Of all of these however, power seems to be the one issue on almost everyone´s mind right now. One of the first things Jhalanath Khanal as our new Prime Minister did was sign a document to establish a committee to address the load shedding issue . His predecessor had left raving and ranting at the lack of activity being carried out to combat load shedding. Even articles covering hydropower issues have appeared with increasing frequency in the media and one can see that the awareness and urgency on the issue is increasing. However, most of these articles address hydropower development in isolation. Hydropower is a source of energy, a crucial component required to fuel economic development. There are several alternatives to hydropower energy like diesel, multi-fuel including nuclear energy. However, given our technical expertise and the cost of diesel and the ready availability of water resources in the country, hydropower is the most feasible option for generating energy. The tone and intent of most of the debates and discussions on hydropower are such that they are treating hydropower development as an end in itself and forgetting that most importantly it is also the crucial input (infrastructure) for economic development. Until this underlying factor is realized and acknowledged, all problem solving endeavors, policies and efforts related to hydropower will not be complete. By looking at a tree too close, we might be guilty of missing the forest, ie the bigger picture.
One of the problems that plague hydropower in Nepal is how it has been treated over the last century. It has been treated as a source of personal pocket money for a select few – the Ranas, then the monarchy, followed by the Panchayat and now by the ´democratic´ political leaders. Even though electricity feeds into almost every single citizen´s life – from the elder to the young student – hydropower development has remained in the clutches of a select exclusive group and often been conducted in a non-transparent manner.
As mentioned earlier there are several alternative sources of energy – diesel, thermal, solar etc. However, while those who can afford to, are using considerable amount of their budget on expensive generators and solar energy contraptions, the average student with a meager income is forced to study in candle light (and with the fast approaching SLC exams and the even faster approaching increasing hours of load shedding even candle expenses are increasing alarmingly). In several rural areas, communities have worked together to build small hydropower projects. However, at a time where countries and cities are aiming to be urban metropolitans with thriving industries reliant on huge amount of power one wonders how feasible or sufficient this model will prove at large.
Professor Deborah Stone in her seminal book on policy, Policy Paradox, broadly classifies policy problems into three categories – representation, implementation and accountability. Representation is the ability of citizens to express their needs, interests and problems, to transmit those expression needs to government and legislative institutions which can translate these needs into policy solutions. Implementation is the problem of how those policies on paper that have been legislated do not get translated into practice. Accountability is a mechanism by which some actors, citizens or other officials hold public officials to a set of standards, which are the policies.
While on paper, all of the major political parties seem to be likeminded on the issue of hydropower, emphasising support and commitment toward developing hydropower as stated in their political manifesto, this consensus falls apart when it is brought outside the realm of the political manifestos. Projects commenced under the auspices of one party get targeted by another and project speed and development get retarded as parties disagree and compete on everything from targeted MW numbers, to get credit to groups who can invest in hydropower projects and issues of local ownership and benefits etc.
Likewise, construction projects have been obstructed by locals often backed by political parties claiming that their needs and grievances have not been addressed prior to the construction work. Therefore, there is a need for a mechanism to address the issues and stakes of the local people.
For private investment in mega projects to have attractive returns and to enable Nepal Electricity Authority (NEA) to purchase bulk power (more than 1000 MW) and export surplus power to India, market mechanism for power trade between Nepal and India is essential and not yet in place. NEA and its predecessors have been involved in power exchanges with India since the early 1970 following inter-government agreements on the Koshi and Gandak Hydroelectric Projects. More recently, NEA has also functioned as the implementing agency to take in the power made available to Nepal from the Tanakpur powerhouse under the Mahakali Treaty with India.
Apart from the power exchange efforts made by NEA, the concept of power trade with India in large magnitude remains on paper alone. Issues such as tri-partite rights, downstream benefits and use of national resources become part of the power trade which is rather a political issue of water rights.
Nepal – India Power Trade Agreement was in place for power trade between Nepal and India on February 17, 1996, but there has been no progress in developing market mechanism for the power trade. For this there is need of India-Nepal Cross Border Transmission Line, for which the government has envisaged a project supported by the World Bank. The proposed India-Nepal Cross-Border Electricity Transmission and Trade Project are to enable electricity trade to meet deficits in Nepal and export electricity to India along commercial principles. The project information document of World Bank (Report No.: AB6310; December 2010) states that "The project would be utilized for import of 300 MW of power from India to Nepal – 150 MW round the year on a long term (25 year) basis; and the remainder on a medium term (5 year) and seasonal basis. After the commissioning of the medium/ large hydro projects in Nepal, the Project would be utilized for export of some 1200MW of power which, based on current proposals is likely to be of the order of 3000 MW of power to India from 2016 to 2018 and onwards. PTC India will deliver the 300 MW of power to be imported by Nepal under a Power Purchase Agreement (PPA) under negotiations; and the export power from Nepal could be routed through PTC India, which is currently the Indian node agency for power trade with neighbouring countries."
It will take a few more years for the market mechanism to be in place for power export to India without which the private sector investment in mega hydropower projects in Nepal is a far cry. Export-oriented projects like Upper Karnali (900 MW), Tamakoshi 3 ´A´ (880MW), Upper Marshyangdi (600 MW), Arun III (402 MW), Lower Arun (400 MW), Balefi (50 MW) and Likhu (34 MW) are awaiting Power Development Agreements.
NEA is compelled to buy electricity from Power Trading Corporation (PTC), an Indian company, at a high rate as parliament has not enforced the agreement for 13 years. PTC has been selling electricity to NEA at Rs 10.72 per unit while it buys at Rs 6.40 per unit with other company. The present government has forwarded in the first week of December 2010, the Electricity Trade Agreement dossier to India seeking a free power market for the electricity generated in the country. If India endorses this agreement, Nepal will be able to trade power in free market.
In the face of fourteen hours of stifling power cut, the question arises as to who is accountable for this. Should it be the government bodies like the Ministry of Energy and by extension the Department of Electricity Development (DoED), National Planning Commission, NEA or should the governmental and non-governmental bodies have joint accountability. Ministry of Energy and NEA should now initiate the process to develop medium-scale hydropower projects.
Along with that, the electricity tariff rate has remained constant for the past decade while NEA has been running to the ground due to yearly losses. According to a report released on Aug 14, 2010 on the web , NEA has so far incurred a loss of around Rs 19.50 billion. Amid escalating inflation and the absence of a corresponding rise in income (through increase in tariff), NEA is heading toward bankruptcy. Despite regular appeals from NEA to the Electricity Tariff Fixation Commission, Ministry of Energy directives and even what seems to be the ex-Prime Minister Nepal´s parting endeavor, the Tariff Commission has remained impassive. This gives rise to the question who is the commission accountable to. If it does not heed its related ministry nor the PM’s directives, then who is the commission answerable to?
mohan.manandhar@nitifoundation.org
Related story
How sustainable is hydropower development in Nepal?
