Minimize risks for hydropower

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    hydro-energyThe Nepal Electricity Authority (NEA) has already extended load-shedding to seven hours a day even before the end of monsoon. It has projected load-shedding of 18-20 hours during this winter, and is planning to operate both the multi-fuel plants in Hetauda and Biratnagar and import 250 MW of electricity from India to limit load-shedding to 12-14 hours during the period. The issue of importing electricity from India and fulfilling the demand by installing thermal plants is raised every winter. Private sector industries/entrepreneurs are individually generating electricity buying expensive generators even now. It is not a long-term solution. Cement factories and other industries that require electricity round the clock are using diesel generators raising their manufacturing cost as the national transmission system does not supply adequate electricity. The demand of electricity rises by 10-15 percent every year. Energy demand is expected to rise more rapidly in the next few years due to rapid urbanization, rising industrial activities, and the potential of investment in infrastructure following political stability even as production is not rising in proportion to the rise in demand. Enhancing internal production capacity is the only rational option to meet the rising demand and hydropower development is the best alternative for that.

    There is unlimited potential for hydropower in Nepal, and there are both domestic and external markets for it. Domestic and foreign investors are rapidly investing in Nepali hydropower projects due to this potential. There is also significant attraction toward constructing small and micro hydropower projects below 500 KW at the community level. Hydropower experts claim that Nepal can start exporting electricity after meeting domestic needs after five years if all the big and medium projects currently under construction were completed in time. This is not just a distant dream but encouraging participation of national and international investors in the recently organized Hydropower Summit has also paved the way toward that possibility.

    Nepali hydropower sector is a good example of the saying that there are more challenges than potential. The International Finance Corporation (IFC) under the World Bank has pointed at around a dozen risks for hydropower development in Nepal including economic, technical and legal. The biggest risk for hydropower in Nepal is being created at the political level. Lack of political stability in the country is affecting hydropower development and the investors are in confusion as the hydropower related policies are changed immediately after the government changes. The hydropower sector has also become a victim of extreme politicization. There are many examples of projects that were started earlier being obstructed due to political intervention. Similarly, climate and fuel, lack of market and transmission lines, delay in construction of projects, price hike of construction equipment, negligence in adjustment of tariff, and political and legal risks have also been pointed by IFC.

    We cannot even imagine about completion of such projects until the legal complexities are addressed properly. Project developers claim that there are problems in developing hydropower and transmission line projects due to contradiction of 16 legal provisions and acts. The government should immediately start the process amending such laws. We have talked a lot about development of hydropower and it is about time to walk the talk. It is, therefore, necessary to start minimization of risks as recommended by IFC.

    Source : Karobar