Energy minister has little to show after a year in office

Published On: March 18, 2019 09:55 AM NPT By: Rudra Pangeni  | @rudrapang

KATHMANDU, March 18: The Ministry of Energy has failed to achieve most of the targets that it had set when incumbent Minister for Energy, Water Resources, and Irrigation Barsaman Pun assumed office a year ago.

The ministry unveiled a 51-page progress report in Kathmandu on Sunday, outlining progress made under Pun. 

After visiting Upper Tamakoshi project site along with Prime Minister Khadga Prasad Oli in April last year, Pun had said that the national pride project will be within the current fiscal year or mid-July 2019. But the project management has already extended the deadline by six months to December 2019. Project officials say it will still difficult to meet the new deadline.

The project is important for the country’s energy security. Delay in project completion has led to cost overruns. The project cost has increased by at least Rs 20 billion, according to a recent report submitted to the project management.

The estimated cost of the project has jumped to Rs 70 billion from initial estimation of Rs 35 billion. While the project is losing revenue of Rs 25 million per day, it is forced to pay Rs 15 million a day to pay interest on bank loans.

“There were initial delays in fitting vertical penstock shafts and steel lining. But the contract has now been rearranged to Andritz Hydro and the project will start generation from the next fiscal year,” the ministry’s report reads. However, no specific time has been given for generation.

Upper Tamakoshi is not the only project that has seen delay. The ministry has failed to settle non-performing contractor’s issue in Kulekhani III Hydropower Project. Interestingly, the project is missing from the ministry’s progress report.

Pravin Raj Aryal, the spokesperson for the energy ministry, said that the minister is trying to sort out the issue to expedite the ‘sick project’.

Upper Trishuli 3A (60 MW) is another project that has stalled since long. Its completion deadline has been extended multiple times. Aryal claims that the project will be completed soon as the ministry has already settled differences with the Chinese contractor.

Aryal, however, could not provide any specific deadline for project completion.

After assuming office last year, Pun had told media persons that he would award Budhigandaki Hydropower Project through a competitive bidding process. But few months later, the government re-awarded to project to China Gezhouba Group without any competition.

The main canal of Sikta Irrigation Project collapsed this year, throwing the multi-billion-rupee project into uncertainty. But the ministry did not take the issue seriously. Though the ministry formed a probe committee after months of confusion, it did not take any strong measures to correct wrongdoings in the project. Dozens of officials of the ministry as well as the contractor are being tried for corruption.

The minister has said that it is not time yet to measure achievements of the energy ministry under his leadership. Pun, however, argued that he has laid grounds for achievements. 

“We have drafted necessary policies and laws as well as made bilateral and multilateral diplomatic efforts for promotion of investment in water and energy projects. These are our achievements,” the report states.

Aryal cites the amendment to Indian guidelines for energy trading, which opens Indian market for hydropower generated in Nepal, as well as energy banking with India as one of the major achievements of the ministry. 

The ministry has cited lack of manpower due to transfer of 28 percent of its workforce to sub-governments as one of the factors that affected its performance. 

Pun has won praises from independent power producers (IPPs) by announcing that the government will sign more power purchase agreement (PPAs) with the private sector who want to build run over river projects. The ministry has extended the target of power generation by run of river projects in the next 10 years to 15,000 MW as the installed capacity of 10,000 as part of energy mix plan endorsed in 2016 has already been met. Though he made the private sector happy, it is sure to affect the government’s policy of building peaking and reservoir plants for energy security of the country.

Earlier in February, the government announced ‘people’s hydropower’ program in February, inviting people to invest in 19 hydropower projects. However, the government is still to form Electricity Regulatory Agency which is a key to protect investment of general public in hydropower sector and curb other anomalies in the sector, even though the Electricity Regulatory Bill was endorsed by the parliament six months ago.

The private sector does not seem impressed with Minister Pun. Shailendra Guragain, president of Independent of Power Producers’ Association, Nepal, say that only a few things promised by the ministry have been implemented. “Energy banking agreement with India and lobbying with the southern neighbor to revise its guideline on electricity trading were the major achievement of the ministry,” Guragain said. 

Guragain added that IPPs had expected the government to take needful decision to ease the process of getting forest clearance and to expedite transmission line projects to evacuate energy generated by different hydropower plants, among others.

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