Managing Community Expectations When Developing a Project in Nepal

Project developers often must manage far more than just project construction and logistics. Developers of the 60 MW Khimti 1 hydropower plant in Nepal conducted a study to determine the success of the community development efforts employed 10 years earlier to manage expectations during construction of the facility.

By Suman Basnet

The Khimti Project School has 400 students, the majority of which are from the local area. (Photo courtesy Khadga Bahadur Bisht)
The Khimti Project School has 400 students, the majority of which are from the local area. (Photo courtesy Khadga Bahadur Bisht)

Local communities are generally positive toward hydropower development but have high expectations of community benefits and returns on the investment in “their” water. In situations with a lack of strong political governance or a government that is not able to objectively delineate benefit-sharing and enforce responsibilities among stakeholders, it falls on the project developer to manage community expectations.

Developers of the 60 MW Khimti 1 project on the Khimti River in central Nepal successfully managed these expectations through implementation of a comprehensive community development program comprised of community-managed rural electrification and small hydropower development, rural infrastructure development, enterprise development and community mobilization.

A study of community expectations conducted in 2010, 10 years after the project became operational, provided concrete results regarding project developer Himal Power Limited’s (HPL) efforts to manage community expectations and built upon a foundation of knowledge to aid hydroelectric project developers in this important aspect of development.

Community expectations

Hydropower projects have tremendous potential to benefit the community in which they are developed. However, the local communities have to be positively engaged during the development, construction and operation phases of the project in order to balance the expectations of the people with the benefits of the project. Community expectations have a direct impact on the effectiveness of community involvement measures.

Locals acknowledge the benefits of hydropower project development in their neighborhood, to a degree. In a group discussion during public consultation for another hydropower project close to the Khimti project, the local community members identified increased local government revenue from royalties, increased employment opportunities, a boost in local economic activities, better health, and education as some of the local benefits of the project.

Some perceptions among local communities in Nepal regarding hydropower projects negatively impact their construction and operation. Communities are aware of the economic potential hydropower projects bring, but they sometimes erroneously perceive that the project developers earn extraordinarily high profits without appreciating that project development and operation costs are also higher because of higher loan repayment costs, high inflation, transportation costs, nature-induced work stoppages, and political and security problems. Community members also may perceive that hydropower developers exploit local resources, both human and physical, without adequately sharing the benefits of the project.

As a result, community members expect “adequate” returns (e.g. jobs, infrastructure development, increase in economic activities, shares, involvement in the project) from the hydropower development. The governments in these areas are often unable to provide sufficient basic infrastructure and services, especially in rural areas such as the area around Khimti 1. For most locals, the hydropower development represents a “pseudo” government with the ability to fulfill needs the government cannot. Private power producers implement local development programs in the neighborhood of the projects. However, the local communities mostly feel that these programs are inadequate, creating a lack of trust and confidence between the developer and the communities.

Himal Power Limited and Khimti 1

Nepali hydropower HPL owns and operates the Khimti 1 plant. Norway-based SN Power owns 57% of the shares in this company.

To balance community expectations and actual benefits during development of the hydropower project, HPL implemented comprehensive community development activities as it constructed and operated the Khimti 1 power plant. Construction of the plant began in 1996, and it went online in 2000.

The control building and switchgear yard of the 60 MW Khimti 1 power plant are shown above. The plant is ready to produce electricity 99% of the year, dependent on availability of water in the river. (Photo courtesy Suman Basnet)
The control building and switchgear yard of the 60 MW Khimti 1 power plant are shown above. The plant is ready to produce electricity 99% of the year, dependent on availability of water in the river. (Photo courtesy Suman Basnet)

In addition to its core business of electricity generation, HPL puts equal emphasis on supporting the socio-economic development of the local communities in the vicinity of the Khimti 1 plant and supplying the area with energy. HPL carried out various development activities at the local level with financial assistance from and close collaboration with the Norwegian Ministry of Foreign Affairs (MFA), Norwegian Agency for International Development (NORAD) and Government of Nepal.

Managing community expectations

To avoid additional misconceptions within the community, HPL clearly defined the following three core areas in which the community development program would work:

Power resources

The primary goal and flagship activity of community development is distribution of the key benefit of the project: the power itself. Rural electrification provides a visible, usable product from the hydro project to the community. Beyond providing essential energy, this distribution also supports infrastructure development, creates jobs, promotes and supports community involvement, promotes business development in the area, and offers the opportunity for leadership roles managing the energy distribution.

For example, HPL built two mini-hydro plants with a combined 1 MW capacity and a distribution system that supplies electricity to about 8,000 households and many electricity-based enterprises. These assets are owned and managed by the Khimti Rural Electric Cooperative (KREC), a local community-owned cooperative HPL helped establish. KREC has a 15- member governing board directly elected by the local population. An elected three-member account and supervisory committee functions as the internal auditing body of KREC. KREC personnel have been trained in various aspects, such as operation, maintenance and repair of the power plants and distribution systems, meter reading, consumer billing, revenue collection and accounting.

