BUSINESS MODEL CONCEPT PAPER

ON

SOLU CORRIDOR TRANSMISSION LINE



Submitted By: Rupesh Kumar Shah
EMBA Fall11



Ace Institute of Management
New Baneshwor,
Kathmandu


June 2014

1. VALUE PROPOSITIONS:
The present backbone of transmission system in Nepal is the east-west 132 kV tie-line
running from Anarmani substation in the east to Lalpur (Mahendranagar) substation in
the west.

Although the east-west transmission grid network of 220/400 kV is under
construction by Nepal Electricity Authority (NEA), the country severely lacks north-
south transmission lines of sufficient capacity to cater the needs of developing IPPs. This
has been a critical hurdle for IPPs in the development of hydropower in Nepal.

The overall objective is to develop the most optimum transmission network in the Solu
Corridor for power evacuation of various Projects in different stages of development as
well as planned Projects on techno-economic basis. This will help NEA get all the power
in solu corridor lumped at the load center.

The Optical Fiber Ground Wire on the transmission line tower will also help in the
expansion of communication network.
2. CUSTOMER SEGMENTS
The Government of Nepal is encouraging the IPPs to develop hydropower. Many IPPs
have acquired survey and generation licenses in different river basins all over Nepal. But
IPPs are having a hard time in moving ahead with the development of hydropower for
the basic constraint of lack of transmission infrastructure for power evacuation. The
Government or its agencies have not been able to develop transmission infrastructures
to facilitate hydropower development as needed.

In view of such, this study aims at exploring feasibility of developing transmission
infrastructure from the Private Sector for mutual benefit. So the project will have
mainly two types of customer i.e. Nepal Electricity Authority and Independent Power
Producers.

3. KEY ACTIVITIES
The Solukhumbu, Okhaldhunga & Ramechap districts possess more than 3,000 MW
hydropower potential. In spite of its immense potential, hydropower development in
this region is almost zero. Power generated from small Projects may be consumed in
the nearby area whereas other Projects will require high voltage transmission lines of
sufficient capacity to evacuate their power.

Generated power is required to be evacuated to load centres through transmission lines.
It is neither economical nor practical for each Project to construct individual
transmission lines for power evacuation. Hydropower is not developed because there is
no transmission system and transmission lines are not developed because there is no
hydropower. It has been like "chicken or the egg first? Thus from the medium term
prospective, even if half of the Projects are materialized, transmission infrastructure for
evacuation of near about 500 MW seems very essential and this may serve as a catalyst
in the development of hydropower in this region.
4. KEY RESOURCES
220 kV double circuit is seen to be the most economical transmission line for power
evacuation of the order of 500 MW. The thermal rating and continuous loading of the
line needs to be designed and we require a good and experienced consultant to design
and supervise the construction of the transmission line and the substations.

Good relationship with NEA and IPPs are to be maintained by providing a continuous
link between them with least interruption. To ensure such service we need to develop
well trained and qualified employees. Again this is another challenge to meet as our
country lacks qualified technical human resources. High quality equipment to ensure
the minimum power loss will also help in building the relationship.
5. CHANNELS
NEA and IPPs will have their own Power Purchase Agreement. We will directly
negotiate with the concerned party for the per unit charge depending upon the power
to be delivered and the line length required.
6. KEY PARTNERS
A more detailed study will be required later; a preliminary estimate of the physical
components is assessed as a 100 km Salleri-Katari-Mirchaiya 220 kV transmission line,
Salleri Substation, Katari Substation and Mirchaiya Substation. The manufacturers of the
plants and equipments such as power transformers, circuit breakers, instrument
transformers, tower fabricators, etc required for the completion of above line will be the
key partners. After the completion of project, during the operation of the line, the
repair and maintenance group will have equal importance.
7. CUSTOMER RELATIONSHIPS
A continuous link between the substation of NEA and IPPs with least interruption has
to be maintained. To ensure such service we need to develop well trained and qualified
employees has to be engaged for the proper operation.

A periodic maintenance team has to be deployed for prevention of major impact. High
quality equipment to ensure the minimum power loss can be helpful in building the
relationship.
8. COST STRUCTURE
Transmission line accessories such as tower, conductor, insulators and hardware fittings
will attract a portion. Similarly, Substation equipment such as power transformer, circuit
breakers, instrument transformers, etc will be another portion.

Periodic maintenance of transmission line and substation equipment and human
resources for the proper operation and maintenance will also be a portion of cost
structure. This is because human resources are getting expensive day by day. Technical
people are cost intensive.
9. REVENUE STREAM
In spite of its immense need, the Government as well as it's various agencies are unable
to invest in the Project and as such hydropower development in this region is severely
hindered. Thus, if such Projects are allowed to be taken up by the private sector, the
private sector will have the opportunity to diversify its economic horizon, while the
Government will also be relaxed from the burden, which it should be obliged to fulfil.

In such situation, as the Project is seen to be attractive for investment, it is proposed
that we from the private sector develop this transmission system in the BOOT model
and recover our investment through safe wheeling charge mechanism.