Sensitivity of hydropower projects

    China Daily
    Photo : China Daily

    We have not been able to generate hydroelectricity as per our target due to our capacity related weaknesses despite immense potential for hydropower development in Nepal. Demand for electricity in Nepal has crossed 1,000 MW but just 700 MW has been added to the national grid. Construction of hydropower projects is the only reliable alternative to meet our electricity demands. But Nepalis have been forced to suffer from five hours of load-shedding a day even during the peak of monsoon as construction of projects has not been expedited as is necessary. The Nepal Electricity Authority (NEA) has already projected daily load-shedding of up to 16 hours in the coming dry season. The continuous load-shedding has not just had direct impact on the industrial sector but has also seriously affected other social and economic sectors.  The state has been spending a huge sum of money on inverters, generators and other equipment to operate industries and enterprises at the time of power cuts. The country has to spend almost the entire export earnings for import of petroleum products, that are used to operate generators, alone. The erstwhile Baburam Bhattarai government had initiated process of procuring diesel plant to fulfill the electricity demands but the decision to bring another diesel plant, that adds long-term financial burden for the state by billions every year, was not practical at a time when even the existing multi-fuel plants in Hetauda and Biratnagar are not regularly operated. The Bhattarai government eventually had to back off as the number of those opposing the plan far outnumbered those in favor of it.

    While only NEA was allowed to construct hydropower projects in the past, the sector has been opened for private investment after the country adopted economic liberalization in the early 90s and has been attracting even foreign investment. But unfortunately big projects have always been obstructed in the name of nationalism. West Seti and Upper Karnali have also become victims of this trend that started in 1995/96 from Arun III project that was to be constructed in the eastern Nepal by the World Bank (WB). Australian company Snowy Mountain Engineering Corporation (SMEC) wasted over a decade saying it will construct West Seti, the biggest reservoir project in Nepal. The project has now been handed over to China Three Gorges Company after SMEC failed to make financial arrangements despite completing environmental study and other reports.

    While companies of other countries are not facing much difficulty, the projects being constructed by Indian companies have been facing big problems from time to time. The UCPN (Maoist), that became the largest political party following the constituent Assembly (CA), had publicly announced it will not allow 14 big projects that were to be built with Indian investment to move forward. It has somehow softened its stance now but the hardline faction of the party, that has now split to form CPN-Maoist, has yet to mellow down. Upper Karnali Hydropower Project, to be built with joint investment of Indian company GMR and Italian Thai Development Company of Italy, has become the latest victim of this nationalist rhetoric. The project is facing uncertainty after the Supreme Court recently issued a stay order directing the government to not go ahead with signing of Power Development Agreement (PDA) that was in final stage.

    Such obstructions in different pretexts deflate the morale of investors at a time when the country is struggling to attract foreign direct investment (FDI). The major political parties had expressed collective commitment to not interfere on hydropower projects some time back on request of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) some time back. It is necessary to understand that the country will not gain anything and instead will lose much if the investors go back abandoning the project.

    Source : Karobar daily