Nepal Needs to Invest in Infrastructure to Boost Domestic Electricity Consumption

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To support the increase in power production, stakeholders have emphasised the imperative need to boost investment in infrastructure to elevate domestic consumption and enhance exports to neighbouring countries.

During a policy discussion programme here on ‘Electricity Trade and Infrastructure’ organised by the Society of Infrastructure Journalists Nepal (SIJN), speakers urged the government to prioritise domestic consumption over focusing on exporting surplus power to neighbouring countries like India and Bangladesh.

Stating that exporting electricity to neighbouring countries is intertwined with geopolitics, Deepak Bahadur Singh, chairperson of the Infrastructure Development Committee (IDC) of the Federal Parliament, highlighted the need to accelerate domestic consumption by offering electricity to industries at affordable rates.

Singh pledged that the IDC will make decisions in the interest of the infrastructure sector without being influenced by political biases.

Singh expressed concerns that the recent geopolitical tensions between India and China could create an uncertain environment for electricity exports, even though India remains the most convenient and suitable market for international electricity trade.

He stressed the importance of organising meetings, conferences and discussions with infrastructure experts on regular basis to help parliamentarians better comprehend this sector.

Thakur Prasad Gaire, a member of the House of Representatives and the IDC, mentioned that he is in discussions with relevant experts to incorporate a ‘one-door policy’ in the new Electricity Act, aiming to eliminate current policy hurdles in obtaining approvals for construction of hydropower projects and transmission line infrastructure.

“The Electricity Bill, approved by the Cabinet, is on the verge of being introduced in Parliament,” he stated, cautioning that during this process, there is a potential risk of certain vested interests attempting to amend the electricity bill. “Consequently, collective efforts are needed to ensure the bill is enacted sans any biases.”

He also highlighted the need to analyse international electricity trade from an economic perspective rather than strategic geopolitics.

Pradeep Poudel, an MP and a member IDC, identified lack of expertise among the committee’s lawmakers in the realm of infrastructure development and investment, which could impede the amendment of pertinent bills.

He proposed improving knowledge in the infrastructure sector through collaboration with experts to ensure well-informed decision-making in the sector’s best interests.

He suggested that the government adopt a policy of reducing reliance on imported petroleum products by promoting domestic electricity consumption, noting, “I think we are still not clear about whether to prioritise electricity trade or consumption.”

Madhu Prasad Bhetwal, joint secretary at the Ministry of Energy, Water Resources, and Irrigation, said that the primary focus should be on enhancing domestic electricity consumption before considering the export of surplus power to neighbouring countries.

He also highlighted that India is the primary market for electricity trade, while electricity trade with China remains more symbolic at this stage.

“We have plans for a total of 11 electricity transmission lines, including one with India at 400 kV,” he said. “Additionally, there are plans for constructing four more cross-border transmission lines. We also have plans for two transmission lines to Tibet in China, at certain locations for electrification purposes, but the implementation will require more time.”

He stressed that there is no need for excessive concern regarding the situation with China, as Nepal’s electricity strategy aligns with the BIMISTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) framework.

Babita Mishra, joint secretary of the Parliament Secretariat, pledged to review the Electricity Bill being registered in Parliament and provide a report to the Infrastructure Committee, and vowed to play a coordinating role to prevent potential delays due to a lack of coordination between parliamentarians and relevant agencies.

Mandevi Shrestha, deputy director-general of the Electricity Trade Department, noted an increase in production permit applications following the opening of the Power Purchase Agreement (PPA) for 1,500 MW hydropower projects, with applications extending to both domestic and international transmission line projects.

Prabal Adhikari, director of Nepal Electricity Authority’s Electricity Trade Department, hailed India’s approval of purchasing 10,000 megawatts of electricity over a decade from its Cabinet and the approval of 110 megawatts from Solu Dudhkosi and Dordi Khola under a mid-term agreement.

He also highlighted concerns about potential cyberattacks on the transmission grid system as a reason for India’s hesitancy to buy electricity from Chinese investment projects, as reported in international media.

Ganesh Karki, chairman of the Independent Power Producers’ Association, Nepal (IPPAN), emphasised the need for Nepal to develop its own electricity trading strategy.

Karki also highlighted the challenges faced by many hydropower projects in Nepal, such as delayed construction of transmission lines, high bank interest rates, forest policies, land acquisition issues, and local opposition, all contributing to increased project costs. He stressed the importance of reducing these costs through policy changes.

IPPAN Secretary Kavita Pokharel expressed confidence in the private sector’s ability to engage in both domestic and international electricity trade, with several companies already established for this purpose.

Energy expert Satish Joshi suggested that Nepal focus on managing diplomatic relations with key markets like India and Bangladesh to advance electricity trade. He acknowledged private sector’s success in electricity production over the past two decades.

Saumitra Neupane, executive director of Policy Entrepreneurs Inc (PEI), highlighted the direct impact of geopolitics on Nepal’s electricity business.

Director of PEI Anurag Acharya emphasised the need for Nepal to understand and navigate geopolitics effectively while engaging in electricity trading.

Pradeep Dangol, CEO of Power Trade and Energy Exchange, a company established for electricity trading, expressed frustration over delays in obtaining permission to operate due to a lack of clear policies, despite the provision in Section 35 of the Electricity Act 1992 allowing involvement of private sector in electricity trade.

Source: The Himalayan Times