FEATURES NEWS THE RISING NEPAL (DAILY)

Hydropower Development
Targetting The Poor

By Uttam Maharjan

NEPAL is very rich in water resources. The country occupies the second position in water resources after Brazil and the first position in proportion to the land area. Although it is believed that the country’s hydropower potential is 83,000 MW, out of which 25,000 MW is economically feasible, the country has generated around 400 MW only. This shows that we lag far behind in the generation of hydropower.

Being a poor country, we have neither adequate capital nor technical expertise to operate large-scale hydel projects and powerhouses. That only 15 per cent of the total population of the country so rich in water resources has access to electricity is a paradox that is like a bitter pill to swallow. Also, NEA (Nepal Electricity Authority) is not fully capable of meeting the demand for electricity (380 MW); it can supply only 340 MW.

The private sector, both domestic and foreign, has played an important role in the power sector. Since the enactment of the Water Resources Act, 2049 and the Hydroelectricity Act, 2049., the private sector has stepped into the field. Andhikhola (5.1 MW) and Jhimruk (12 MW) are the first hydel projects completed by the private sector. Now, there are several projects, either completed or on the pipe, such as Khimti (60 MW), Chilime (20 MW), Indrawati (5 MW), Upper Modi (14 MW), Bhotekoshi (36 MW), Puwakhola (6.2 MW) and Tanakpur (12 MW).

There is a provision that stipulates that an individual or firm may sell NEA electricity ranging from 100 to 1,000 KW at different rates in the rainy and dry seasons. And the sale of electricity ranging from one to ten MW may be made as per the power purchase agreement (PPA) between NEA and a producer. This provision has encouraged many to invest in electricity generation.

The government recently declared that it was going to complete 3 mega-hydel projects by the end of the year. These are Upper Karnali, Saptagandaki and Arun III. Similarly, the government is mulling over another mega-hydel project, Upper Tamakoshi. If these mega-projects are completed in time, the power crunch now being faced by the country can be tackled and excess power exported to neighbouring countries.

It is worth noting that foreign companies are interested in big power projects, eyeing India as a potentially big market. But India is willing to buy sufficient quantities of electricity only in case operation, maintenance, security and ownership of power are placed at its disposal, something not acceptable to our country.

The projects run by foreign parties are not benefiting the country in real terms. The PPAs reached with them have far-reaching and long-term implications. The electricity tariff of the country is among the highest in the world. Moreover, donors also impose high tariffs as a precondition for financing hydel projects.

Foreign aid, which is invested in hydel projects, often comes along with harsh conditions. There is no transparency, accountability, effective monitoring mechanism and financial discipline in such projects. Rather, corruption and maladministration would rule the roost.

There is often delay in hydel projects and the cost also tends to shoot up vis-a-vis contract amounts. Nepalese rupee devaluation, additional works and the likes are cited as causes for high costs. Such arguments do not hold water since the contracts undertaken by competent and experienced foreign parties already take into account all such factors as may influence the projects. Viewed thus, only slight price adjustments may crop up.

Small and medium-scale hydel projects are suitable for the country, since low capital and indigenous expertise suffice to operate such projects. Besides, these projects also answer the needs of local people and enlist their participation for quality services.

Several fora on water management have been held around the world. One such forum is the Durban International Conference held in 1992. At the forum, views were expressed on treating water as an economic good, decentralising management and delivery structures, putting greater reliance on pricing and enlisting active participation of stakeholders in water management.

The Water Resource Act, 2049 accentuates decentralised planning and allocation of water resources and delivery of water resources to district water resource committees for efficient use. Likewise, the Agricultural Perspective Plan (APP) outlines efficient use of water, attention to management cost recovery, improvement in the operation and maintenance of existing water systems and investment in small-scale farmer-managed surface and ground water systems.

The ultimate goal of hydel projects must be to transform the socio-economic status of the poverty-stricken people and to overcome problems like population displacement and economic impacts. So new water policies on cost-effective methods of utilising water for agricultural, drinking, industrial, hydropower and watershed management purposes need to be formulated. This will ensure equitable, efficient and sustainable use of water resources.

The government is coming out with a new water resource strategy. The aim of the strategy must be to target poverty alleviation through the effective use of water resources. Experts opine that ad-hoc policies on the use of water resource have badly affected the management of water resources in the past.

NEA recently came out with a new electricity policy. The policy was formulated keeping in mind the internal consumption of electricity and prospects for exporting electricity. Furthermore, experience gained by implementing various stipulations enshrined in the Hydroelectricity Act, emerging concepts on hydropower development, technological development, power export, and ecological conservation were also taken into consideration while formulating the policy.

The policy stresses power development by harnessing vast water resources, equitable sharing of benefit accruing therefrom, exploration of internal and external markets, making transparent government activities related to the private sector, cheap generation of electricity, rendering of quality services and promotion of power export. What is more, the policy envisages identifying rural electrification with economic activities as a step towards rural development. The new provision that NEA will not be bound to purchase electricity from the private sector if it has already surplus electricity is a welcome sign.

The new electricity policy and the upcoming water resource strategy are expected to target maximum benefit at the poor, marginalised people.

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