. (PEDC) adopted measures of creating a SPV (Special Purpose Vehicle) with majority share of 51% retained by PEDC, with two other equity partners each subscribing 19.5% shares and allotting 10% of the shares for investments from local community. The new company was initially registered as Khani Khola Hydropower Company (P) Ltd. But since Prabhu Finance Company Ltd. wished to become the second equity partner the company was converted into a public limited company. The loan components for the projects are to be acquired from a Consortium of commercial banks headed by Grand Bank Nepal Ltd with Citizens Bank International Ltd. and Civil Bank Ltd. as consortium partners.

In order to ensure completion of the project within the stated RCOD the civil works contracts have been arranged so that they are small packages which can be completed within one year.

The RCOD of the project was fixed on 13 April 2015 and the project schedule had been designed with this target date in mind. But the earthquake that struck Nepal repeatedly after April brought the project to a standstill for almost two months delaying the RCOD. Subsequent to the earthquakes the nation came under the grip of Madhesi uprisings and undeclared trade embargo across the Indo-Nepal border making it impossible to purchase petroleum fuels and construction materials. Hence project activities came to a virtual halt , The festive season of Dasai, Tihar and Chhat also made it difficult to mobilize labour for the projects. After the Chhat festival the project management has decided to acquire petroleum fuels and construction materials on its own from the Indo-Nepal border so that these may be passed on to the contractors to resume construction works.

With the intervention of the company on matters related to direct procurement of fuels and construction materials for the contractors most of the contracts are now either completed or nearing completion. Two of the contracts which are badly managed have been taken over by the company in contract management to ensure speedy completion of works.

The major bottleneck in the final completion of the project has been the failure of NEA to complete the construction of the 33 kV transmission line from Matatirtha to Malta despite the its obligation as per the PPA signed for the two projects. As a result the company has been compelled to accept the temporary arrangement of evacuation the power generated by the two projects into the local 11 kV supply system through the Malta substation. NEA for the purpose has to make improvements in the existing south Lalitpur feeders. The company has been requested to bear the labour costs for these improvements with the necessary hardware and cable being supplied by NEA. The completion of these improvements is imminent and the projects are in a position to declare their CODs very soon.

As NEA has not been able to implement the 33 kV transmission line between Matatirtha and Malta, an agreement has been reached whereby a contingency plan will be implemented whereby the energy generated by the projects will be temporarily evacuated into two local 11 kV circuits – viz South lalitpur feeder and Pharping feeder.

This progress report highlights the chronology of activities at different stages in the development of the projects and provides the updated status of the two projects.

2. SURVEY LICENSE

3. FEASIBILITY STUDY REPORT

4. CONNECTION AGREEMENT/ PPA

5. INITIAL ENVIRONMENT EXAMINATION (IEE)

6. DETAILED ENGINEERING OF PROJECTS

7. GENERATION LICENSE

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