30 August-5 September #671

Common minimum targets

A lack of understanding among power players has stalled the growth of the hydropower industry
Sunir Pandey

After a child drowned near the construction site of the 50MW Upper Marsyangdi project in July, angry locals vandalised equipment and shut down the plant in protest.

They claimed the company had failed to build a bridge which it had promised as part of the project. The lack of local administration meant that political parties had to step in and act as mediators between villagers and developers. Although work resumed after a few days, animosity between the two remains.

The incident highlights exactly what is wrong with Nepal’s hydropower sector: investors are not guaranteed any protection by the state and the state in turn has failed to devise proper guidelines for developers on their social obligations.

And behind the hype of Nepal’s potential to export power to India, is the stark reality that 40 per cent of Nepalis still have no access to electricity. Nepal’s per capita power consumption is among the lowest in Asia at 93 kWh, well below the regional average of 810, meaning there is plenty of scope for increasing demand by creating industries.

The broader solution to Nepal’s power problems, according to investors, politicians, government officials, and experts who gathered in Kathmandu this week for the Power Summit ’13, lies in the creation of a comprehensive Power Development Agreement. Inaugurating the summit, President Ram Baran Yadav urged participants to “keep ordinary citizens at the centre of all discussions on hydropower development”. Even though leaders of political parties were present during each day’s concluding sessions, they tended to linger on the fallout of power politics and expended few words on the role of hydropower to reduce poverty.

From the time private companies were allowed into electricity production, the sector has seen its fair share of politics. When asked if hydropower had a place on their election manifestos, the politicians present answered in the affirmative. But experience shows that parties, especially during election season, have a habit of playing up hydropower to boost their vote banks, and have so far refrained from tackling core issues due to fear of being labelled ‘anti-development’.

Like every other debate on Nepal’s hydropower, the summit too was abuzz with discussions on the highly ambitious yet controversial joint ventures on the Kosi, Gandaki, Karnali (Chisapani), and Mahakali (Pancheswor) rivers. But former Minister of Water Resources Dipak Gyawali pointed out that the uncertainty over these would exist until both countries worked out an understanding on the value of stored water.

“The Mahakali treaty is going nowhere not because Nepal is lagging behind on its obligations, but because Uttarakhand does not want to drown its villages to provide irrigation water to Uttar Pradesh,” explained Gyawali.

To hasten the pace of power production, Bishwaprakash Pandit, secretary at the Ministry of Energy, said the government was looking to build transmission lines to India, solve land acquisition problems, and work out Power Purchase Agreements with private developers as immediate measures to solve the country’s power crisis.

The panel concluded by agreeing on the immediate need to:

  • Pass the Electricity Act
  • Develop a Power Trade Agreement with India so that Nepal can export surplus energy after its domestic demands are met
  • Increase domestic demand to cope with any imminent surplus
  • Remove inconsistencies out of land acquisition rules and maintain political commitment to build confidence among investors
  • Reform the Nepal Electricity Authority by giving separate entities the responsibility to create, operate, and distribute power
  • Build transmission lines to India to import or export power
  • Abandon first-come first-serve methods of granting licences
  • Create a basin-based hydropower masterplan to go along with Nepal’s imminent state restructuring
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