We need to do adequate homework to reduce the cost of production of hydropower so that the goal of affordable energy can be achieved
For the first time, the government of Nepal in May issued the whitepaper on power development with the objective of increasing electricity supply to gear up overall development of hydropower through integrated hydro policy. The government target includes generation of 3000 MW of power in three years, 5000 MW in five years and 15,000 MW in ten years. In ten years, the government has targeted to produce 10,000 MW for domestic consumption and 5000 MW for export. This commitment is in line with the spirit of Sustainable Development Goals (SDG) of United Nations on affordable and clean energy. SDGs are a universal call to action to end poverty and protect the planet by ensuring that all people enjoy peace and prosperity. Out of the 17 goals to be fulfilled by 2030, the seventh goal, also known as SDG-7, is related to ‘affordable and clean energy’.
The UN has emphasized in ensuring universal access to affordable electricity by 2030 which calls for investing in clean energy sources like hydropower and solar. The SDG-7 aims to close the energy access gap and “ensure access to affordable, reliable, sustainable and modern energy for all” through national action and international cooperation.
The UN has clearly pointed out that country’s ownership is fundamental along with policy innovation for meeting the goals. Thus, the unveiling of this whitepaper along with the commitment to bring an integrated hydro policy has definitely put the investment in hydropower project into a spotlight. This commitment is mainly zeroed in on attracting investors from Nepal and abroad. Projects which were in limbo or agonizingly slow are expected to take off.
While access to electricity in the urban areas has reached around 97 percent, the supply of electricity is inadequate. We must note that the supply has been more reliable since last year after Nepal Electricity Authority successfully addressed irregularities in power distribution. Yet, around 20 percent of country’s population still has no access to electrification. Only five percent of the rural population has access to electricity from the national grid. Even in the areas where electricity is available, large number of people continues to rely on other sources like firewood and LPG for cooking purposes. Large amount of fossil fuels are also consumed in industrial sectors and vehicles.
Electricity in Nepal is mainly produced through hydropower and other sources such as solar and wind energy in particular contribute negligible share. The journey of hydropower development in Nepal dates back to 1911, when the construction of Pharping Hydroelectricity station started. However, even after more than a century, hydroelectricity capacity is confined to just a little above 1000 MW. Owing to the slow pace of development, most of the transmission line projects have not been completed on time. Without the proper planning and development of transmission line, it is almost impossible to achieve the target.
As we are moving forward toward meeting 90 percent target on average, it is equally important to make sure that the electricity will be used for purposes like cooking and commuting among others.
After several decades of political turmoil, Nepal finally has a political stability following the recently held general elections. The constitution of Nepal has also adopted a policy of harnessing water resources with domestic investment with equal focus on promoting foreign investment. The government’s commitment in the form of whitepaper is definitely an applauding task. But there is more to this problem than the government’s commitment. The hydropower sector had received a special attention during the First Five Year Plan (1956-60) as well. In spite of this, Nepalis continue to struggle for proper supply and access to electricity. Low generation of electricity in winter because of the decreased water level is a challenge to overcome.
Challenge to overcome
The timely completion of ongoing hydropower project is another challenge. Because of the hindrance of the locals or by negligence of contractor, projects are not being completed within the stipulated time. We are yet to build enough transmission lines, which are required to transmit power to substation. Hydropower experts are worried about imbalance between generation and transmission expansion plans and the fact that the existing transmission lines are being overloaded.
Investors have often blamed the lengthy procedure to acquire license and approval during the development and construction of the projects as the reasons for this. The current policy on hydropower is often criticized for having many gaps because of which the private sector and international investors are unwilling to make investment in Nepal. Besides, inadequate supply of infrastructure including shortage of construction materials has also caused delay in many projects. So what should be done?
Despite these challenges, conducive environment has been created for developers in the recent times. The government’s plan is ambitious but can be materialized with a strong coordination among the developers and the government.
We must begin by ensuring proper coordination between concerned ministries, modernizing and expanding distribution system and updating existing policies on a regular basis.
Allocating Rs 83 billion for Ministry of Energy can be fruitful in meeting the goals as stated in the whitepaper in terms of developing and expanding hydropower projects. One door policy can certainly attract potential foreign investors who have often complained about complex procedures within bureaucracy to obtain the license and to execute the project plan.
The government also needs to work on fast-track measures to construct transmission lines while enhancing the capacity of the substations. Then we will be able to set up electricity transmission and realize phase-wise development of domestic and cross-border transmission lines as stated in the white paper.
The whitepaper will undoubtedly have a positive impact on power generation and supply and attract the attention of international investors. But issuing whitepaper alone won’t be enough. We need to do adequate homework to reduce the cost of production of hydropower so that the goal of “affordable energy” can be achieved.
Meanwhile, it is imperative to launch extensive consultations with stakeholders and immediately enact integrated policy for hydropower development.
The author is executive member of Energy Development Council of Nepal and Executive Chairman of Sushmit Energy