Nepal’s Hydropower sector: Power in peril


    Nepal’s Hydropower sector

    kaligandki-aNepal’s hydropower is still a long way from exporting electricity. We have not even explored the ways to generate enough electricity for consumption in our own homeland. Without further ado, the entire state machinery needs to mobilize to ensure a flourishing energy industry in the country. Our per capita energy consumption, which is a low 160 kilowatt per hour, is a symbol of our living standards and level of prosperity.
    If poverty alleviation is our primary aim, the country will have no alternative but to harness all of its energy sources, chiefly hydropower. Electricity generation should be considered the backbone of our economy. Only when policymakers are confident that the future of our country depends on the success of hydropower, will the doors open for many mega-projects lying incomplete.

    Good governance with law and order in the hydropower sector could ameliorate our current energy scarcity. However, it is a deplorable reality that it has been the government’s focus. Both the government and the private sector recently approached a record low on energy generation, plunging the nation into darkness. But the reasons for it were never analyzed and countered.

    Energy security

    Unless our leaders understand that energy security is key to our independence, we will continue to be undeclared colonies of other countries. Nepal can achieve economic empowerment through this sector. Our country never had visionary leadership in this sector, being simply influenced by the Indian roadmap since Nehru’s time. However, political leaders are not entirely to blame for this. The state’s counseling bodies, including high level bureaucrats, are equally responsible for not providing them good guidance. Also, people’s awareness level has been too low to react to their unjust decisions regarding water and energy issues.

    It is frustrating that Nepal has always neglected its own strength, water resources gifted in abundance by Mother Nature. It is now established that our neighboring country India knows our strength more than we do. As a result, it makes well-calculated strategic moves on water-related issues in Nepal. We lack adequate statesmanship in our government-level decisions, and outside of it, ultra-nationalism kills the prospects of bilateral co-operation.

    The government needs to take a more comprehensive approach to the security of energy supplies, including hydropower generation and alternative energy promotion, with the plans for both long-term and short-term needs of the country. Nepal needs to secure energy also to tackle climate change issues. We need to initiate fast action toward optimum utilization of our water resources before our rivers dry up.

    Energy security in the country reduces foreign dependence on energy-based imports, and increases prospects of domestic energy boom. The government needs to slash the import of oil and gas from other countries by a certain percentage every year and replace them with our own energy. If the prospect of good price on exported electricity is poor, we can shift our policy from direct energy export to export of goods manufactured from energy-intensive industries like textiles, chemical fertilizers, cement, steel, etc. It not only promotes the industrialization of the country, but also checks the movement of domestic labor force to foreign employment.

    Investment patterns

    The government is ignorant of investment patterns suitable for Nepal’s hydropower sector. Government policies should not hurt domestic investors at any cost. To promote domestic investment, the government can provision to license projects up to a certain megawatt capacity, say 100 MW, to domestic developers only. Further, domestic private sector can be given the highest priority in domestic consumption projects, and if they do not have enough capital, they can develop joint ventures with foreign private sector.

    Investment plans should ensure local people’s share in such projects so as to encourage their support in project development all the way.
    The flow of capital in hydropower projects from domestic entrepreneurs not only saves the nation’s treasury from harmful impacts of foreign currency depletion, but also offers the unique opportunity to domestic private companies to expand their access in large projects both at home and abroad with the financial gains and the technical experience from these projects. Unless the lack of government’s starts trusting domestic hydropower developers, the present energy crisis cannot be solved.

    The enormous hike in hydropower license fees by the Ministry of Energy, though reportedly meant to discourage unfaithful and long-time licensed holders, triggered unprecedented gloom among genuine developers. The government’s unilateral decision on such a crucial issue without an attempt to know the stakeholders’ views has been detrimental to the sector. It has only turned the MoE into a huge reserve of hydropower licenses.

    Nepali private sector is headed towards a dilemma over the changing course of government policies related to hydropower development. Unless the sector receives strong government backing and is allowed to lead the industry for domestic consumption, the nation would lose the opportunity to mobilize domestic financers and developers.

    Conflicting acts, rules and regulations pertaining to the development of hydropower projects needs to be amended soon. Many power development agreements with foreign developers are facing difficulties due to inconsistencies in government policies. It is necessary to carry out interactions between the government and stakeholders before making amendments in order to promote clarity and transparency in relevant proceedings. If practical aspects are ignored, it will increase the probability of governance failure and complications at implementation levels in future. All types of hydropower projects, including those with FDI components for domestic market, and purely the export-oriented ones, need clear government roadmaps and intact law-and-order situation.

    Risky energy market

    Sharp U-turns have been observed in the Indian energy market, contrary to our conventional expectations of energy export to India. Though Nepal wishes to sell surplus energy from run-of-river projects in wet season to India, this prospect may soon turn gloomy because electricity is available at very low tariffs in India. In contrast, Nepal’s generation cost is quite high. We cannot expect India to buy our expensive electricity when its own run-of-river power houses generate at their full capacity.

    Though India is a coal-rich country excessively dependent on this resource for power generation, its trailblazing role in hydropower generation has been conspicuous. It has already developed about 39,000 MW of electricity from its own hydropower projects, mostly run-of-river ones. This calls for a new strategy at the policymaking level towards Nepal’s long-dreamt electricity export before a robust SAARC regional electricity grid can evolved.

    The author is a senior Engineer

    Source : Republica