Nepali Times
Energy emergency


You don't need to go far these days to see proof of gross mismanagement and government incompetence.
The dark cities, long queues of cars and motorcycles at gas stations, locals commandeering LPG delivery trucks contrast sharply with the political wrangling over power, the peace process and constitution. The economy is a wreck, and investors have crossed the tipping point.

The petroleum shortage is due to the state-owned Nepal Oil Corporation (NOC) not paying its bills to Indian Oil. NOC's monthly losses are a staggering Rs 1.2 billion despite the increase in fuel prices last month.

"The bottom line is that the selling price is way below the buying price," says Mukunda Dhungel of NOC. The utility loses Rs 14 for every litre of diesel it sells, Rs 454 per LPG cylinder and Rs 3 per litre of kerosene. It makes a small margin on sale of petrol and aviation fuel, but five times more diesel is consumed than petrol.

In the past five years, crude oil prices have roughly tripled from around $30 per barrel to around US$110. The supply chain has also been disrupted because of a gas and fuel crisis in India as well.

The figures just keep getting worse: Nepal's diesel consumption has grown three-fold in the past five years mainly because of the electricity shortage. Nepal's fuel bill grew by 36 per cent last year to Rs 80 billion, and that was Rs 10 billion more than all our exports put together.

The government buckled under student protests last month and offered a 33 per cent subsidy to students and 'poor people' on petroleum products. No one knows what constitutes 'poor' and how to organise the distribution of subsidised fuel.

A cabinet meeting last week decided to release Rs 2 billion to NOC to clear its bills with Indian Oil. But that money hasn't yet reached NOC, besides it owes the Indians Rs 4.5 billion.

If you thought the petroleum scenario was scary, the electricity crisis is worse. Even the chief of general services at Nepal Electricity Authority (NEA), Gosai KC throws up her hands in despair: "I will not live to see load-shedding free day in my life time."

No power has been added to the national grid for the past two years, even though demand has grown 20 per cent in that time. Five hydro projects are expected to start operation in the next five months, but they will add only 40 MW to the grid when the winter shortfall is over 700 MW.

"After we produce enough to meet present demand, we need generation capacity to grow at 100MW per year," says NEA board member Krishna Prasad Dulal. "But lack of planning and poor execution has landed us in the present situation."

The government is trying to encourage investors into hydropower. Nepal Rastra Bank has made it mandatory for commercial banks to make 10 percent of their total lending to the agriculture and energy sectors within the next three years.

The cabinet last week endorsed a 10-point work plan to reduce power rationing, offering a 30 per cent increase in the PPA rate for ongoing and new hydro projects from domestic investors. The new rate is set at Rs 4.80 during monsoon and Rs 8.40 during winter per unit.

"The work plan has addressed our demand but it would be better if it could also include projects which are already operational," says Subarna Das Shrestha of the Independent Power Producers Association of Nepal (IPPAN). "We want the government to implement it, we will do our part."

Then there are the so-called Super Six projects that total 190 MW which are expected to gain momentum after this agreement. NEA itself has another five big projects (including Upper Tamakosi and Chilime) totalling 840 MW to be completed by 2017. By that time, Nepal will have surplus power during the rainy season but there will still be a shortage in the dry season because demand will also grow.

"Load shedding will remain well beyond 2017," explains Sher Singh Bhat of NEA, "we need at least 4,000 MW of run-off-river projects or a 1,000 MW reservoir project to end power cuts."

But local opposition, extortion, labour militancy have all delayed existing projects, including the construction of critical transmission lines.

Sunil B Malla at the Water and Energy Commission Secretariat paints an apocalyptic picture: "The economy will collapse when power cuts reach 18 hour coupled with fuel shortage."

Total installed capacity: 700MW
Power generation in winter: 300MW
Power demand in winter: 1,100MW
Demand growth: 10 per cent per year (100 MW)
To be added by September 2012: 40MW
To be added by 2017: 850MW

Nepalis consume 410,000 million gigajoules of energy every year (equivalent to 9.3 million tons of oil, or 15,000MW of electricity)
Petroleum products make up 10 %
Electricity 2%
Biomass (firewood, dung) 78%

Read also:
Opportunity in adversity

Opportunity cost
Anyone deliberately out to destroy this country and sabotage the economy couldn't have done a better job than successive governments after 2008

1. Dhruva Lal Karna
The best option to get out of present mess is to deploy two medium size atomic plant (~700 Megawatt )for a limited period, say 10 years. 

We should build as much hydro electricity plant as possible in the time and then decommission the atomic plant.

A medium sized atomic plant would take about 2 yrs to start producing electricity and we can outsource this to any US or French company on the turnkey basis.

As far as the location is concerned we have a lot of barren land in remote hill area with no human settlement in 10 km radius, suitable for the plant. 
The nuclear waste is also not any problem as we can ask the concerned company to take it with them for safe disposal.

2. armugam
I am sure you are joking. Only atomic plants we have read know are the nuclear ones. Your proposition boils down to "Nuclear-Nepal"! A cocktail that will be not to the linking of "Uncle Sam", sorry, that should read "Sardar Uncle" even before that! 
An extremely long shot,verging on the wildest of the most illogical dream. If at all, it would end being a "radio active naribel" in bandar ko haath"!

3. ushaft
It is not wrong to dream of nuclear power-plant, in fact it is a good idea. But, a very strong democratic system is a pre-requisite for developing nuclear power. The international community has to be assured that the control of nuclear resources lies in the hand of a reliable and responsible leadership and a very robust system. Otherwise, they will not allow nuclear resources in the hand of a rogue leadership and state.

4. Indra Giri
There's no sense in talking about Nuclear Power Plants when the resources we have at hand lay unused. It is not a politically or technically viable option.The govt has no plan whatsoever to get us out of this energy crisis. Why does it not provide subsidies on alternative energy sources like solar power and wind power? The state however subsidizes the use of fossil fuel, relatively well of populace use them. Shouldn't the govt lead the way and show the way forward. The excuse it has been coming up with all along is transition, which is likely to continue for years to come.
I am disappointed in the educational institutions of Nepal as well, they teach the pupils about renewable energy, but have gas guzzling generators light up the class rooms. The well off do not care, they have their inverters and generators, majority can not care,they have more pressing things to care about.

5. John
Solar is the stopgap measure for Nepal. It will take 10 years to build enough hydro capacity for the country under best circumstances. How long in the real world?
Most households in the country can generate enough power for home use via solar. The panels, batteries and equipment isn't cheap - up to one lakh for a rural home, and as much as ten times that for a modern house in the city. 
A 50% government subsidy for solar installations would pay off in 10 years in savings on diesel, better industrial productivity, and would help keep the lights on everywhere.

6. FG
@#4, #5 The government does provide subsidy on household solar power plants through AEPC. How many people know about it and how many can afford even the subsidized costs, however, is a different matter.   

7. Rohit Rai
I maybe day dreaming but is it possible to gather all garbage, rubbish, human wastes of Kathmanduites and turn it into methane gas to be rebottled and used in households for cooking? An alternative to this terrible cooking gas shortage and also a better way to control pollution. What do you think? Is it possible?

8. Raghu
If only Nepal had succesive governments that care about the welfare of the country and its people rather than their individual pockets and power base.  No matter what form of government we have, if the politicians are not sincere towards the development of the contry, nothing will happen

(11 JAN 2013 - 17 JAN 2013)