Nepali Times
Tiny is even more beautiful


Future mega-projects that make all headlines: Arun, Chisapani, Pancheswor, or Kosi High Dam. But quietly, away from the media spotlight, villages all over Nepal are lighting up with power from locally-crafted, locally-funded, locally-run micro hydropower. The people, it seems, have got tired of waiting for electricity to come to them, and they are now going to the electricity. They are getting together to get soft loans, even pooling savings, to build micro (below 100 kW) and pico (below 3 kW) hydro power plants.

Nepal's first micro hydro plant was installed about 20 years ago. A gifted and dedicated engineer named Akal Man Nakarmi first managed to couple a generator to a food-processing mill near Malekhu to produce power. Next came his turbine and generator compact, known as the Peltric set. Akal Man's pelton turbine and induction generator combo was an instant hit. Nepal had its first locally fabricated system that was small, tested, and affordable for grassroots communities who could finance, build and operate the system themselves. The modest and soft-spoken Akal Man went on to win the Rolex Award, and today he is still in his workshop in Chhetrapati banging away at yet another Peltric turbine. "This is the future of energy in Nepal," he tells you. "Not another mega project costing a billion dollars."

Alongside Akal Man's successful tests of the prototype Peltric set, came a government decision to subsidise rural electrification through the use of micro hydro. The Agricultural Development Bank Nepal (ADB/N) that used to provide loans to set up turbine-powered food processors began to include micro hydro in its portfolio. Many traditional ghattas (water mills) were upgraded to multi-purpose power units that ground grain more efficiently by day and generated electricity by night.

Fifteen years later, Nepal has an estimated 1,000 micro hydros that use the falling water of small brooks and streams all over the country to produce electricity. And another 900 or so turbines are used for milling only. The micros are not all problem-free-age and disrepair, ownership and management problems have turned some into rusty hulks. Still, a majority are whirring away, bringing the light of development to unlikely remote villages of the country and quite literally empowering people.

And if small was not beautiful enough, many Nepali villages are going for even tinier power plants: pico hydro. These provide electricity to light up 20-60 homes for several hours in the evenings and at dawn. During "off-peak" daytime hours they sell power to recharge car-batteries that villagers use to replace traditional kerosene-wick lamps and to watch satellite television. Pico promoters tell us that the system is catching up so fast in some districts (Ilam is one) that it may not be long before every settlement there has its own local power "utility".

"People have seen bright lights in neighbouring villages and want to build their own systems," says Bhola Shrestha, of Energy Systems. "Anyone would want to do the same after learning that many villagers use electricity by spending only a little more than what they spend on kerosene or candles."

With over 6,000 major and minor rivers and countless other fast-flowing streams all cascading down at unbelievable gradients, Nepal could be a hydropower superpower. But large power projects are expensive, need large investments and loans, service mainly urban areas, and despite major investments in the past ten years the proportion of Nepalis with access top electricity remains at a low 15 percent. As an alternative source of energy, Nepal's economy and terrain seems to be ideally suited for micro and pico hydro.

All you need for pico hydro is a water source with about five litres per second of water flow-less than what most irrigation channels in the hills have. (For example, a traditional water mill runs on about 30 litres of water per second). You need to divert this water through a 2.5 in polythene pipe down a drop of at least 20 m into a pelton turbine to produce electric current. The average per kilowatt cost of electricity generated is about Rs 100,000-120,000 and a one kW system can supply to up to 10 households using 100 watts each. There are about 700 such systems now operating in Nepal.

A 1997 study on pico hydros by Subarna Prasad Kapali found that the cost, after subsidies, was between Rs 6,000-15,000 per household. The power producers are co-operatives, individuals and farmer groups who charge flat tariffs based on the electricity used. "Usually villagers pay about Rs 25 a month for a 25 watt lamp, which is what they pay for kerosene for their tukis," adds Shrestha. But there are problems slowing the march of the pico: unavailability of start-up capital and inadequate support personnel for repair and maintenance, for example. "Another major issue is the quality of the systems," says Devendra Adhikary, coordinator of the Energy Sector Assistance Programme, funded by the Danish Development Agency (DANIDA). "After 25 years of doing micro hydro we think we need to have certain quality standards in place."

