Ramesh Shrestha, owner of a cyber caf� in Tahachal, has his shutters pulled down half the time even on a weekday. His generator sits silently in a corner: the petrol shortage has removed his safety net against load-shedding. He often uses the weekend to queue for petrol or search for cooking gas, but mostly returns home empty-handed as these too are running dry.

Shrestha is certainly not the only one whose business has been severely affected by the energy crisis. Major industries have experienced a hike in their costs of operation last quarter. Two out of 10 biscuit factories in Sunsari and Morang have closed due to the staggering cost of raw materials, while energy cuts have made it impossible for them to compete against cheap imports. Fuel shortages have curbed half of the city's public transportation. A manager of a five-star hotel in Kathmandu argues: "I cannot compromise the quality of our hotel's service even when there are 16 hours of load-shedding. And this in the end can increase our cost of operations by four times." His hotel sepnds Rs 7 million a month to buy extra diesel.

Increasing costs could be managed if only companies were able to maintain their sales. But every seller is also a buyer, and with high costs eating away household income, consumers are only window shopping. Most retailers (except, perhaps, those selling batteries, inverters and generators) admit that sales have slid down by at least 20 to 30 per cent in the last few months. Why would anyone purchase a new car knowing that it takes hours to fill a tank? And what's the point of television ads when viewers can't tune-in? The ripple effect on the purchasing pattern of the consumer has resulted in slumped sales, and a deep depression among traders and manufacturers.

The situation, coupled with political instability and expectations of bandas this month, dampens economic motivation in the country. Businesses lose incentive to compete when the state fails to provide and maintain basic infrastructure.

Precautionary measures must be taken before the country slips into a serious case of stagflation, when the rate of inflation exceeds economic growth. Within two months our 3-billion-rupee credit line with Indian Oil will be exhausted and we will be in the soup again. This winter, no new big power plants will be added and demand will have risen,
so look out for only four hours of power a day.

Nepalis understand that a long-term solution lies in hydropower potential. But we also know that the government's ambitions to generate 2500 MW of electricity by 2015 can only be met with political stability and open investments in
the sector. There are few signs of that happening.

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