Independent Power Producers (IPPAN)- A Request

By DR. AB THAPA

It has been very recently reported that a two-day meeting was held to bring together investors, business professionals etc at a single forum where all kinds of issues from policies and laws to technology and trade were discussed. Needless to stress that the IPPAN can play a very constructive role in future development of our vast hydropower potential.

It is quite clear that our hydropower should be developed in the interest of our country and the people. It is equally true that the private developers must not be treated as philanthropist. They are entitled to make reasonable profits Without such incentives they would not be interested to work. Unfortunately quite often private developers are seen shamelessly robbing the governments to make vast profits. Recently even the donor countries have started to show great concern over this matter. It has been reported that a British minister participating in the recently held World Bank meeting has categorically said that the British Government will suspend its aids to be channeled through the World Bank if the Bank attached conditions such as the involvement of private sector while disbursing funds for the projects.

In Nepal people have great misunderstanding over the way hydropower projects are implemented by private developers. Khimti Project, Bhotekoshi Project, Indrawati Project are seen as the showpiece among the IPPAN projects. It is hoped that the IPPAN would respond to the following queries that have worried Nepalese people who have great stake in Nepal ’s hydropower development.

Khimti Hydropower Project

Within the past decade our power development plans have been thrown into a complete disarray. The task of regulatory body even now is nothing more than a mere formality. The 60 MW Khimti hydropower, the first project in private sector, has opened a Pandora's box. The Khimti project had disastrous consequences for the economy of the Nepal Electricity Authority.

The Khimti project operating at a very high head of about 650 meters was seen in the past as one of the most attractive projects for the generation of cheap electricity. The cost of this project was originally estimated at US $ 60 millions but astonishingly, it was raised to US$ 140 millions to calculate the selling price of the electricity to the NEA. It is virtually an incomplete project A most important component of any hydropower is a reservoir for the storage of water at least for daily use to enhance the value of the firm energy. This very important structure is missing. The Khimti project is forced to operate at base load , thus it would be producing electricity at constant rate throughout the day and night. Under such circumstances the true per unit (KWh) value of the firm power of the Khimti by comparison with other power stations like the Marshyangdi, Trisuli etc would be far less.

The Khimti project produces an enormous volume of seasonal energy due to unnecessarily high installed capacity of the power station, which is 60 MW against its firm capacity of only about 18 MW. The seasonal energy procured from the Khimti is completely wasted though the NEA is made to pay about US $ 9 million per annum for such seasonal energy. Unfortunately, to make matters even worse, the NEA had to build at its own cost very expensive high voltage 120 KV transmission lines from Khimti to Katmandu almost exclusively for the supply of seasonal energy, which anyway would be completely wasted. A low voltage transmission lines at far less investment would have been adequate for the transmission of the entire Khimti firm energy.

As far as the NEA is concerned, the Khimti deal was indeed a total disaster. Many developers were quick to take full advantage of the precedence set by the Khimti project.

Dispute Over The Bhote-Kosi Capacity

The private developer of the Bhote Koshi hydropower is reported to have already made claims that the NEA should purchase each and every unit of the electricity they are able to generate by running the hydropower at its total installed capacity of 45 MW despite the fact that according to the PPA the total capacity of the hydropower had to be only 36 MW. It should be noted here that the Bhote Koshi hydropower would be able to operate at a capacity exceeding 36 MW only during the monsoon season.. It need not be explained that such extra seasonal energy will be completely wasted. At present the NEA has declined to make payment for such extra generation. .

The Bhote Koshi hydropower can be expected to operate at full installed capacity of 45 MW throughout the monsoon season lasting about three months ( about 2000 hours each year). During the winter season when the demand for electricity in Nepal is the highest, the Bhote Koshi hydropower is able to generate only about 15 MW. The NEA could be forced to pay extra money each year for the purchase of about 18,000,000 KWh electricity which could be roughly equivalent to Rupees seven crores if the PPA is amended to increase the capacity of the Bhote Kosi project to 45 MW.

Why Yangri and Larke Were Leased Out?

The UNDP supported Melamchi Water Supply Project Report explains that around the time 2011 the total system demand for water supply ( in Kathmandu valley) is expected to reach the total supply from in-valley surface sources and Melamchi. Thereafter the next stage of the development of the Melamchi will be required. This entails diversion from the YANGRI and LARKE rivers that flow to the east of the Melamchi. Water would be diverted by tunnels to a point upstream of the Melamchi intake. The total length of the delivery tunnels is expected to be over 12 kilometers. The Larke and the Yangri are the main tributaries of the Indrawati River. After the diversion of the Yangri and Larke rivers into the Melamchi there would hardy be any flow in the upper reach of the Indrawati River during the dry season.

It saddens any common Nepalese who have the slightest care for the country to learn that the Indrawati River has been recently leased out to private developers to build a cascade of hydropower. One hydropower is already completed and the others are also going to be implemented. The IPPAN and concerned agencies at the policy making level should be able to explain the rational behind the decision to implement the Indrawati hydropower projects. Could not we find some other suitable rivers any where in Nepal to be leased out to private hydropower developers?

A Request

Needless to say that in future the IPPAN would be playing very important role in development of our hydropower resources. It is time that the IPPAN would review its past performances and help its members in future to develop our hydropower resources in the best interest of our country.

(Dr. Thapa writes on water resources)