In the context of Nepal, two approaches are seen for developing Hydropower Project:

1. One Company, One Project

2. One Company , Multiple Projects

1. One Company, One Project:

Under this approach a company is established to own and operate single hydropower project.
The company could be subsidiary company or SPV company or independent company.

The advantages of one project, one company are:

a. Focused Management and Expertise: Each company is specifically focused on the
development, operation and maintenance of a single hydropower project. This allows for
specialized expertise and management focus enhancing efficiency in decision making and
project execution.
b. Clear Project Accountability: This model provides clear accountability for each project, as
each company is responsible for its own success. Accounatbility improves project
management, reduces conflicts of interest and ensures that resources are dedicated to the
success of the individual project.
c. Financial Transparency: With a separate company for each project, financial reporting and
transparency are clearer. Investors and stakeholders can easily access the financial
performance of each project, promoting trust and confidence.
d. Risk Isolation: The risks associated with each hydropower projects are contained within the
individual company. This helps in isolating risks and protects other projects or the parent
company from the potential negative impacts of issues that may arise in a specific project.
e. Tailored Financial Strategies: Each project can tailor its financing strategies based on its
unique characteristics and requirements. This flexibility allows for optimized financial
structures, potentially attracting a wider range of investors and financing options.
f. Community Stakeholder relations: Individual companies can better focus on building
positive relationships with local communities and stakeholders. Tailored community
engagegement and CSR inititives can be implemented to address specific local needs and
concers.
g. Flexibility in Exit Strategies: This model allows for more flexibility in exit strategies for
investors .

However, this approach comes with certain set of disadvantages as well:

A. Economies of Scale: With a single project, the company may miss out on potential economies of
scale that could be achieved by managing multiple projects simultaneously. Combining
resources and expertise across several projects can lead to cost savings and increased efficiency.
B. Financial Stability: Relying on a single project can make the company more financially
vulnerable. If issues arise with the project, such as delays, cost overruns or unexpected technical
difficulties, it could have a significant impact on the company’s overall financial stability.
 C. Dependency on Project success: The success of the company becomes highly dependent on the
success of a single project. If the project encounters setbacks or fails, it could lead to severe
consequences for the company.
D. Market Competition: In a scenario with multiple projects under one company, the company
may have a competitive advantage in bidding for new projects. A single project model might
limit the company’s ability to compete with other companies that have a broader portfolio and
experience in managing multiple projects simultaneously.
E. Limited Skill development: A company managing only one project may not have the
opportunity to develop the diverse set of skills and expertise. Multiple projects can expose the
company to different challenges , fostering the broader skill set among its workforce.
F. Market presence: Having multiple projects under one company can enhance its visibility and
reputation in the market. This broader presence may attract more opportunities and
partnerships compared to a company focused on a single project.

Examples of One Project, One Company:

 Himtal Hydro
 Madhya Bhotekoshi Jalbidhyut Company Limited (102 MW)
 Rasuwagadhi Hydropower company limited (111 MW)

2. One Company , Multiple Projects:

Under this approach, a single company run more than two or more projects. The benefits of
running multiple hydropower projects by the same company can vary based on several
factors, including the size of the projects, their locations, the overall business strategy of the
company, and the economic and regulatory environment. However, here are some potential
benefits:
A. Economies of Scale: Managing two hydropower projects under the same company may allow
for economies of scale. This includes sharing resources, expertise, and operational efficiencies,
which can lead to cost savings.
B. Diversification of Portfolio: Running multiple hydropower projects diversifies the company's
portfolio. This can be beneficial in reducing risks associated with dependence on a single project.
C. Steady Revenue Stream: Having two hydropower projects can contribute to a more consistent
and steady revenue stream for the company. If one project faces challenges such as
maintenance or unexpected outages, the other project(s) can help maintain revenue generation.
D. Enhanced Financing Opportunities: Having a track record of successfully operating multiple
hydropower projects may enhance the company's credibility in the financial markets. This, in
turn, can make it easier to secure financing for future projects and expansions.
E. Operational Synergies: Managing multiple hydropower projects enables the sharing of best
practices, expertise and personnel across different sites. This can lead to improved efficiency,
optimized operations and better overall project performance.
 F. Resource Optimisation: Hydropower projects often require significant resources such as skilled
labor, equipment and technology. A company with multiple projects can optimize the allocation
of these resources based on specific needs and priorities of each project, leading to improved
resource utilization.
G. Technology and Innovation Transfer: Lessons learned from one hydropower project can be
applied to others, leading to continuous improvement and innovation. This cross pollination of
ideas and technologies can result in the development of more efficient and cost effective
solutions.
H. Market Presence and Influence: Operating multiple hydropower projects can enhance a
companys presence and influence in energy market. This may lead to better negotiation power,
strategic partnerships and a strong position in regulatory discussions.

