The restoration of democracy had most adverse effects in the power sector development of the country. Arun III was derailed as a result of sustained opposition led by then main opposition party and some prominent figures associated with water resources advocacy groups.
The 1990 people’s uprising forced Late King Birendra to restore multiparty democracy in the country. The restoration of democracy had most adverse effects in the power sector development of the country. Arun III was derailed as a result of sustained opposition led by then main opposition party and some prominent figures associated with water resources advocacy groups. There were no immediate alternative plans with the government to meet the expected electricity demand growth in the country. The G P Koirala led government was facing serious problems from both within the party and from main opposition party. This was a fluid political environment, which allowed the policy revision for hydropower sector in the country paving the way for entry of private players into power sector. The privatization drive started by the then minister of state for finance Mahesh Acharya at the time were responsible for selling off of many industries like Bansbari Leather Shoes Factory, Bhrikuti Paper Factory, Harisiddhi Brick Factory, etc. The government interference in other profit making public enterprises resulted in these entities turning to loss making units. The current power crisis also is mainly triggered by naked political interference with vested interests in the past to enrich the concerned ministers and their masters.
Nepal’s desire to fulfill the whole electricity demand by hydropower and uncertainties in the water levels in major rivers have made things worse. Had there been diversification of generation, the current crisis would have been far less.
Nepal Electricity Authority (NEA), set up by the act of erstwhile parliament (Rashtriya Panchayat) in early 1980s by merging Nepal Electricity Corporation, Eastern Electric Corporation and Department of Electricity was mandated to generate, transmit and distribute electricity to all type of consumers in the country. At that time it was common practice to have all these three key services of power generation, transmission and distribution under one umbrella expecting better coordination in operation and planning. All these three components must function in desired manner simultaneously for effective performance of the whole system. Nepal’s desire to fulfill the whole electricity demand by hydropower and uncertainties in the water levels in major rivers have made things worse. Had there been diversification of generation, the current crisis would have been far less. But it is easier said than done. We do not have coal reserve to go for Coal Thermal Power Plants, which are very cheap. We cannot expect to have Nuclear Power Plants in the country in near future because of its highly sensitive nature and unpredictable security and political environment in the country. The potential of wind power generation has not been explored meaningfully to date despite strong proofs of its possibility. But again the Wind Power Generation is not as easy as hydropower generation and carries with it high degree of uncertainty. The wind technology is a proven technology in the countries like Denmark, Germany, UK, Canada, Spain and even in neighboring India. We have to look for wind power as one of the ways to diversify our generation. In addition to wind, we have to continue working for promotion of other alternative sources of power and energy like Solar PV Systems, Solar Water Heaters, Biogas plants, etc. Solar PV Systems are very expensive because their key components are mostly manufactured and imported from developed countries. Concerted Research and Development works are going on to bring down their cost. We can only rely on Solar PV Systems to electrify homes in remote areas where National Power Grid is highly expensive to expand.
You cannot blame the poor security scenario in the country only for the delay in construction and cost overrun. The vested financial interest of NEA top officials directly involved in the project was one of the main reasons for this. They colluded with the contractors and consultants to cause colossal loss to NEA and the country.
We are in current mess not only due to poor planning and coordination among different functional groups within NEA, excessive political interference by successive governments with the sole aim of amassing wealth and sometimes, poor choice of Chief Executive as well as members of Board of Directors (I mean those from outside government ministries). All of us know the cost overrun in Kaligandaki A but none of the officials involved in that project were ever investigated and forget about their prosecution for failing to deliver and causing grave loss to NEA and the country as whole. The construction cost of recently completed Mid Marsyangdi Hydroelectric Project has doubled from its initial estimate. The civil construction part, which may prove difficult to unearth once the project has been completed, is to blame for most of these cost escalations. You cannot blame the poor security scenario in the country only for the delay in construction and cost overrun. The vested financial interest of NEA top officials directly involved in the project was one of the main reasons for this. They colluded with the contractors and consultants to cause colossal loss to NEA and the country. I doubt the anti-graft body in the country will ever look at the matter seriously. The CIAA simply lacks desire and competence to probe such matters. The officials there can in-turn use this as an opportunity to get their rightful (?) pie. The natural calamity (I mean Koshi flooding) that struck the nation would not have come at worse time. Low rainfall in the Kulekhani catchment area made things further worse as Kulekhani I and II generate at peaks a combined total of 92MW. The loss of Kattaiya-Duhabi line due to damage to few towers should have been fixed working in warlike regime. But this has not been done. We never seriously considered such contingencies in the past and never had any readymade plan for the same. The current situation, I hope, will give impetus to serious thoughts for increased attention to Research and Development activities within NEA.
