The decision of CMEC has come at a time when the Asian Development Bank was unwilling to move ahead with its agreed share structure of 15 percent in West Seti. The memorandum of understanding (MoU) was signed in the presence of Nepal’s Prime Minister Madhav Kumar Nepal in the Nepal Embassy in Beijing during his weeklong official visit of China. Besides West Seti, there are other projects like Trishuli 3A (60 megawatt), and Budhi Ganga (18 megawatt). The Upper Trishuli 3A is going to be built under the Chinese Exim Bank’s line of credit while Budhi Ganga is going to be built under a grant assistance of the Chinese government.
There has been a competition between Chinese and Indian companies to build Nepal’s hydropower projects. The competition in construction has been lowered down in the tender prices. The recent example of such a competition is seen in the Upper Tamakoshi Hydroelectric Project of 456 megawatt where the Chinese company Sino Hydro and India’s Hindustan Construction Company had competed. The competition between the two companies for this project had lowered the costs by Rs 1.3 billion from the estimated cost for civil construction. In the first quarter of 2010, the financial closure of Upper Tamakoshi should be finalized. Otherwise, there is uncertainty of the project’s completion on time.
The initial signs of the year 2010 in the hydropower sector don’t show good hope for the Nepali people. The upward trend in load shedding has forced us to forget our immense hydropower potential of supposedly 300,000 megawatts. It is a joke when we see our river potential and the quantity of power Nepal has generated. This year also, the hours of load shedding will reach 16 hours per day though there is the maintenance of Duhabi-Kataiya transmission line and the completion of the 70-megawatt Middle Marsyangdi Hydro Electric Project (MMHEP). The MMHEP being a run-of-the river-type project, its production in the dry season will be lowered to its one-third capacity, which is around 25 to 30 megawatt. The reason behind the same level of load shedding like last year is due to the negligence in addressing the increased demand for power. Nepal could not give momentum to initiatives of producing power for its people although the Pharping hydropower project, established 99 years ago, was the second of its type in Asia.
Still Nepal is not being able to fulfill its internal demand for domestic energy consumption. Electricity being an essential infrastructure for industries, Nepal lacks industrial economy due to this reason. Therefore, the contribution of industry to Nepal’s gross domestic product (GDP) is below 15 per cent.
There is no specific hydropower project in Nepal which can be commissioned before two years so as to reduce the scarcity of electricity. The more Nepal delays to develop power quickly, the more its power crisis becomes chronic, further complicating the management of its power sector. Major hydropower projects are either in their study phase, or the developers are in their wait-andwatch mood due to Nepal’s own political instability. Every year, Nepal should achieve its power needs by additional 70 to 80 megawatt due to the increased demand but it has failed to do so as the present installed capacity is 250 megawatt less than the demand. We have only 650 megawatts of stalled capacity from all the hydropower projects.
Nepal Electricity Authority (NEA), the sole authority for power generation, transmission and distribution of electricity in Nepal, is going to be worse in 2010 due to its chronic losses and financial indiscipline while no initiatives have been taken for its reform. Its direct impact will fall on the hundreds of thousands of electricity consumers and hydropower development of Nepal. As NEA is the single buyer of electricity and the sole institution to develop transmission line networks, its irregularities, corruption, indecision all have hindered the development of hydropower.
NEA, having an annual loss of nearly four billion rupees with an accumulated loss of around 12 billion rupees, is facing rampant interventions from the Ministry of Energy in each of its decision process. The minister of Energy is the head of the board of directors of this organization. According to senior officials at NEA, this institution is being weakened more due to the intervention on every small and tiny thing from the ministry – from peon recruitment to tender processes of huge amounts. Experts opine that the rescue and reform of NEA is possible only when the provision of the minister concerned being the head of its board of directors is changed, and its managing director is appointed through an open competition.
If the political consensus is made firmly in India and Nepal about Pancheshwar Multipurpose project, it will also move forward in the direction of its pre-construction works in 2010. The lack in commitment has derailed this project for 14 years. The ministerial meeting due to be held in January 2010 on hydro power and water resources issues will also leverage the Pancheshwar project. The storage and multipurpose project of 6,000 megawatt will be ready for production of energy after nine years of uninterrupted construction.
Dinesh Karki reports on hydropower and energy for Republica.
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