A local cooperative owning such valuable assets and managing an extensive distribution system and power plants of 1 MW capacity is the first of its kind in Nepal, demonstrates the effectiveness of community-managed rural electrification, and promotes leadership and involvement within the local community.

Water resources

Considering the rural location of the areas affected by the hydro project, supporting distribution of the major raw material used by the project is an important factor of community development. This includes distribution of water for drinking and agriculture, as well as watershed management. These efforts support the development of local infrastructure and promote community involvement.

From the start of construction, HPL has assisted in rehabilitation of vital rural infrastructure such as irrigation systems, drinking water systems, schools and toilets. Areas of support were determined on the basis of a participatory rural appraisal carried out by HPL. More than 40 drinking water systems were constructed or refurbished to provide a clean, safe source of water to local villages, thereby lessening the incidence of water-borne diseases. To further utilize water resources to improve hygiene, HPL constructed about 1,700 toilets, significantly increasing the level of sanitation in the local area. HPL assisted farmers in refurbishing 24 pre-existing irrigation systems to improve reliability and efficiency of water delivery to the fields. This support has helped farmers increase yield of farm products and encouraged them to convert to the higher-income-yielding cash crop farming.

HPL provided skilled labor, imported materials, and design and supervision support for these projects, while the local people provided local materials, unskilled labor, and rights of way. To ensure sustainability of the constructed or refurbished infrastructure, HPL encouraged communities to set up a revolving fund to cover maintenance expenses. The money for the fund would come from contributions from the beneficiaries or would be included in any fees or charges collected from the beneficiaries by the locally-formed users committee.

Human resources

Through education improvements, vocational training, health upgrades, and enterprise development, human resource support creates a connection between the project and direct benefits for the community. These efforts provide job opportunities, training, and new business development in the area.

HPL established and supports a Khimti Project School, which has about 400 students, 80% of which are locals. In addition, HPL supported infrastructure upgrades in about 38 local schools. The financial support helped schools to construct and/or refurbish buildings and to acquire basic furniture and educational materials. The schools were selected on the basis of a needs assessment study and interaction with local representatives. The works were carried out in close coordination with the respective school management committees. The locals provided unskilled labor for the work. HPL agreed to pay the salary of one teacher each in three of the under-staffed schools. This support is renewed annually.

From 2001 to 2006, HPL also carried out an informal literacy program. Twenty basic and five refresher classes were held with 643 participants, including 593 females and 102 students from oppressed castes. The aim of the program was not just to teach the participants reading and writing skills but to help them incorporate literacy into their everyday lives.

HPL also provided support to the health sector in the local area. HPL runs a Khimti Project Clinic that caters to about 12,000 patients annually. Ninety-five percent of the patients are local people with no connection to the power plant. The project also funded outreach clinics and provided medicine and equipment/furniture to various government health institutions in the local area.

HPL promoted various income-generating and enterprise development activities for the local people, including women and individuals from oppressed castes. These efforts include agricultural support for coffee, green cherry, vegetable, and fruit cultivation, as well as livestock rearing. Support included training, market linkage and institutionalization. Additionally, training classes for women included washing-soap making, fabric painting, jam making, allo fiber processing, weaving, pig and goat rearing, and tailoring.

Vocational skill training programs were held for unemployed youths to promote self-employment in the Khimti 1 project area. Training was provided in three trade areas, all identified as being important and needed: hair cutting, leather shoe making and plumbing. Almost all of the trained youths have opened their own businesses or are gainfully employed in their respective trades.

Impact on community

HPL’s community development activities have had significant positive impacts in the local communities, according to a local community impact study. Results showed the following:

— Improved standards of living (amenities and services);

— Increased use of clean, renewable energy, reducing the area’s carbon footprint;

— Increased employment (direct and indirect) on the supply side (energy service delivery chain) and on the demand side (rural industries, productive uses);

— Women’s empowerment through income generation and a literacy program;

— Improved cleanliness and sanitation;

— Enhanced access to mass media through radio and television; and

— More effective self-governance in local communities.

Electrification provided clean energy for lighting and cooking to 8,000 households. Better residential and public lighting increased safety (reducing theft, natural accidents and social crime) and cleanliness. Furthermore, availability of electricity enabled households to use telephone, radio, and television for information, communication and entertainment.