Is Diesel Power Plant a Solution?
It is suicidal to opt for Diesel plant as quick fix to current power crisis. Had there been 10-15% deficit during peak hours only, this option may have been an affordable and sensible alternative but not for a deficit of more than 50%.
Current power crisis in the country is of unprecedented level. We have huge deficit both in demand and energy. We are facing acute shortage not only at peak hours but at off-peak hours also. As estimated by Load Dispatch Centre of NEA, current deficit is around 400MW which is unimaginable for a system of just over 600MW. Large Diesel plants not only require diesel on daily basis but also efficient manpower to handle and operate. They will need proper training on operation and maintenance (O&M), which will take time. Otherwise we will have to rely on foreign technicians and engineers that will increase the O&M cost and make the option further costlier. The petroleum oil has plunged to below US$ 40/bbl but it is highly volatile commodity whose price is controlled by developments in Middle East, Russia, Nigeria, Venezuela, Mexico, the US, etc. The serious environmental impact and its long-term effects on surroundings are other points of concern. The main point is the country simply cannot afford these plants. It is suicidal to opt for Diesel plant as quick fix to current power crisis. Had there been 10-15% deficit during peak hours only, this option may have been an affordable and sensible alternative but not for a deficit of more than 50%. Various Indian states are suffering from power crisis for decades. They have the technology, manpower and up to some extent affordability, but still why such option has never been considered seriously attracts serious thought. In case of Nepal, in the pretext of saving industries from bankruptcy, if we go for this option, one of the major stakeholder in the development of country will be bankrupt. The industrialist lobby, agents of many big corporation, who are coercing the Maoist leadership for installing DPP, are trying to make billions for themselves from this new business opportunity created due to crisis in the country. The current Minister of Water Resources seems to lack even fundamental information regarding power supply issues whereas the Maoist top brass without whose positive nod this whole initiative could not have gone through seems to be no different from other parties.
The crisis did not arise overnight and it cannot be solved overnight. There should be immediate, short-term, medium-term and long-term measures.
Few simple things should be understood. The crisis did not arise overnight and it cannot be solved overnight. The government has already declared Electricity Emergency and came up with set of measures to tackle the electricity crisis in short-term as well as long-term. The government’s new announcement has to be carefully studied before commenting on the same. However, I would like to address few points as possible way ahead to tackle the current crisis. There should be immediate, short-term, medium-term and long-term measures. The immediate measures may consist of reduction in usages of unnecessarily excess lighting fixtures in government offices starting from Singh Durbar and NEA head office. Similarly, significant power and energy savings can be achieved through reduction in consumption at power generating stations where electricity to all employee quarters are provided free of cost prompting huge wastage by the employees and their families. Street lighting wherever they may be, should be switched on and switched off at right times. Power supply to hoarding boards has already been switched off though they only constitute very small of fraction of total demand. Even these days heaters ranging from 1000W to 2000W are seen in use at NEA central office premises which shows little respect for what is happening in the country. The same might be happening in the other government offices and government owned companies. The areas with high pilferage of power must be penalized first by cutting their supplies to longer hours compared to other areas with permissible level of leakage. This should have been done even when there was no load shedding.
The repair of Kattaiya-Duhabi transmission line must be completed at the earliest. Concerned Nepalese authorities should have worked day and night to get part of the transmission line repaired/restored as an emergency. The water level in the Koshi river has reached its annual minimum and the work should have been completed by now. What are the impediments for this? The repair of the line would have provided us an estimated 75MW of power. The existing Diesel plants with NEA are said to be in poor health- most of them not working properly. The concerned engineers have cited lack of fund for repair/maintenance and lack of spare parts for this grim scenario. But why the concerned NEA officials did not deem it necessary to carry out repair and purchase the spare parts in time so that they could have been operated to minimize the load shedding. Should these officials be punished for failing to maintain the stations under their control? Since NEA management was aware of significance of power delivered by Kattaiya-Duhabi line, they should have taken timely decision to tackle impending power cuts. There are news of various power plants failing to operate at their rated capacity not only due to reduced water flows but also due to lack of regular maintenance and application of good maintenance practices at their power plants.
