Ladies and Gentlemen,

Whenever there is a seminar, debate or discussion on the Nepalese Hydropower sector we can be sure of being reminded about Nepal’s 83,000 MW potential Hydropower and 43,000 MW economically viable Hydropower.

However, what is no stressed is the fact that out of the potential power, only around 561 MW of Hydropower has been developed till date. What is not stressed is the fact that even though there is a deficit demand – supply gap of around 90 MW and a natural annual growth rate of around 60 MW even in today’s state of suppressed industrial demand, only 44 MWs have been added to the power grid in recent years. What is not stressed is the fact that load – shedding has become a normal feature of our life and will probably continue to be so till at least 2012.

In a country where even if we are able to bring on stream just 50% of the power projects whose studies have been completed till now we can nearly double the current Gross National Income, this sector should have been our engine for economic growth, development and national prosperity. However, instead of this we are today in a situation where the domestic consumer is facing untold miseries, inconveniences and difficulties brought about by the regular load – shedding in place now and industries, besides facing huge financial losses due to the erratic, irregular and supply of low quality electricity, have had to put on hold any corporate expansion plans due to lack of electricity supply? Is this situation the result of mismatch in planning, defective policies, ineffective implementation or some other natural or man – made constraints?

 

I think the time has come for Power Developers/ Producers, Domestic and Industrial Consumers, Investors and other stakeholders of the energy sector to start asking questions and seek answers to them to see how we can encourage and attract both domestic and international power developers to develop and implement hydropower projects in a large way so that Nepalese will never have to face load-shedding again, industries can run to their full capacity ushering –  in an overall increase in economic activities; how we can develop and promote domestic as well as external markets to capitalize on benefits from the enhanced production to national economic prosperity; and how we can build and establish efficient systems to ensure better product and services to the consumer.

In today’s interaction we have the good fortune of having amongst us a personality like Mr. T.N. Thakur, who is currently the chairman of power trading corporation Ltd. India. He has vast experience and expertise in the power markets in India. Therefore, I would like to take this opportunity to share with him as well as other participants some queries and issues that I have in this sector so that we can draw on his expertise and experience for coming up with solutions to them.

 

  • In spite of having today over 43,000 MW of economically viable Hydropower potential in Nepal why have we been able to develop less than 600 MWs only? What are the factors, constraints, issues and situation that has made Nepal an importer instead of being a large Net exporter of Electricity?
  • What are the long term, short term and the immediate term issues that should be addressed to make this sector vibrant?
  • On one hand we have one of the highest power tariff rates in Asia if not the world and yet on the other hand we have a situation where Nepal Electricity Authority is making huge financial losses. What can be done to reduce electricity tariff rates to around Rs.4 per unit and also ensure NEA runs profitably?
  • How do we go about developing competitive Hydropower Projects that can be attractive to the Indian market, which is without a doubt the best market option for Nepal?
  • It is very expensive to undertake Hydropower Projects. What are the appropriate mechanisms, means and ways for funding these projects?
  • What other financial instruments would be suitable and effective for making capital easily and readily available in this sector?
  • What are the anomalies and disparities in our major Hydropower Policies and Programs?
  • How should we go about in developing the infrastructure required by the power sector for efficient transmission and distribution in the domestic market and the needs of the external market keeping in view our long-term requirements?
  • These are just some of the issues that I have raised. I believe many more will surface during this interaction. I also firmly believe that this August gathering will come up with appropriate answers and solutions to the issues raised.

Mr. Thakur,

Acknowledging the importance of this sector to Nepal’s growth, development and prosperity aspirations, the Confederation of Nepalese Industries is thinking of taking the initiative of preparing a private sector led 10 year Hydropower Perspective Plan for Nepal. Keeping in view PTC’s experience and expertise in the Hydropower market segment it would be wonderful if CNI and PTC could join hands for this exercise.

 

Interaction on Nepal-India Cooperation in power sector and trade

(April 12, 2007; Hotel Shangri-La)