Advocating for a Shift in Government Focus: Prioritizing Domestic Consumption over Electricity Export


Stakeholders are right in calling on the govt to prioritise domestic consumption over electricity export

Even as Nepal’s electricity production keeps increasing, the country does not seem to have a clear policy as to whether we should prioritise consumption or electricity trade. Of course, if energy cannot be consumed in the country, it must find a market for the surplus power, which at the moment is limited to India and Bangladesh. But power exports to India, though increasing in recent years, tend to be influenced by geopolitics, given the strong rivalry between Nepal’s two big neighbours, India and China. It might be recalled that India refuses to buy any power from a hydroelectricity project that has either been funded by China or built by a Chinese company. What’s more, even power projects that use Chinese machinery could face restrictions in exporting electricity to India.

Against this backdrop, stakeholders are right in calling on the government to prioritise domestic consumption over electricity export. There is a fallacy that exporting power would make Nepal rich. It is akin to making a huge investment on building a house so as to earn a cheap monthly rent. Hence, during a policy discussion on ‘Electricity Trade and Infrastructure’ held in the capital on Wednesday, stakeholders urged the government to accelerate domestic consumption by offering electricity to industries at affordable rates. While we are negotiating with India and Bangladesh for exporting surplus power, industrial corridors are facing frequent power outages and having to rely on diesel generators to run industries. Either the government should invest in building transmission lines to evacuate power from the hydropower plants to the industrial corridors or allow the entry of the private sector in this sector as well. Moreover, in the absence of transmission lines, many hydropower projects in the private sector have been told by the NEA to operate at just half capacity, causing colossal losses as they have been constructed with bank loans at high interest rates.

But until the transmission lines are ready, power export remains Hobson’s choice. Nepal has been upbeat after India officially endorsed an agreement the other day to purchase 10,000 MW of electricity in the next 10 years. Nepal Electricity Authority (NEA) has been exporting 452 MW of electricity in the Indian energy market on a daily basis. This is expected to pave the way for a new road map for electricity development in Nepal and play a significant role in its economic development. Nepal too is expected to enter into some sort of agreement on electricity trade with China during Prime Minister Pushpa Kamal Dahal’s visit to China this month. This would reduce our reliance on any one singly country in electricity trade. These developments are expected to give electricity production in Nepal a boost in the coming years. But the way forward for the country is to use the vast electricity resources for the development of its manufacturing industry. Currently, everything that the country consumes is imported, which has so far been sustained by the huge remittances that millions of youths send home from the Gulf countries. Nepal can no longer continue to be a market for goods imported mostly from our two neighbours.

Pass budget soon

As many as 51 local levels have failed to endorse their budget for the fiscal year 2023-24, despite the fact that two-and-a-half months have already passed since the start of this fiscal. As per the Local Government Operation Act, each of the rural and municipal assemblies must endorse the fiscal budget no later than mid-July. The local levels are also required to enter the details of the budget into the portal of the Ministry of Federal Affairs and General Administration (MoFAGA).

Madhes Province has the highest number of local levels, with 36 among them failing to pass the budget. Besides internal conflicts related to budget allocation, some local level officials said they lacked trained human resources to formulate and present the budget. The development works and social programmes to be carried out by the local levels cannot move ahead if the fiscal budget is not passed in time. The federal ministry has issued clear guidelines about the ways of presenting the annual budget. If the local levels lack trained human resources, the federal ministry must do the needful to address such problems. The local levels cannot function properly without support from the centre, which should have fulfilled this kind of gap after the local level elections.

Source: The Himalayan Times