Worth the money : Developing hydropower


    Developing hydropower
    When will load shedding end in Nepal? If we go through the statements of our energy ministry in the last ten years, we could conclude that it may never end. Ten years ago, then-water resources minister said load shedding would end in five years.

    The present energy ministry says load shedding will end in another five years. Were we just chasing a mirage in the last decade? Isn’t it time for our policymakers, planners, developers and everyone concerned with energy security in Nepal to find a solution? Electricity generation has become vital for the country, as the total hard currency spent on import of fossil fuel exceeds total annual exports.



    We have abundant water resources to produce hydropower, which can not only cater to our energy demands, but also to parts of neighboring countries. Despite widespread concerns about speedy development of hydropower, why does it move at snail’s pace? Individuals concerned with hydropower may have their ideas, but the question is, what steps should the country take to ensure hydropower development at an accelerated pace? Let us try to define the role of different stakeholders.

    In a developing country like Nepal, the primary responsibility of fulfilling the basic needs of its citizen falls on the government. In the last two decades, the government of Nepal has considered investment in hydropower development ‘lucrative’, and expected investment from private sector. The government policy has been to reduce public investment in the sector. Consequently, after completion of Middle Marsyangdi, we do not find any major hydropower development in pipeline from the government sector.

    Performance of independent hydropower producers has been dismal in the period. Khimti, Bhote Koshi and Chilime hydropower plants were constructed and operated smoothly. Lured by the facilities provided to these projects, many local and international promoters were interested in developing hydropower projects in Nepal. Licenses were issued to every possible project in every corner of the country. The license given for surveying could not proceed to construction phase as developers could not mobilize financial resources.

    Although everyone agrees that the country needs to develop hydropower, there is no consensus among political parties and other stakeholders regarding government policy to that end. The stakeholders are basically divided into two distinct camps: liberal and nationalist. Liberals plead for international investment and export of electricity, whereas nationalists argue for the mobilization of internal resources and giving first priority to internal consumption. The time has come to take a firm decision and move forward.

    There is also a brighter side to this otherwise dismal situation. Lessons have been learnt from the present energy crisis. It has helped us develop our capacity to construct up to 30 MW hydropower plant with local technology and resources. Our financial institutions are ready and able to provide loans for medium sized projects. Returns from completed plants are starting to trickle in.

    Chilime, Khimti, Bhote Koshi and other small completed projects are generating resources, and the second cycle of development of private sector hydropower projects is slowly but steadily progressing. In the long run, they can contribute a great deal to meeting energy needs of Nepal. But the question of how to solve present energy crisis is still not addressed.

    The overall responsibility of hydropower development lies with the government. In the present circumstances, the country cannot move forward only with inputs from private sector. We should learn from the experience of China, India, Korea and other countries that developed hydropower with public sector investment in the beginning. At present, storage type and big sized hydropower projects need public financing in Nepal. We should learn from the smooth progress of Upper Tamakoshi hydropower project and copy such a modality in other projects too.

    In the present situation, many private developers who have invested considerable amount in project preparation have obtained licenses, but are unable to mobilize financial resources. The government should work out a solution to utilize the license of attractive sites that are idle with private sectors.
    Recent policy changes provide some hope for hydropower development. The government has increased budget in the sector considerably, and has promised accelerated development of hydropower plants and transmission lines. This may motivate public sector to develop power plants. Independent power producers will also benefit from it.

    The present political, social and financial situation calls for increased public investment in hydropower, similar to investment in roads, irrigation, agriculture, etc. Electricity, which has multiplier effects in the economy, and also results in direct financial returns, should get high public investment priority. We are in the process of managing our political crisis, but let us not allow another crisis to develop in the meantime. It is about time we took to hydropower development on a war footing.

    The author is Former Energy Secretary and an expert on water and energy


    Source : Republica