It's finally come to this: of the 650 MW electricity generation capacity the national grid can only put out 260 MW.

Demand is surging at 60 megawatts a year and no new major capacity has been added for the past four years. It doesn't take a rocket scientist to calculate that power cuts will be with us for at least another 10 winters. It may be longer if new projects are not launched right away.

The question for consumers is what to do till then? Aside from buying a diesel generator and investing in solar-charged batteries for household lighting, the only other thing is to hope that the existing capacity is managed properly.

The Nepal Electricity Authority (NEA) admits loss through leakage and pilferage is more than 25 percent-one of the highest in the region. Reducing these losses by just half could save up to 80MW and reduce the current 17 hours a week load shedding. Kathmandu Valley alone loses 6 MW to pilferage.

The proposed restructuring of NEA into regional distribution centres could cut these losses. In Pokhara electricity theft was cut to nine percent after a regional distribution wing was set up. The planned community electrification will also reduce pilferage because local management is more efficient.

To reduce demand, time-of-day pricing would work. Tarriffs could also be seasonally fixed: more expensive in peak winter months and cheaper during monsoon when there is excess capacity.

"The idea is to make price work as a policeman," says former Water Resources Minister Dipak Gyawali, "and that was exactly what we had recommended to the Tariff Fixation Commission in 2003 but the idea was totally ignored."

Differential tariffs would make it attractive for investors to get into reservoir projects since they can sell electricity at higher cost during peak hours and seasons. At present, except Kulekhani, all hydropower depends on water levels in rivers which is down drastically due to the five month drought.

The Water Resources Ministry and the NEA are now paying for twiddling their thumbs and not launching any major project since King Gyanendra took over in October 2002. Still, all they are doing is fixing load shedding schedules, imploring consumers to make voluntary cutbacks or knocking out street lamps.

They are asking consumers to switch to compact florescent lamps because a 11W light is as bright as a 60-W incandescent bulb. If all households (making up 40 percent of NEA's clients) converted, the system would save at least 180 MW.

"The figures show that this is a workable idea," said Ratna Sansar Shrestha a former member of the NEA board, "all you need to do is get your clients to use such lamps and you save huge units of electricity."

Another idea that may have to be taken more seriously is to introduce daylight saving time in winter to reduce electricity consumption during the peak evening hours. If Nepal Standard Time is advanced by 45 minutes, there would be longer daylight hours. An additional benefit would be to eliminate the incongruous 15 minute time difference with India. If people turn on the electricity one hour later this would automatically reduce peak evening load.

NEA officials say that if there are no major rain showers in the coming two weeks, useable water in Kulekhani will run out within a month and the present 35 hours of loadshedding a week could be extended even further.

So, for now the only thing NEA and its consumers can do is: pray for rain.

WHAT CAN BE DONE

. Reduce system loss of 25 percent
. Introduce differential pricing to reduce demand
. Convert incandescent to fluorescent bulbs
. Introduce daylight saving time
. Pray for rain

Nothing in the pipeline

The NEA may like to blame this year's winter drought for the power shortage but even if there was normal rainfall this winter we would still be in a crisis.

The 70MW Middle Marsyangdi which should have come on stream this year has been delayed by the conflict and is still two years away. No other major power project has come online since 2002. The only reservoir-type project being contemplated, the 750 MW West Seti, is meant only for export. Upper Karnali, another quick turnaround project, is so far from load centers in Nepal that it makes sense only for selling power to India. Both are at least 10 years away.

The NEA had foreseen this crisis and three transmission lines to link with the north Indian grid were being prepared last year. But like other aid projects it became a casualty of the February First royal takeover. The peak season for power consumption in north India is June-July when Nepal has surplus power and in Nepal it is February-March when the Indian grid is off-peak-making power trading with India feasible.

The quickest project that can be turned around is the 309MW Upper Tama Kosi that can be finished in four years. But in its eagerness, NEA may have bungled this project too by trying to go it alone. At a seminar last month in Oslo which brought together Norwegian and Nepali investors interested in the Upper Tama Kosi, the NEA put off potential investors.

The NEA says it has already invested in studying Upper Tama Kosi, could inject more capital, take active part in construction and guarantee the power purchase. It proposes to begin road construction this year, complete detailed design by 2007 and start the civil construction by 2008. NEA says it has lined up $150 million in loan commitments, will fund the road and detailed study itself and will get more finance as it goes along. It says it may even take a minority stake in a foreign joint venture.

The Norwegians who are involved with Nepali partners in the $150 million Khimti project had invited the NEA as the license holder to Oslo to see how and under what conditions the project could be taken forward. However, they were said to be sceptical about NEA doing such a large project itself. The Oslo meeting failed to identify the way forward on financing and conditions under which the Norwegian company Statkraft would be interested in investing in Tama Kosi.