Opinion (Spotlight Weekly)

Urging Donors: Melamchi-Langtang Interconnection

By A.B. THAPA

The common Nepalese, saddled with escalating electricity prices, are wondering how long they would have to endure this painful ordeal. Most do not know that there is not the slightest chance of restoring the price of electricity to a level that could be considered justifiable any time soon. In fact, we are heading for more trouble. Our economy could soon plunge into the most disastrous crisis if today's laissez-faire hydropower development policy is allowed to continue. In this context, the role of donors and various agencies directly or indirectly associated with the sector, such as ICIMOD and IUCN, becomes important. Holding a nationwide debate on Melamchi-Langtang interconnection right away might not be inappropriate. The proposed interconnection could be expected to help to supply electricity to the whole country at a rate perhaps the lowest in our region and also to provide water in abundant quantity to Kathmandu valley for free.

Unfortunately, this vital project is now going to be killed without the slightest remorse. We need to act quickly to save it. If we want to change our hydropower development approach, it would be necessary to know where we went wrong in the past.

Causes of Power Sector Debacle

There is an urgent need to find out the causes of the power sector failure that has led to an enormous rise in price of the electricity in the last few years. The findings would help us to come to an appropriate comprehensive solution to this burning problem. There are several causes of the sharp rise in electricity price. A very simple one is our laissez-faire hydropower development policy.

The demand for electricity is the highest in Nepal in dry months of the winter. In the evening peak hours during this period, the total generating capacity of all the electrical power stations might not be in any significant surpluses if it is presumed that the Nepal Electricity Authority (NEA) should also have adequate reserve capacity in the system to use as a backup in the event of emergency. However, during the wet season, our demand for power is greatly reduced. At present, by comparison with the winter months, the evening peaking demand during the wet seasons could be expected to drop down by more than 50 MW. It is also a well-known fact that during the critical winter months, the time duration of about one third of the total maximum evening load is only about two hours. Even based on this very crude analysis, we can come to the following interesting conclusion. At present, in our interconnected power grid about 100 MW capacity is operating on an average only for about 400 hours each year if taken into account the fact that during the wet season lasting for about six months nearly 50 MW capacity might remain idle.

The NEA is forced to purchase from private developers electricity produced at their power stations with a total installed capacity of about 100 MW, which drops to only about 35 MW during the critical period in winter. The NEA might now be purchasing about 400 million KWh electricity from the private developers, unfortunately out of this purchase the actual use of the NEA might be only about 20 million KWh. The rest is completely wasted. Herein lies the sad story. The NEA producing each year from its own power stations about 1500 million KWh is said to be paying about 45 percent of its total revenue to private developers for actually using only about 20 million KWh electricity supplied by them. Unfortunately, our concerned government agencies are giving the impression that nothing has gone wrong. In the name of liberalization, private developers are being given free hand to build new hydropower of their own choice, completely ignoring the actual nature of the power demand, and the NEA is forced to buy whatever they produce at a prefixed rate. The NEA's financial situation is rapidly worsening. The losses are mounting. The NEA, under tremendous pressure from the donors, is forced to raise electricity tariffs at successive short intervals to cover losses. It is very urgent to conduct a through study to find out solution to current power development problem.

Rescuing the Power Sector

Donor countries have provided grant assistance to Nepal in order to achieve faster economic growth to improve the living conditions of the vast number of people still living far below the poverty line. Power development had been identified by the donors as a priority sector. As a result, the NEA, placed in a very favorable situation, was able to enhance its assets without appreciable increase in liability. Unfortunately, the total asset of the NEA acquired in greater part through foreign grants is being eaten up very fast to repay the private hydropower developers for the supply of electricity that is almost completely wasted.

Nepal is in great need of counselling from donor countries and international institutions to safeguard its power sector, which is under constant attack from private developers determined to make a fortune by wrecking the NEA. Local bodies of the donor countries and institutions and various organizations like the ICIMOD and IUCN financed by the donor countries should be asked to play useful role wherever possible. An entirely new opportunity has been sighted for the immediate development of Nepal's hydropower, which would enable our country to produce electricity to meet the demand of our country for quite some time at a rate perhaps the lowest in our whole region and at the same to supply water to Kathmandu valley for free. The Langtang-Melamchi interconnection project could provide such opportunity. Unfortunately, this project is going to be killed as a result of our attitude to disregard serious technical matters in taking decisions. The attention of donor community would greatly help to save such an extremely important project.

