And worse is yet to come. If it doesn't rain soon, power cuts will go up to 16 hours a day by mid-February. If nothing is done, these crippling cuts will last at least for another four winters.
At present Nepal's peak evening power demand has risen to 770MW, but production is only 286MW. Peak power generation from the Kulekhani system is down because the reservoir is nearly empty. All of Nepal's run-of-the-river schemes are generating half capacity because of low flow. The 60MW that used to come from India every winter is cut because the Kosi flood washed away the transmission line.
The Middle Marsyangdi that was inaugurated last month by Prime Minister Dahal will only generate 25MW, but only from spring. Power demand is rising at 10MW, but no new major capacity has been added to the grid since the 144 Kali Gandaki came on stream in 2003.
The surprising thing about this crisis is that it shouldn't have been a surprise. Planners and experts have been warning about the growing gap between demand and supply for nearly a decade. (See: 'Loadshedding till 2015' (#289). But successive governments did nothing. According to NEA, the 10th Five-Year Plan target was to produce 314MW but only 40 MW was generated over the period.
"This crisis will continue and we have to be prepared for up to 16 hours of daily load shedding," warns Jugal Kishor Shah at the NEA. The prolonged power outage has crippled industry, with an 80 per cent fall in production. Already crippled by militant unionism, most manufacturing, businesses and hotels are on the verge of closure.
After the announcement of national power emergency on 25 December, the government has come up with National Energy Crisis Working Plan. It plans to re-negotiate Power Purchase Agreement rates for private owners that generate up to 25MW. Projects of up to 50MW do not need EIA or the consent of the forest ministry. It plans to distribute Compact Fluorescent Lamps (CFL) all over the country for which the government has allotted Rs 100 million.
The plan also allows a 10-year income tax waiver for hydro projects that are commissioned in the next two years. And, most controversial of all, the cabinet has approved the installation of diesel plants to generate 200MW before next winter and has called for proposals from the private sector.
The government would import 30MW from Tanakpur, India, beginning Thursday. Critics say the government is reacting in knee-jerk fashion, and hasn't pursued more immediate do-able options. Electricity pilferage amounts to 30 per cent of the generated capacity. Reducing that by even half would be the same as adding another Middle Marsyangdi.
If distribution is handed over to local communities, theft goes down as shown by Mugling which reduced pilferage from 36 per cent to 9 per cent after distribution was handed over.
NEA has also never looked into demand side interventions to control energy use through pricing mechanisms such as time-of-day tariffs. And one immediate solution would be to reduce the price of diesel from Rs 59 to Rs 45 so that industries will find it viable to generate power from their captive plants and even sell it to the grid.
However, the water resources ministry is sitting on nearly 3,000MW worth of licences for hydro power projects all over the country.
The government's record of running existing diesel plants are not good. The 39MW Duhabi plant and the 15MW one in Hetauda don't generate even 20MW between them because of shoddy maintenance and high diesel cost. Adding 200MW worth of diesel would push up NEA's losses by another Rs 25 billion a year.