Transmission failure

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    The current trends of supply and demand of electricity could mean that Nepal’s energy crisis will continue for at least five more years, even if all the committed projects are constructed without hitch. By 2016, with the completion of Upper Tamakoshi, Nepal’s estimated supply of electricity will be 1,205 MW in dry season — still a deficit of 305 MW. However, during rainy seasons, there will be ample surplus electricity that the country could export to the energy hungry neighboring states of Uttar Pradesh (UP) and Bihar, which are among fastest growing economies in India.

    Defused infusionLack of adequate transmission lines and insufficient capacity of existing and planned cross-border transmission lines will be major drawbacks in the future. Presently, the electricity generated from Kaligandaki has not been well utilised during the rainy season in absence of high voltage transmission lines, which has resulted in revenue loss for the nation and commercial loss for producers.

    New cross-border transmission lines are essential for commercial viability of mega hydropower projects such as Arun III, Upper Karnali, Upper Tamakoshi and others. They are important as there is a complementary relationship between power demand and supply potential between Nepal and India. In addition to this, if the government prioritises the construction of cross-border transmission lines to link major hydro projects, it will also help reduce the load-shedding to some extent.

    Procurement potentialNepal’s electricity import is limited to 145 MW during the dry season due to low capacity transmission lines. If high capacity cross-border transmission lines were built, Nepal’s power procurement would increase to 250 MW. The Muzaffarpur to Dhalkebar corridor project was planned to realise this potential but has not started due to incomplete financial closure in Nepal. Unlike other bilateral projects, this has been planned on commercial basis.

    The two sides have established separate companies with participation of various agencies such as Nepal Electricity Authority (NEA), Power Trading Corporation, Infrastructure Leasing and Financial Services and Power Grid Cooperation of India Ltd. The governments of Nepal and India and the World Bank have played facilitating roles in the process.

    There are simultaneous plans to construct three more cross-border transmission lines from Butwal to Gorakhpur, Duhabi to Purniya and Anarmani to Siliguri. Timely completion of these projects will be pivotal in development of hydropower in Nepal and will open new frontiers in power trade between the two countries. Also, adequate transmission lines will encourage additional investments in new hydropower projects in Nepal as the demand for power in India’s two most populous and energy hungry states — UP and Bihar — will only grow in the future.

    Problematic policies

    With the restoration of multi-party system in 1990, several policies were formulated to promote hydropower development in Nepal, with some already in effect. The recently revised Hydro-power Policy, 2001 allows greater private part-icipation in power sector to facilitate improved access in rural areas. However, there are various hefty environmental and forest guidelines that hinder construction of transmission lines. For every tree that is cut down, the project has to plant 25 more and for clearing one hectare of land for transmission lines, the project has to compensate the forest department with 16 hectares. Similarly, the process of land acquisition for the project is very complicated as people demand full compensation with ownership of land.

    Due to such logistical problems and lack of capital, six projects have been in limbo for years. The government has recently decided to start constructing transmission lines for Khare Khola Hydro Electric Project (HEP) (24.1 MW) and Singati Khola HEP (16 MW). But the remaining four projects, namely Maya Khola HEP (14.9 MW), Solu HEP (23.5 MW), Tallow Solu HEP (82 MW) and Mewa Khola HEP (50 MW) have still not started their construction works due to lack of trans-mission lines.

    Sensible system

    According to a NEA source, it costs Rs 11.5 million to construct one kilometer of transmission line with 133 kV

    capacity. But the budget allocation for the development of this sector is much less than what is required. Similarly, NEA has been in financial crisis due to its inability to adjust tariff rates. There are also other challenges like selection and implementation of projects with low financial and system feasibility, and low productivity of human resource.

    To address these issues, NEA should start making appropriate arrangements to introduce wheeling charge system in transmission lines, so that various industries such as cement, iron, steel, et cetera, which consume higher amount of electricity can directly buy electricity from the power producers at higher prices. This will encourage power producers to develop new hydropower projects while industries will get regular supply of electricity. This will not only reduce the overall cost of production as they will not need to depend on costly and imported fossil fuel but also make transmission system more efficient and sustainable. This system ensures reliable supply of electricity, which could resolve energy-related problems of the industries and lead the nation towards a path of economic prosperity.

    (The author is a research assistant at Samriddhi, The Prosperity Foundation and can be reached at pramod@samriddhi.org)

    Source : The Himalayan Times