Development of energy sector will fail if private sector is left behind: Balram Khatiwada
लगानी न्यूज
The Government of TAG_OPEN_div_136 Nepal has set a target of generating 28,500 MW of electricity by 2035 as per the Energy Development Roadmap and Implementation Plan, 2081. For a country that has endured decades of energy shortages, load-shedding and import dependence, this roadmap is not just a plan, but a potential basis for economic transformation. But the question is clear: Will this roadmap be implemented in practice, or will it be limited to paper?
The document is a long-term strategic blueprint for Nepal’s energy sector from 2024 to 2035.TAG_OPEN_div_134 Its main objective is to achieve energy security by optimally utilizing the domestic energy sources, increase internal electricity consumption, expand inter-country electricity trade and make energy the backbone of the national economy.
According to the government’s plan, out of the total 28,500 MW to be generated, 13,500 MW will be consumed domestically, 10,000 MW will be exported to India and 5,000 MW will be exported to China, Bangladesh and other countries.TAG_OPEN_div_132 While this goal is ambitious, it is not impossible. It is not impossible to achieve the goals of the roadmap if clarity and consistency are maintained in policy, law and implementation.
History of Nepal’s Electricity Development It was started in 1968 with the Pharping Hydropower Project. Since then, nearly 4,000 MW of electricity has been connected to the national grid after nearly five and a half decades of operation. This achievement has not been achieved easily.
During this period, Nepal Electricity Authority, its subsidiary companies, independent power producers from the private sector and foreign investment have jointly contributed.TAG_OPEN_div_128 It is particularly noteworthy that the private sector accounts for more than 80 per cent of the total production capacity.
After the Electricity Act of 2049, the private sector got entry into the hydropower sector. In the beginning, the private sector started with small projects, but today it is implementing large, medium and multipurpose projects. In the last few years, the private sector has become more active.
As of now, 5,TAG_OPEN_div_124 000 MW of projects are being constructed by the private sector. Some 13,000 MW hydropower projects are awaiting power purchase agreement (PPA). Additional projects with the capacity of thousands of megawatts are in various stages of study, approval and financial management. This clearly shows that the private sector is capable of achieving the target of 28,500 MW if the state facilitates.
According to the government’s plan, out of the total 28,500 MW to be generated, 13,500 MW will be consumed domestically, 10,000 MW will be exported to India and 5,000 MW will be exported to China, Bangladesh and other countries.TAG_OPEN_em_76 While this goal is ambitious, it is not impossible. It is not impossible to achieve the goals of the roadmap if clarity and stability are maintained in policy, law and implementation, and the private sector is given the opportunity.
Export-oriented energy economy{
Domestic power generation has increased significantly in recent years, creating a situation of surplus electricity during the rainy season. This is the reason why Nepal has started exporting electricity to neighboring countries like India and Bangladesh. Today, Nepal has become the net exporter exporting electricity to India more than importing electricity. It has already started exporting 40 MW of electricity to Bangladesh. It is preparing to export 60 MW in the coming monsoon, including 20 MW.
Nepal-Bangladesh Energy Secretary-level meeting has formalized it. The trade with India, which started with 40 MW, has now reached the capacity to export up to 1,200 MW. This is the biggest achievement in Nepal’s energy history.
The
Energy Development Roadmap reviews past policy, legal, and institutional efforts. It is acknowledged that the Electricity Act, Hydropower Development Policy, Energy Efficiency Strategy and Renewable Energy Subsidy Policy have prepared the basis for energy development. But the roadmap also points to a harsh reality: the country faces an energy crisis due to prolonged inadequate production, weak transmission and distribution infrastructure, policy ambiguity, and investment risks.
Even today, bio-energy accounts for 80 percent of Nepal’s total energy consumption.TAG_OPEN_div_113 Excessive dependence on imported petroleum products has put a huge burden on the national economy. It is in this context that Nepal has made international commitments to achieve net-zero emissions by 2045, for which a rapid transition to clean and renewable energy is essential.
The roadmap has adopted a strategy to develop alternative energy such as reservoir-based, semi-reservoir projects, river-based hydropower, solar energy and green hydrogen. But production alone is not enough. Today’s biggest problem is the poor coordination of transmission and distribution infrastructure. When the project is ready, there is a situation of wastage of electricity in the absence of transmission lines. This has added serious risks to private sector investment.
