Restructuring of NEA

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    NEA_BuldingNepal is known for being the first country in South Asia to build a hydropower project. It has been more than a century since Farping Hydropower Project was built by Chandra Shumsher during the Rana regime and the engineering used in constructing that project is widely recognized as one of the best in the world. Moving away from history, Nepal still is a leading country in terms of hydropower potential. Some have informally claimed that 83,000 MW of electricity can be generated from the rivers in Nepal while others have raised that potential figure to up to 200,000 MW but generation of just 43,000 MW, which is still a huge figure, seems to be technically feasible, according to many experts. Unfortunately our installed capacity has just crossed 700 MW, which is the maximum that can be supplied including that imported from India even during the monsoon. It is unfortunate that Nepalis have to face a daily load-shedding of five hours even during the ongoing rainy season. There is no doubt that lack of construction of adequate hydropower projects is the main reason for energy crisis in Nepal.

    There have been attractive slogans for hydropower development in Nepal, and impressive action plans have been designed to reduce load-shedding and raise generation of electricity. Some talked about generating 10,000 MW within 10 years while others chose to dwarf that with staggering claims of 20,000 MW in the same period but there has been no solid improvement in generation. India, Norway and other countries, meanwhile, have made big commitments about investment in the hydropower sector in Nepal, but ultra-nationalist slogans regarding the sector have time and again created problems. The private sector has also enthusiastically come in to invest in the sector after new hydropower policy was introduced over two decades ago. Not just small and medium sized projects but even big ones are being built accordingly by the private sector on the one hand while big projects have been delayed due to inefficiency of the state-owned Nepal Electricity Authority (NEA) that is responsible for development, generation, procurement, transmission and distribution of hydroelectricity in Nepal. Projects being constructed by NEA including Chameliya, Kulekhani III, Rahughat, Upper Trishul 3A and others are facing problems due to delay, variation order, and compensation claims of contractors. The trend that started with Kulekhani continues till date. The NEA management, however, has failed to deal with these problems and the projects have been delayed, and cost of construction escalated as a result. Inability to take timely decisions, not making payments as per the bid agreement, and not tackling the problems that arise during construction immediately are the weaknesses of NEA management. NEA has lost billions in revenues from lost opportunity to sell electricity due to delay in completion of these projects apart from the escalating cost.

    The actual problem of NEA is related to its structure. It will not be appropriate to keep NEA as a single body responsible for development, generation, procurement, transmission and distribution in the present situation, and it will be better to immediately unbundle it. The accusations of experts that the projects have not been constructed in time due to the structural flaws from the time of its inception should not be taken lightly and it is imperative for NEA to immediately take reformative measures learning from the past incidents and problems.

    Source : Karobar