Next three years critical for hydropower

Next three years critical for hydropower
ekantipur, 6-Dec-08

Gyanendra Lal Pradhan, is one of the most vocal advocates of developing major hydropower projects in the country for the prosperity of its people. He has been campaigning for a hydropower revolution in Nepal for the last two decades. Given the new target set by the government producing 10000MW of power within the next decade, he has been working to convert this dream into reality. An electrical engineer from Maulana Azad College of Technology, India, he is the managing director of Trishakti Cable Industries. He is also the chairman of Nepal Hydro and Electric Pvt. Ltd. and Khudi Hydropower Ltd. He is one of the directors of Butwal Power Company and an executive member of Independent Power Producers Association in Nepal. Pradhan was also conferred with the 'Best Manager of the Year 2006' award by Management Association of Nepal and 'Best Entrepreneur' by Boss Business Magazine. He talked to Prithvi Man Shrestha of The Kathmandu Post about the current situation, prospect and strategies to be taken in the hydropower sector for larger development of the country.

Do you think the target of developing a 10000 MW hydropower project, is feasible or attainable in a decade?

There has been a national consensus among the political parties for the first time about the importance of developing the hydropower sector. It is one the few sectors, that has attained national consensus. Nepal has a huge potential of hydropower development and the desired market is just next door. Investors from around the world are ready to invest in the sector. In order to do so, the government has to try and create an investment friendly environment. Preparations for constructing a 3300MW plant have already started. If the government is able to retain investors' confidence for the next three years, then I don't think anyone can stop us from constructing such a big project. Therefore these three years are crucial in terms of determining the future of hydropower development in Nepal.

It has been a trend here for 'investors' to hold licenses for power projects that they don't make an attempt at developing. What do you think has to be done?

It is due to the government's weak policies of renewing such projects even when the construction companies have not started work. The government has the authority to revoke their licenses if they don't work. But, they should be allowed to take time until their license period is expired as per the law.

Why do you think the Nepali private sector is not enthusiastic in hydropower, even when there are foreign companies who are willing to invest?

The government needs to create a conducive environment for both domestic and international investors. The Nepali people are forced to live through extended periods of power cuts while Nepal Electricity Authority (NEA), a government entity, does not even rush to sign the Power Purchase Agreement (PPA) with the private investors. Last year, the authority signed an application for 7 MW against an application for 180 MW. Why will the private sector invest in projects if the power they generate is not purchased?

As an advocate of power export prospects of Nepal, what do you have to say about people who state that the country cannot prosper by exporting power so it should look at producing power for internal consumption only?

We have a potential of developing 200000MW hydropower. I don't support the idea that we are capable of producing just 84000MW. We will not require more than 20000MW by 2050. So what do we do about the surplus power? I support the idea that we need to ensure more domestic consumption first but we should also not rule out the export prospects.

Nepal's electricity is considered to be one of the most expensive in the world despite it being rich in water resources. Why?

The fault lies in the donor driven policy that rules us. When projects employ foreigners and massively use imported materials, the power will not be cheap. It might have been a necessity initially to employ foreigners just to transfer their skills and expertise. But, we have failed to learn their expertise and build up our own capability to develop the project. Another reason behind the expensive electricity can be the undersized projects in the country. For example, Likhu was initially licensed for 51MW. Now an Indian investor has licensed the same project for 121MW. It is not necessary to construct a big dam for a big project, but we need to focus on changing the size of machines used at the dam side. We need to focus on making the project as big is possible. Another factor to be taken under consideration is time management, if we complete the project before time or on time, then the project cost will definitely come down and result in lower electricity charges. The operation cost of power projects usually go down in later days unlike in other industries.

How are your companies, especially those related to the hydropower sector performing?

Butwal Power Company is doing good and we plan to develop projects of 100MW. We have established a new firm called 'Hydro Solution' which aims to develop many power projects by generating resources domestically and internationally. Hydro Solutions has set targets of completing works in 300MW projects within the next five years. We are planning to get involved in developing 10000MW within the next decade.

How has global recession affected investment in this sector?

Global recession has presented a golden opportunity

for hydropower developers as their project costs have decreased by 20 percent due to the fall of prices of steel rods and copper wires.