If the government cannot do PPA on take-or-pay, then the private sector should be allowed to trade electricity. The private sector is capable of trading electricity. It has been asking for business permission for a long time. If the license is given to the private sector, the waste of electricity will be consumed, the export to the regional market will increase, the burden on the authority will be reduced.
62 trillion investment: not a dream, a possibility
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According to the energy development roadmap, about TAG_OPEN_div_107 Rs 6.231 trillion needs to be invested in the energy sector by 2035. That’s a huge amount, but not impossible. The private sector is capable of making this investment. But there is a serious contradiction here. On the one hand, the government dreams of energy development, on the other hand, efforts are being made to restrict the private sector through policies and laws.
Policy steps to weaken the private sector
– Electricity Bill seeks to discourage the private sector,
– Hundreds of projects affected after Sebon stopped IPO issuance for a long time,
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– Promoters were confused by an attempt to introduce a dual-engine system,
– Investments were put at risk by introducing a ‘take and pay’ system through the budget,
– Pressure from the Authority to run the plant at half capacity during the rainy season, which weakened the financial condition of the companies.
These decisions are contrary to the spirit of the Energy Development Roadmap. If the government cannot do PPA on take-or-pay, then the private sector should be allowed to trade electricity. The private sector is capable of trading electricity. It has been asking for business permission for a long time. If the license is given to the private sector, the waste of electricity will be consumed, the export to the regional market will increase, the burden on the authority will be reduced.
Energy development is not just a state monopoly, it is a joint effort. This is the work of all the stakeholders together. The government can’t do it alone. The private sector alone can’t. We also need the wisdom of civil society. If civil society does not understand the energy sector, it cannot develop rapidly.
The energy development roadmap is ambitious, but its success depends on taking the private sector into confidence.TAG_OPEN_div_94 Energy will become the basis of economic prosperity if the government and private sector work hand in hand. The compulsion to go abroad for employment decreases. Employment will be created in the country. The country will become economically strong through energy exports.
Relative to the new government
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{{TAG_OPEN_div_91} The interim government formed after the Jenji uprising of September 23 and 24 has been mandated to hold the House of Representatives elections on March 4. A new government was formed after the youth uprising, but the private sector has not felt safe. The project was shut down for a month after asking for 10 percent free shares in the name of Jenji. The private sector asked for security but the government could not provide it.
Promoters have realized that chaos is growing, which makes it impossible to bring in bigger and more investment in this sector. It is the responsibility of the government to create an investment climate. It should be guaranteed by the government. The government to be formed after March 4 should understand the energy sector and have a vision to collaborate with the private sector. From IPPAN’s side, our expectation is clear that energy development should be a shared journey, not a dream.
Only TAG_OPEN_div_87 then can the energy development roadmap come out of the paper and become a document of national prosperity. Now, dozens of problems have plagued hydropower projects. The Ministry of Energy has two agencies, the Department of Electricity Development and the Nepal Electricity Authority. The Department of Electricity Development is distributing licenses. Does the Authority refuse to sign PPA? If there is no PPA, then why are the licenses being distributed to the private sector for millions of rupees? Can the state’s policies sink people’s money?
The forest has its own laws. There is a situation where it cannot work. There is a need for a development-friendly forest law, which will also help in the development work and also help in the conservation of forests.
Hydropower projects are built but cannot be connected to the system for years. Currently, only the Nepal Electricity Authority (NEA) is constructing the transmission line. The National Transmission Grid Company has also started works on some transmission lines. However, this is not enough because the private sector can build the transmission and distribution system needed to meet the number and capacity of the project to be developed. The government should create the necessary legal arrangements and environment for this. The private sector is capable and ready to build big transmission lines. Only the state’s facilitation is awaited.
The NEA employees seem to be worried about the wastage of electricity during the rainy season.TAG_OPEN_div_81 If you want to give business licenses to the private sector, then there is no need to worry. The private sector is also capable and ready to do business. Half a dozen companies from the private sector have given permission for business in the Ministry of Energy.
The private sector is working for the economic development of the country through energy.TAG_OPEN_div_79 It is ready to join hands with the government. This is one of the areas that can chart the roadmap for Nepal’s economic development. It can make Nepal prosperous.
(From the article Energy Prosperity Souvenir 2082 by IPPAN General Secretary Khatiwada)
प्रतिक्रिया दिनुहोस्