Melamchi-Langtang Interconnection

The concept of Melamchi-Langtang interconnection is based on a combination of independent studies of various projects carried out at different times. The main impetus for the project is provided by the concurrence of the views of the government as well as the donors to acknowledge the need to implement the 28 km long tunnel to deliver Melamchi water to Kathmandu valley to meet the growing demand for water supply in the valley within the next 10 to 15 years. Thereafter, the water of the Yangri and Larke rivers would have to be further added. There are two serious drawbacks in building the 28-km Melamchi tunnel project exclusively for water supply. The project would be too expensive and thus place a heavy financial burden on the people of Kathmandu. Each customer would have to pay every month about Rs. 5,000 for water supply unless the government decides to pay it in the form of subsidy. Thus, an overwhelming majority of the people living in the valley could not afford to bear such extremely high cost of water supply.

As explained before, the diversion of the Yangri and Larke is virtually an inseparable part of the Melamchi project. It would astonish any man possessing the slightest common sense to learn that at a time when the donors and one wing of the government had already decided to take up the Melamchi project, the other wing of the government leased the Yangri and the Larke rivers to private developers to build hydropower. The Yangri and Larke water supply project and the Yangri and Larke power project known as the Indrawati project are mutually exclusive. After the Yangri and Larke diversion for water supply, the Indravati project would no longer be able to produce firm power. However, even after that, the Indravati project would be able to produce seasonal energy in enormously large volume which is bound to be completely wasted, nevertheless, the NEA would be obliged to pay for such seasonal energy at the same price that applies to firm energy. The Indravati power project has already been commissioned. The diversion of the Yangri and Larke for water supply would have adverse impact on the ability of the NEA to supply firm power in the winter months when the demand for the electricity is the highest.

Langtang River Diversion

The diversion of the Langtang river for water supply to Kathmandu valley is not a new concept. Initially it was thought to effect diversion from the catchment area instead of the river. A study of such diversion was made by GTZ in 1977. The study provides the following information.

The idea to augment the limited water resources of the Kathmandu valley by diversion of water from the Langtang/Gosaikund massif in the north was first mentioned by Peter Aufschnaiter in 1960. In 1976/77 the project was studied on a very preliminary level by Dr. Ing Cristian Kleinert. This project, originally not listed by the Nepalese government under projects to be investigated for possible cooperation with Germany, had been included in the study program on the initiative of the German Mission itself because of
the fascinating concept and promising objects. The mission report points out that the high cost of the project, mainly caused by difficult access and transportation, would not make it viable for detailed study at the time.

Multipurpose Langtang Development

The concept of the Langtang project solely for power generation was developed under the United Nations Development Program-supported Gandak Basin Master Plan study. This project can be easily linked with the Melamchi project tunnel. The interconnection of these two projects could open up whole new vistas for the most cost-effective development of hydropower in the near future. The diversion of the Melamchi-Langtang flow into the Kulekhani could be regarded as one such possibility. It can be roughly said that after the full development of the Lantang-Melamchi-Kulekhani interconnected projects, it could be possible to generate about 2500 million KWh peaking power at a cost of about 2 US cents per KWh. Three hydropower projects each operating at a head of about 1000 m or more with a total installed capacity of about half a million KW could be built at a cost of about US$1,000 per KW. After the completion of the above projects, the Melamchi tunnel could be expected to run in full capacity of about 15 cumecs throughout the year. The Melamchi river alone would be able supply only about 1.5 cumec or even less in dry months when Kathmandu valley faces its biggest water shortage. Unfortunately, the government has granted permission to build a small hydro-power using the lower reach of the Langtang river. This small Langtang power project and the giant Langtang-Melamchi projects are mutually exclusive. So all the arrangements made with the private developer must be annulled before it is too late. It would be extremely helpful to our country if the donors could caution us whenever we are going to make very serious mistakes. It does appear that the present government policy on the Langtang river could be one of the most serious mistakes.

In Conclusion

The Nepalese people are very grateful to donor countries for their generous assistance to carry out the development works that would ultimately help to improve the living condition of a vast majority of the people still living far below the line of poverty. We all should see to it that such generosity would not be in vain.