Before electricity was readily available, using an oil expeller was very labor intensive and difficult work for locals, especially women. The electric oil expeller shown above has made getting cooking oil from mustard and other seeds a faster and simpler process. (Photo courtesy Suman Basnet)
Before electricity was readily available, using an oil expeller was very labor intensive and difficult work for locals, especially women. The electric oil expeller shown above has made getting cooking oil from mustard and other seeds a faster and simpler process. (Photo courtesy Suman Basnet)

In terms of local employment, KREC employs about 35 people. Similarly, about 255 small and medium enterprises were established that directly employ more than 700 people. Establishment of these enterprises (e.g. metal workshops, furniture workshops, poultry, mushroom farming, fisheries, and electronics repair workshop), many of them electricity-based, provided better services to the locals as well.

Rural infrastructure development programs, carried out in close collaboration with the locals, promoted self-governance, improved health and sanitation, provided market access to local products and improved crop yields.

Impact on HPL

The comprehensive community development program has also benefitted HPL. Primarily, the program has gained HPL recognition as a “good neighbor,” and the company is seen as “partner” rather than “adversary” in development. Additionally, HPL has received community support (such as advocacy and pacifying anger toward HPL), which was especially crucial during the armed insurgency in Nepal (1996 to 2006). In the long run, HPL and SN Power strongly believe that community development activities will have a positive impact on HPL’s bottom line while supporting the communities surrounding the project area.

Getting concrete results

In 2010, the tenth year of operation of the Khimti 1 plant, HPL commissioned a study to determine the perception of HPL and the plant among various stakeholders.

According to this study, the community recognized the rural electrification work done by HPL. However, the developer’s work in the community was not equally acknowledged. The study attributes this, firstly, to the localized nature of the other support activities and, secondly, to these other activities not always being recognized as being supported by HPL.

The study also concluded that the community’s views of HPL are mixed. While most see HPL as a showcase of foreign investment in Nepal (80%) and recognize that it is heavily involved in infrastructure development (70%) and social work (64%), community members also stated that the organization promises more than it delivers (67%) and has not done enough for the locals (58%). The study suggested that the community development activities in the project area were not recognized by locals for the following reasons:

— Since HPL implemented many of its activities through local partners, the community often views the partners as the source of the support;

— The community holds high expectations for HPL to continue and expand its work in the area;

— The majority of HPL’s activities are community-wide, as opposed to directly touching individuals. Once they are in place, the association with the organization is loss obvious; and

— Community members prefer benefits that impact them at an individual level in terms of employment generation, skill building and other practical skills.

It was noteworthy that the concerns are higher in the lower-income groups. Therefore, it is important for HPL to establish a stronger connection with this segment of society.


In spite of the comprehensive and sustained community development work HPL has carried out in the vicinity of the Khimti 1 power plant, it continues to face many challenges in maintaining and further developing its reputation and public support. The main challenges relate to managing expectations, sustainability, ensuring that communities take on self-governance rather than become dependent on the project, and marketing of its community development activities.

HPL and SN Power are constantly looking for ways to strike the right balance between addressing local concerns and requests and at the same time managing expectations.

Ensuring community involvement, contributions and ownership in development works; promoting transparency; and an effective monitoring, evaluation and reporting system are some of the ways HPL has tried to manage expectations. Dialogue with all major political parties is also seen as an important mechanism for addressing expectation issues because politics pervades to the village level in Nepal. Finally, keeping total neutrality is also a very important factor.

In many instances, the infrastructure installed by HPL rapidly deteriorated due to a lack of motivation within the community to properly operate and maintain the systems. This is mainly because the community members felt HPL would intervene and repair or correct any malfunctions or issues. Motivating the community to handle these issues internally and developing new systems when needed is a definite challenge. One method HPL has utilized is drafting an agreement with the community ensuring its continued care of the assets installed by HPL. Not only does this method promote feelings of ownership and accountability in the community, it serves as a contract clarifying the role HPL would play in the activities.

Another challenge for hydropower companies is marketing community development activities and maximizing the positive impact they have had in the local communities. There is a general tendency for companies to undersell their work in this regard, and HPL is no exception. The perception study described above has suggested the following ways by which HPL can further improve its perception in the local communities:

— Initiate contact with the community and establish programs that touch the people directly;

— Increase visibility and awareness of the projects set up by HPL;

— Encourage positive dialogue on how HPL could participate in improving the life of local people better;

— Create case studies with representatives from the community to speak positively about the programs managed by HPL;

— Seek recognition of work by leading non-governmental organizations and the government and other third parties; and

— Use all forms of media to communicate its activities and their impact at the local level.

The experiences and lessons learned from HPL’s community development activities form a suitable basis on which SN Power is planning to carry out community development as part of the hydropower development currently in the works. The results are yet to be seen as the projects are still in the planning phase.

SN Power is committed to working closely with its key stakeholders, especially governments and local communities, to create an environment that invites development while supporting equitable distribution of hydropower development.

Suman Basnet was environmental and social director at SN Power in Nepal, where he managed the company’s environmental and social activities in its hydropower operation and development efforts.

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