KUNDA DIXIT |
If you think 14 hours is bad, think of what lies in store: only two hours of power a day. At the rate at which demand is outstripping supply, this will soon be a reality.
The uninterrupted power supply on Wednesday illustrates why. Nepal's hydropower generation is inadequate, but when the flow of Himalayan rivers goes down because of winter drought, it gets worse. Two days of rain temporarily solved the problem, but the future doesn't look so rosy.
"It's simple," explains former Nepal Electricity Authority (NEA) chief Uttar Kumar Shrestha. "We are having a 14-hour power cut in February, which will increase to 16 hours by April. With a minimum of an 80MW annual increase in demand, this will reach 19 hours next year and 22 hours the following year."
The bad news is that things will get worse before they get better. It will take at least two years to build transmission lines to import power from India, and multi-fuel plants take at least a year to set up. That is, if we start now.
The country currently has an installed capacity of 697MW, all of which, except Kulekhani, come from non-storage 'run of the river' projects. During winter, these plants generate just a third of their capacity and things are worse when the winter rains fail like this year. Demand has now reached 967MW, and there is a winter deficit of 520MW. There is a deficit of 250MW even in the monsoon.
In five years, NEA projects demand to rise to 1500MW, so we will need an installed capacity of 4500MW to cover for the winter deficit. The projects expected to be completed in the next few years (Upper Tamakosi, Upper Trisuli 3A and 3B, and Chamelia) will only add 586MW to the grid. This still means a shortfall of over 200MW at full capacity. "Projects of 2000MW should immediately go into construction if we are to keep up with demand," hydropower developer Gyanendra Lal Pradhan says.
Political instability, local unrest and financial insecurity complicate the equation. The open investment policy introduced after 1990 led to a brief boom in hydropower development, increasing capacity from 280MW to 615MW, but the war delayed new plants.
Local opposition has stalled three big projects with Indian investment: Arun III, Budi Gandaki and Upper Karnali. West Seti is facing an uncertain fate due to opposition by the Maoists. But even if these projects were to be completed, they would not end Nepal's power woes because they are all for export.
"Our priority should be to build projects for domestic consumption. Building mega projects for export will do nothing for the deficit back home," water resource analyst Ratna Sansar Shrestha says (see box).
Experts say the best short-term solution is to improve the performance of state-run stations, which are all running at 20 per cent below capacity, equivalent to 500GWh worth Rs 35 billion. Cutting down the transmission losses, currently at 26 per cent, could save 56MW. Pilferage is also very high in the Tarai, and districts like Bhaktapur.
But the only long-term solution is to start building new plants right away. For this, Nepal needs to be investment-friendly, and tariffs need to be revised. Private developers say the NEA's purchase price of Rs 4.44 per unit is not sustainable. Independent Power Producers of Nepal (IPPAN) wants the rate raised to at least Rs 5.99 per unit.
"If NEA can import Indian electricity at Rs 7.28 per unit, there is no reason why it can't buy from local developers at slightly less," IPPAN President Subarna�Das Shrestha says. Private producers say the government has a negative attitude towards domestic investors.
NEA wants to import 125MW from India for 25 years, a plan ridiculed by experts. "It is absurd to be dependent on a foreign country for a resource that we already have. If NEA bought electricity from local developers at the rate it
buys from India, we would have projects in Nepal," Shrestha says.
Even so, there may be no option but to immediately put up transmission lines to import from India to make up for the supply shortfall.
The export debate
Dipak Gyawali, water resource expert and former minister
People often cite Bhutan's example to show how it has been benefitting by exporting power to India, but Bhutan will be facing power cuts this winter onwards. This is because 80 per cent of Bhutan's electricity is exported to India, leaving just 300MW for consumption within the country.
Gyanendra Lal Pradhan, hydropower developer
There is no other way to balance the trade deficit than to export power to India. Bhutan has today an installed capacity of 15000MW but we, in the name of ultra nationalism, are hindering hydropower development. It does not make any difference who builds a project as long as it is built.
Ratna Sansar Shrestha, water resource analyst
Reducing the trade deficit with India by exporting power may sound tempting, but there is enough demand in the country itself to consume what the current projects will generate. The three industrial corridors have a demand of 200MW each and a study has shown that 648MW is needed to replace LPG gas in the Kathmandu Valley. This means we have 2200MW demand even now. Adding 10 per cent a year, peak demand in ten years will be 5700MW. Building projects that will export most of what they produce, we will not resolve the power deficit in Nepal. We should focus on using the energy for industrialisation if we want to reduce the trade deficit.
Even the optimistic scenario for 2015 looks gloomy
NEA projects by 2015:
Chamelia (30MW) 2011
Kulekhani 3 (14MW) 2011
Upper Tamakosi (456MW) 2015
Upper Trisuli� 3A (60MW) 2011
Upper Trisuli 3B (40MW) 2013
Rahughat (30MW) 2013
Upper ModiA (42MW) 2010
New NEA capacity by 2015:� 672MW
New private plants by 2015: 281MW
Existing supply: 697MW
Installed capacity by 2015: 1,653MW
Capacity required by 2015: 4,500MW
Invest in storage
The reason power cuts are so crippling in winter is that supply dries up as the flow of Himalayan rivers goes down in winter, just when demand is at its peak. The shortfall has been made worse by successive years of winter drought since 2000.
Experts at Policy Dialogue on Hydro Power Development, recently organised by Niti Foundation, recently stressed the need for storage projects to address the winter power crisis. They said the government should now fast-track its reservoir projects that store monsoon runoff, and let private producers focus on run of the river schemes.
Kulekhani (92MW) is the only existing storage project in Nepal. NEA, with the support of ADB and Japan, has begun work on the Upper Seti dam, which can generate 127MW of peak power. The government is also looking at Seti Trisuli (128MW). West Seti (750MW) was touted as a multipurpose storage project for export. Experts now say it should be converted into a power plant to meet domestic demand.
The government's 20 Year Hydropower Development Plan has identified Tamor (380MW), Budi Gandaki (600MW), Kali Gandaki (660MW) and Nalshyagugad (400MW) to be implemented by NEA.
But reservoir projects take longer to build, and government involvement slows them down even more. Which means it will take at least 12 years for these projects to generate power even if they are launched today.
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