Record budget amid slim prospect of effective implementation of power programs

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    KATHMANDU, July 25:

    Ministry of FinanceThe great potential that Nepal holds in generation of electricity through hydropower has been a favorite topic no matter where you go in Nepal, from school classrooms to high-level party and business and trade conferences. But that is all it has been limited to — babble.

    The government this year went a step forward by allocating a record-high budget for the energy sector for Fiscal Year 2013/14. People from the general public to the hydropower developers are upbeat with the budget which has also offered some incentives for investors in this crucial sector.

    However, going by our recent history, the government´s target of developing hydropower can not be achieved even with allocation of a sufficient budget.

    This year, the budget for energy promotion has risen to an all time high of Rs 30 billion, which is one of the largest allocations for a single sector.
    But, merely arranging a budget can´t bring about the desired result if it is not backed up by effective implementation.

    The 12th development plan, which ended in mid-July, had envisaged adding 184 MW power to the national grid. But that ended up with bleak progress with addition of only 21 MW during the three-year period. The progress in extension of transmission lines is even worrisome.

    The National Planning Commission (NPC), the apex body of the government to formulate policy guidance, revealed that the government could construct hardly 500 meters of transmission line against a target of completing 500 km of lines during the plan period.

    “A reform of Nepal Electricity Authority (NEA) is a must to utilize the allocated amount of budget for the development of the hydropower sector in the country,” an official at the Ministry of Energy (MoE) said after the government announced it was injecting comparatively higher amounts of investment into the sector.

    The government in its approach paper for 13th three-year development plan has set a target of developing an additional 668 MW in the next three years.
    “The government´s move to develop the hydropower sector is appreciable but the implementation institutions are weak,” Subarna Shrestha, a power developer, said.
    Finance Minister Shankar Prasad Koirala, who is also a former energy sectary, while unveiling the budget for the current fiscal year said that the government´s first priority would be to develop hydropower projects in the coming years keeping in view the deepening power shortage.

    However, the budget failed to speak about the measures to effectively implement the programs planned in the budget.
    “Our emphasis on power development is based on the grounds that the manufacturing sector should not have to be affected by crunch of the power,” he added.

    Realizing the need of government involvement in power generation, the government has provided authority to the Department of Electricity Development (DoED) — an implementing body for power development — to develop hydropower projects.

    The DoED, which was simply engaged in issuing licenses for the development of hydropower projects, has got a mandate to develop the 25MW Budhi Ganga hydropower project through the fiscal policy for 2013/14.

    “We want to utilize our available human resources for the programs to generate power in addition to our other regular functions,” Gokarna Raj Pantha, a senior divisional engineer at the DoED, said.

    The government´s move to expedite the development of the hydropower sector should not be squeezed due to bureaucratic red-tape and the ill-performing NEA.
    “We have to focus on reforming NEA and push it to sign power purchase agreements (PPAs) with private-sector power developers,” said a power developer.
    In many cases, NEA itself has been creating hurdles in the development of the hydropower sector.

    It has been reluctant to sign PPAs for six hydropower projects – collectively called the super-six — being developed by the private sector.
    The super-six projects, which include 16 MW Singti, 24.1 MW Khare, 23.5 MW Upper Solu, 82 MW Lower Solu, 14.9 MW Maya Khola and 50 MW Mewa Khole, are well prepared for initiating construction. But NEA’s reluctance in signing the PPA deals with developers of these projects has dashed the prospects of their implementation.
    NEA should be responsible for the loss of the private sector´s confidence due to its indifference in signing the PPAs.

    The government has not mentioned anything about effective implementation of its projects and plans so far. The government should work on creating an environment so that the modus operandi of the implementing agencies is improved to pave the way for achieving the targeted plans for the current fiscal year and the three-year plan.

    Source : Republica