6.12.1 Provision shall be made such that the local people can also be directly benefited from the operation of the hydropower generation project. Such provision shall be included in the agreement to be made with the licensee. In addition, ten per cent of the amount obtained for royalty shall be provided to the District Development Committees of those Districts affected from the dam, reservoir and powerhouse constructed for the generation of hydropower, to be spent in development and construction work of those Districts, pursuant to the Local Self-governance Rules.
6.12.2 In addition to the capacity of the project, the following subject matters, shall also be taken into account in categorization of the hydropower generation centre:
1. The centre supplying the internal demand,
2. The centre exporting electricity,
3. The captive plant built by any specific industry, which will consume at least 60 per cent of the energy generated.
6.12.3 (a) The provision of license shall be as follo ws:
1. Study and survey License
2. Generation License
3. Transmission License
4. Distribution License
(b) No license shall be required for hydropower project up to a capacity of one MW. Such hydropower project shall be registered with the District Water Resources Committee prior to commencement of the works of such project. Information of such registration shall be given to the Department of Electricity Development. The basis for registration of such projects shall be as determined by Government of Nepal. Such projects shall be entitled to the facilities in accordance with this Policy.
(c) An application has to be duly submitted to the Department of Electricity Development to obtain the license. The study/survey license of a hydropower project up to a maximum capacity of 10 MW shall be issued normally within 60 days of the submission of all the details. The licenses of all other types shall normally be issued within 120 days of the submission of all the details.
6.12.4 The license to carry out detail survey of, and generate electricity from, a hydropower project with capacity of more than ten MW, of which feasibility study has already been done by the governmental level and electricity from which is expected to be consumed in Nepal of Nepal, shall be issued on competitive basis through invitation of proposals.
6.12.5 The survey and generation license has to be obtained for the captive plant. The license shall normally be issued within 120 days of the submission of all the details.
6.12.6 A licensee who holds the study/survey license has to submit an application for the generation license within the validity period of the license. If the application for generation license is not made, the ownership of the study/survey report shall devolve on Government of Nepal. Government of Nepal may, on the basis of such study report, generate electricity from that project on its own or let any other company, selected on competitive basis, generate electricity from that project. If the generation license of such project is issued to the private sector in a manner to use that study report, refund of justifiable expenditure incurred in the study/survey of that project may be arranged from the person who has obtained the generation license.
6.12.7 License may be issued to export electricity from projects with installed capacity of more than 100 MW as deemed appropriate by Government of Nepal. The license for such a project shall be issued by the Government of Nepal through invitation of proposals or through negotiation with the applicant, who has submitted application for the license.
6.12.8 The license shall be issued by the Ministry of Water Resources.
6.12.9 The grounds for granting the license shall be made transparent.
6.12.10 Government of Nepal may, as per necessity, conclude a project agreement with the applicant to attract private, national or foreign investment.
6.12.11 Term of the License:
(1) The study/survey license:
The term of the study/survey license shall be for a maximum period of five years.
(2) The hydropower generation license:
The term of the generation license, depending upon the nature of the project, shall be as follows:
(a) The project supplying the internal demand:
Thirty-five years from the date of issuance of the generation license
(b) The export-oriented hydropower project:
Thirty years from the date of issuance of the generation license
(c) In the case of the captive plant producing energy of which at least 60% is utilized by any national industrial enterprise on its own:
Until the concerned industry remains in operation. If the industry does not remain in operation, up to 30 years from the date of issuance of the generation license.
(d) For storage project, the term of the generation license may be extended for a maximum period of five years on the basis of the construction period.
(3) The Electricity Transmission and Distribution License:
License has to be obtained for the transmission and distribution of electricity.
(a) Government of Nepal may specify any transmission line or grid as the national transmission line or grid.
(b) The term of the electricity transmission license shall be twenty five years from the date of issuance of the license.
(c) The term of the electricity distribution license shall be twenty-five years from the date of issuance of the license.
(d) In respect of the term of the license for generation, transmission and distribution of electricity and generation and transmission or distribution only of electricity, the term of electricity transmission and distribution shall be the term of license for generation.
(e) The term of the license for electricity transmission and distribution may be renewed for ten years at a time in accordance with the prevailing law.
(f) The term of transmission and distribution of electricity generated from the electricity generation centre with a capacity of up to one MW shall remain valid so long as the centre remains in operation.
(4) In cases where any person is generating and distributing electricity in any specific area independently with or without obtaining a license, any other person may request for license for generation and expansion of electricity with higher capacity in the same area, adversely affecting that project. Provided, however, that such a person shall purchase, on mutual understanding, the hydropower centre, transmission and distribution lines in operation therein. If a mutual understanding could not be reached as referred to in above, Government of Nepal shall, based on the national interest, make arrangements to reach an understanding with reasonable compensation for the structures.
(5) A body that obtains the generation, transmission and distribution license should be registered in Nepal. Prior to obtaining the generation, transmission and distribution license, the license holder shall furnish the guarantee as prescribed, to Government of Nepal.
6.12.12 Any licensee shall be entitled to use the national grid system by paying the specified fee for the transmission of the electricity generated by such a licensee. For this purpose, necessary grid-codes and basis for load dispatch on the use of the national grid system shall be prepared.
6.12.13 Electricity may be supplied independently in any area under the local system without being connected to the national grid system after obtaining the license.