Also isn't it true that pico hydros are good only for lighting, and that they don't have the "economies of scale"? "This is a something that we're also concerned about," admits Bhola Shresta, whose company Energy Systems. The UK's Trent University is now training Asian pico power manufacturers to address to some of these issues.

Nepali peltrics come in the 0.6-5kW range and the most-popular one kW unit weighs just 35 kg. Pico promoters say the plants are so simple that Nepali villagers have, with some training in peltrics, installed their own systems. In his workshop, Akal Man Nakarmi has Peltrics to suit different situations: low head (20 m), medium (40 m) and high head (200 m). There are now over a dozen local turbine makers in Nepal who are pre-qualified by different agencies to do surveys, manufacture and install micro hydro systems. Akal Man's Kathmandu Metal Industries and the Biratnagar-based Krishna Grill and Engineering Works are the market leaders.

With the Danish Development Agency (DANIDA) offering new subsidies, the number of village co-operatives or individuals setting up their own pico hydro units is expected to grow. A subsidy of Rs 55,000 per kW is to be provided to those willing to build micro hydros less than three kW. Projects larger than this and up to 100 kW get Rs 70,000 per kW. There are also subsidies of Rs 27,000 per kW to add-ons for generating electricity from improved ghattas or water mills. Besides, there are also subsidies for the transport of electromechanical equipment and construction materials and for rehabilitation of existing systems.

"There has been an overwhelming response to the subsidy, about 300 individuals and groups have applied for support," says Adhikary. As the first step toward quality control, ESAP has managed to get equipment manufacturers and builders to agree to ensure that the systems deliver the power they are installed to produce and that they are provided one-year warranty. "Within a year we may develop other quality and safety standards," he adds.

The growth of pico hydro in Nepal has been largely a result of private initiative. The initiative hopes to repeat the success of Nepal's vastly successful and sustainable biogas programme by introducing catalytic subsidies.

There are grey areas that pico has to address for its own sustainability. For now, when even major systems are failing to deliver electricity they were supposed to, no one is complaining. Says Bikas Pandey, an expert on micro hydro: "It is small but the beauty of that is that any individual or a group of, say, five people can have a system."

"I'm satisfied with what has happened"

Dipendra Purush Dhakal is perhaps shortest-serving governor of the Nepal Rastra Bank. But in seven months, Dhakal says, he has done everything possible and is satisfied. We spoke with Dhakal to find out how far he had taken the financial sector reforms, and to get a glimpse of the working of the central bank. Excerpts.

Economy and financial sector reforms:

With about six percent growth, good foreign exchange reserves, low inflation and fairly good revenue collection, our economy is capable of withstanding any short-term shocks-a good time to undertake structural reforms. I approved the Financial Sector Reform Strategy, especially banking sector reforms. We could either introduce reforms or watch the banks die. I would have signed management contracts for both in three months.

The opposition to reforms:

The opposition to reforms seems to have eased. The negative net worth as a percentage of the total assets of the Nepal Bank and and the Rastriya Banijya Bank is said to be as high as negative 40 percent. The Asian crisis occurred when that was negative 30 percent. The value of the deposits has deteriorated.

The Public Accounts Committee decision:

They agreed that reforms were needed, but said the process wasn't legal. They said all future actions should be transparent, accountability ensured, and that targets should be quantified.

New central bank act and independence:

First the law was translated into Nepali and finalised after consultation with stakeholders. It was approved by our board, the ministries of finance and law, and was to be tabled in parliament's winter session. It will ensure real autonomy. The government won't issue directives. Shortcomings in foreign exchange regulations are also addressed. There will be limits to the authority of the board and the governor.

Internal management:

The governor's powers have been defined, everything will be decided by the board. There are over 300 contract employees at NRB, hired by previous governors (not Mr Rawal). We decided to select those actually needed through exams on 21 April (that has been postponed indefinitely). We have a system to select staff for career development and a new scheme to allow staff to obtain interest-free loans for further studies.


I am fully satisfied with what I managed to do. I'm not going to seek a decision review because a decision relating to an important official like the central bank governor has to end somewhere.

(11 JAN 2013 - 17 JAN 2013)