PROF. DR. KAMAL RAJ DHUNGEL
Adequate and reliable electricity supply is the pre-condition for any economy’s prosperity and sustainability. Agriculture, manufacturing and service sector all rely heavily on the adequate supply of electricity, without which they cannot gain a competitive edge. None of these sectors can exist comfortably without electricity because it acts like an essential factor of production. In fact, it helps to double today’s economic growth rate in a short span of time and in turn increases the size and volume of the country’s GDP. Many Third World countries are suffering from power deficit. Nepal is no exception, and the power deficit has a direct effect on the overall growth of the economy.
Electricity for heating, cooling, cooking, lighting, pumping, communication, powered machines and the like are essential for decent living. Most appliances and gadgets that make our life efficient and comfortable are all powered by electricity. Businesses need electricity to accomplish the tiniest of things every day. Industries fail to produce the desired level of output which in turn increases layoffs of human resources which in turn increases unemployment. Its immediate effect is to lower the income of the people that lowers the size of the government revenue. It implies that people will have low capacity to earn, consume and invest. It would contribute to continue the vicious circle of poverty. Citizens will be unable to invest in education that weakens the progress in human capital. Human capital development is the pre-requisite on which the pace of economic development depends. When the resources are kept idle, unemployment rises and the vicious cycle of poverty becomes pervasive. This process if allowed to continue would weaken the capacity of both private and public sector to invest. A clear vision with firm commitment is needed to stop such bottlenecks from developing. But, to break this vicious circle is conditional, conditional upon the adequate and reliable supply of electricity. If there is a failure in supplying electricity to ease the demand, the economy is forced to seek alternative sources of electricity. This will increase the import bill of fossil fuel which in turn leads to an increase in trade deficit. The government spends its revenues by paying for energy to other countries rather than putting it in development activities. This deficit of investment in development activities makes the economy sink.
Our present situation is not sound. The existing electricity generating capacity is about 700 MW. Since the last decade, the electricity demand is growing at an annual average rate of 9 per cent, exceeding 1000 MW a year, but the supply is stagnating. Even if the existing hydro-power plants are operated to their full capacity, the deficit will still remain at 300 MW. But, all the hydro-power projects except Kulekhani are based on the run-of-river system indicating an oscillatory situation in power generation. The operation of the plants at full capacity is seasonal. Power generation varies due to the variation in water flow in the rivers. The generation falls to one third of the installed capacity during winter creating a severe imbalance in demand and supply. Assuming the peak demand of 1000 MW, the supply deficit could range from 300-700 MW, lower in the rainy season and higher in winter.
Having said that the future does not look bad if right decisions could be initiated at the right time. Nepal is rich in hydro-power potentiality (43 thousand MW). Of this, only 1.5 per cent so far is being harnessed. If the rest could be produced, Nepal would be an electricity exporting country. However, hydro-power industry is not an easy investment. The installation of power plants requires humungous financial investment and extremely high effort, time and energy. Lack of consensus, non- commitment, unsuitable policies in place, diverse vision and attitude on the utilization of hydro-power whether it is for domestic consumption or for export are some of the visible barriers. Narrow view of patriotism, lack of farsightedness, lack of knowledge about the role of electricity in national development, etc are some of the invisible barriers. Lack of plan in place and weak implementation of the existing plans, inability to convince investors and never ending political uncertainty are some of the factors that affect its development.
In the long run, there is a strong possibility to export excess electricity which will further strengthen the economy, increases competitiveness and creates employment opportunities. Economic progress that hydro-power development boom is expected to bring would depend on affordable and plentiful supply. We are moving in the opposite direction. Nepal is importing electricity annually with considerable size ranges from 100-120 MW from India under power exchange agreement and commercial basis. Being rich in hydropower, it is regretful to be importing instead of exporting. The initiation of power plants will generate employment, and electricity when produced would stimulate economic growth from which the economy can generate more employment and thus accumulate revenue to invest in more infrastructure and power plants. This could be done by mobilizing both public and private investment—internally and externally.
Source : The Himalayan Times
