Nepal’s steep topography, coupled with favourable hydrology and dense river network, provides great opportunity for the development of hydropower projects of varying capacities. Hydropower has been considered as a major source of economic development of Nepal. However, there is lack of hydro-electricity generation to fulfil the growing electricity demand of the country. Until 1992, private sector involvement in the development and operation of hydropower projects was limited to the capacities below 100 kW. Hydropower Development Policy, 2001, Water Resources Act, 1992, and Electricity Act, 1992 are the major policy and acts empowering private sector in its involvement in the hydropower development.

In order to facilitate the plan and programm of the Nepal Government to meet ever growing demand of power and cope with the precarious condition of power supply in the country, private sector has shown its interest and taken initiatives towards the development of power projects in the country. Among many developers as IPP’s, Shiva Shree Hydropower Ltd. is developing Upper Chaku “A” Hydropower Project in Sindhupalchok district. Upper Chaku “A” Hydropower Project is a run-of river (RoR) type of hydropower project with installed capacity of 22.2 MW and will be able to generate 118.08 GWH of energy annually. Chaku khola is a perennial river and is one of the major tributary of Bhotekoshi River. It has 40% dependable flow of 3.25 m³/ sec and gross head available for the project is 815 m.

The company has obtained Generation Licence from Government of Nepal, Ministry of Energy on 2068 Falgun 12. The Licence authorizes the company to develop, generate and sell power from the project for the span of 35 years.

The company has entered into Power Purchase Agreement with Nepal Electricity Authority on 2067 Bhadra 22. The purchase rate of energy by NEA is Rs.4 and Rs.7 per kWH in wet and dry season respectively including escalation of 3% per annum for 9 years.

The company has entered into Loan agreement with a Consortium of Banks on 2069 Shrawan 30. Citizens Bank International is the Leading Bank of the Consortium. The revised cost estimate of the project is Rs. 403 Crore