The over reliance of government/planners on IPPs for the fulfillment of electricity demand in the country is one of the reasons for current crisis. First two IPPs in Nepal are emptying NEA coffer as NEA pays almost its 40% revenue for meager 96MW generation from those two IPPs. Nepal based IPPs can in no way be relied upon for large-scale power generation simply because it takes colossal capital investment and they lack expertise for such projects.
The over reliance of government/planners on IPPs for the fulfillment of electricity demand in the country is one of the reasons for current crisis. This policy of bringing huge capital investment on this basic requirement for the country was flawed from the beginning. Even in developed countries, electricity was used to be produced by government controlled companies or tightly regulated and monitored private companies with license to produce electricity in given regions (especially in the US). First two IPPs in Nepal are emptying NEA coffer as NEA pays almost its 40% revenue for meager 96MW generation from those two IPPs. Nepal based IPPs can in no way be relied upon for large-scale power generation simply because it takes colossal capital investment and they lack expertise for such projects. IPPs should concentrate on projects less than 25MW and government and NEA should facilitate their inception. When Power Purchase Agreement (PPA) is concluded between NEA and IPP, there must be strict timeline by which the power plant must come in to operation. Incentives can be offered for plants coming before their stipulated deadline and punishment for those coming late. NEA should have adopted differential PPA based on power surplus and power deficit zones and should have provisions to consider other factors like local consumption, available transmission line capacity and future expansion planning. Uniform PPA rate make things easier for the developers but is not the best solution for NEA. Holding rivers and selling them must be stopped immediately and the existing licensing procedure must be scrapped altogether and new one whereby real developers are attracted must be enacted.
In the long run, NEA and the government must rely on their own and make sure that no generation/demand gap exists. One of the most contentious issues is the sale of West Seti power at comparatively low rate to India when the domestic rates are far higher. There should be no repeat of West Seti. And, don’t hand over our rivers to foreign companies with other vested interests rather than commercial. The Upper Karnali 300MW license sold to GMR by Sher Bahadur Deuba’s protégé minister will have long-term ramification on the country. National treasure stolen or owned by foreigners is gone forever.
The government in this hour of crisis can easily fall in the trap laid by commission agents and big business houses whose only interest has been profiteering at any cost.
The government in this hour of crisis can easily fall in the trap laid by commission agents and big business houses whose only interest has been profiteering at any cost. The government task force should have involved people from power academia as well to give representation of group that in other countries wields heavy clout over such matters. The political appointments made to fill top NEA post as well as some of the members of its board in the past have been used by governing parties to ensure the controlling minister and concerned political parties get their respective monetary share from mismanaged and corrupt activities of NEA. Let us hope that the worst is over soon. Even if we decide to have DPP, we have to go for bets possible options. Diesel plant up to 100-150MW in temporary basis will alleviate the current crisis. But it will take at least 4-6 months before these plants come in to operation given the way our bureaucracy functions. So, for this year, we have no choice but to live with long hours of load shedding. By proper planning and timely decisions, we can reduce and minimize this year’s painful power crisis next year without installing DPPs and save billions of scarce rupees. Serious thought must go in this direction.
There are companies that provide diesel power plants on temporary basis. They install, operate and then will take back their plants after the completion of the contracted period. The price of electricity from such plants must be calculated scientifically and transparently which should not be more than NRs 16 per kWh(unit) if the current global oil price persists. If government mulls allowing private parties to install the plant and buy electricity as in the case of other IPPs, this will bring disaster to the country and NEA. Also, the cost of such plants must be transferred to its consumers. Otherwise, people in remote Humla, Mustang, Solukhumbu and other similar districts will be sharing the cost of diesel power plants and that does not make sense. Passing the cost of diesel power plants to the customers will be a difficult proposition for the government but there is no choice. We remember the Nepal Oil Corporation crisis. It can be in the form of fuel surcharge as in the case of airlines and must be terminated once these plants are out of operation. Vested interests will try to keep those plants as long as possible but the concerned authorities as well as pro-public groups should be attentive against such attempts. The most urgent need of the hour is to save NEA by restructuring and reforming its operations and activities. Colossal public money has been invested in NEA to make it achieve its targets. But the excessive government interference, high level of corruption and lack of accountability and transparency have brought this very important institution to the brink of collapse.