While there are several potential advantages to running multiple hydropower projects, there are also
some disadvantages and challenges that a company may face in managing two or more such projects
simultaneously. Here are some potential disadvantages:

A. Operational Complexity: Managing multiple hydropower projects introduces operational

complexity. Each project may have unique characteristics, requirements, and challenges, and
coordinating their operations can be challenging. This complexity may lead to increased
administrative and managerial burdens.
B. Resource Allocation Challenges: Allocating resources such as manpower, equipment, and
finances among multiple projects can be a complex task. The company needs to ensure that
resources are distributed efficiently to meet the operational needs of each project.
C. Increased Risk Exposure: While diversification can help mitigate risks to some extent, it also
exposes the company to risks associated with each individual project. Issues such as regulatory
changes, environmental concerns, or unexpected events like natural disasters can impact each
project differently.
D. Capital Intensity: Hydropower projects are often capital-intensive. Running two projects
simultaneously may strain the company's financial resources. Securing funding for multiple
projects and managing cash flow effectively become critical considerations.
E. Market Risks: The hydropower market is subject to fluctuations in electricity prices and market
demand. Running multiple projects increases exposure to market risks, and the company needs
to adapt to changing market conditions to remain financially viable.
F. Technical Challenges: Each hydropower project may have unique technical requirements and
challenges. Ensuring the effective and reliable operation of multiple projects requires a high
level of technical expertise and may involve overcoming project-specific engineering issues.
G. Community and Stakeholder Management: Engaging with local communities and stakeholders
is a crucial aspect of hydropower project management. Managing relationships with diverse
communities around multiple projects can be challenging, and any discontent or opposition can
impact the company's reputation and operations.
H. Longer Payback Period: The initial investment and construction phases of hydropower projects
can be lengthy. Running two projects simultaneously may extend the overall payback period for
the company, delaying the realization of returns on investment.

It's important for a company considering multiple hydropower projects to conduct a thorough risk
analysis, have effective project management strategies in place, and be prepared to address the unique
challenges associated with each project. Proper planning and risk mitigation measures are essential for
the successful operation of multiple hydropower projects by the same company.

Case study on multiple projects run by same company

1. Sanjen Jalbidhyut Company

Sanjen Jalbudhyut Company Limited is a subsidiary of Chilime and is developing two hydropower
projects – Sanjen Hydroelectric project (SHEP) having capacity of 42.5 MW and Sanjen (Upper)
Hydroelectric Project (SUHEP) of capacity 14.8 MW in Rasuwa district of Nepal.
The equity investment is structured as comprising of 51% Promotor Shares and 49% public.

The shareholding structure of the company is as below:

Particulars Shareholding
Chilime Hydropower company
limited 39.36%
Nepal Electricity Authority 10.36%
Various Municipalities-
Rasuwa District 1.28%
General Public 15.00%
Depositors of EPF 19.50%
Project Affected Local 10.00%
Employees of Promotor
Company 3.50%
Employees Of EPF 1.00%
Total 100.00%

Cost of Project:

Projects MW Total Cost (crore) Cost per MW (crore)

Upper Sanjen 14.8 366 24.73
Sanjen 42.5 618 14.54
Total 57.3 984 17.17

We can see the cost benefit enjoyed by Sanjen Project. Per MW cost was reduced by 10 crore.

Major issue faced by Sanjen was local hurdles while issuing IPO. The issue was resolved by forming a
District Coordination Committee. The committee was given responsibility to discuss and decide on a
module of share allocation which was agreed by all stakeholders. The affected area was classified as
Very Affected, Affected, less affected and rest of the district. The share ratio was decided by committee
and share was allotted accordingly.

Upper Sanjen Jalbidhyut has already started generating revenue whereas Sanjen Jalbidhyut will be
completed within this fiscal year.
2. Api Power Company Limited
The company is developing three hydropower projects at Darchula District, namely Naugad
Gadh Hydropower Project (8.5 MW), Upper Naugad Gadh HydroElectric Project (8 MW),
Chameliya HydroElectric Project (40 MW).
The Naugad Gadh and Upper Naugad Gadh both projects are completed and revenue
generation has started.
The company has allotted shares to affected locals of Naugad gadh hydropower project on
2074/12/03 whereas the affected locals of Upper Naugad were not given any shares. Only CSR
activities were conducted in the area.
The Chameliya Hydroelectric project was undertaken by same company. The PPA date was
2075/11/15. The required capital for the project was arranged through issue of right shares. In
this case also, the locals were not allotted shares. Only CSR activities were conducted.

Jagdulla A Hydropower Project (JAHEP):

JAHEP is a semi cascade hydro power project.

Common Factor for both Projects:

a. Head works:
b. Access Road:
c. Common Stakeholders:
d. Operational Synergy:
JAHEP, if run by same company will get benefit of best practice, expertise and personnel
across different sites. This can lead to improved efficiency, optimized operations and better
overall project performance.
e. Technology and Innovation Transfer:
Lessons learned from one hydropower project can be applied to others, leading to
continuous improvement . This cross pollination of ideas can result in development of more
efficient and cost effective solutions.

Challenges:
a. Local Issues:
JAHEP falls in Dolpa and Jajarkot districts. So, while issuing shares of JHEP, locals of affected
area of Jajarkot should also be given shares. A company should do a comprehensive
workout on finalizing the share allocation if both the projects are run by same company.
b. Financial Challenge:
When both the projects are run by same company, the financing of later project will be
determined by the performanace of earlier project. If the progress of earlier project is not
satisfactory, it will be hard to gain confidence of financiers to invest their money.
c.

Legal Provisions
As per Section 9(4) of Securities Registration and Issue Regulation 2073, Any public company
shall allocate upto 10% of its total issued capital to the locals of project affected area. For this
purpose, project affected area means the area as defined by Environment Impact Assessment
Report. The Regulation further states that if there is classification of affected area in the EIA
report, then priority for share allocation should be determined based on that classification of
more and less affected area.