Hydropower projects of up to one megawatt that have obtained the survey licence or are under construction or already in operation will have to be affiliated with local units from now onward.

The Department of Electricity Development (DoED) has said that as developers will be able to obtain project development approval for hydropower projects of up to one megawatt by informing local bodies, such projects that have taken approval of DoED have to now be allied with the concerned local units where the projects are located.

According to Nabin Raj Singh, director general of DoED, there are around 54 projects under this category and they need to change their affiliation from DoED to the concerned local unit.

As per the government’s plan to promote distributed generation at the local level to ensure sustainable energy for all, the Ministry of Energy has allowed the local units to approve the applications of developers who want to develop projects of up to one megawatt. The guideline developed by the MoE includes the proposal to accept the application from the developer at the local level.

However, the concerned local body has to forward the application to DoED for technical clearance of the project. “It means the concerned developer will not have to approach DoED,” said Singh, adding that the concerned local unit will
forward the application for technical clearance to DoED, which will verify the capacity of the proposed project and chances of area overlap with other projects.

The Ministry of Federal Affairs and Local Development has also agreed on the provision of technical clearance. The DoED will not give clearance to a project if its capacity is above one megawatt or if the proposed project overlaps with other projects that have obtained licence from DoED.

The MoE has developed the guidelines following the recent implementation of the Local Government Operation Act that has extended the authority to local units to approve the application of survey, generation, transmission and distribution projects of up to one megawatt.

While submitting the application, the developer has to include other essential documents like estimated project cost and the hydrological analysis of the river/stream that is certified by the consultancy firm. The project going to be developed should follow the appropriate design to produce at least 45 per cent of the rated capacity at any time.

Furthermore, the net worth of the developer who submits the application must be at least Rs one million and that must be
authenticated by a certified chartered accountant. To obtain the generation licence the developer needs to submit the required Rs one lakh as license fee, environmental impact assessment report, and grid connection agreement with off-taker or if the electricity is going to be generated for rural electrification, the area and name of the customers need to be submitted.

The local unit can issue the approval of generation, transmission and distribution based on the rationale and demand of the developer and the project must be completed within three years from the time the application is approved by the local unit.

If the developer does not start construction after a year of the licence being issued the concerned local unit can scrap the project licence. Moreover, the ownership of such projects will be transferred to the local administration after 35 years of the contract being signed, however, the developer needs to pay royalty to the respective local unit that is fixed on mutual agreement till that period.