South Asia’s Water: South Asia’s Water

South Asia’s Water: South Asia’s Water
Economist, 19-Nov-11

A growing rivalry between India, Pakistan and China over the region’s great rivers may be threatening South Asia’s peace

SONAULLAH PHAPHO has spent half a century picking a living from Wular lake high in Indian-controlled Kashmir. Today he is lucky if he scoops a fish or two out of the soupy mess. Push a boat into the knee-deep lake and the mud raises a stink of sewage. A century ago Wular and its surrounding marshes covered more than 217 square kilometres (84 square miles), making it one of Asia’s larger freshwater lakes. Now, thanks to silt and encroachment, the extraction of water by nearby towns and tree planting on the shore, it measures only 87 sq km and is shrinking.

Compared with much of South Asia, Kashmir, a disputed territory in northern India, has many rivers and relatively few people. But even here fresh water is running short. To see how contentious this can be, drive half a day south to where the Baglihar dam (shown above) is rising up. An enormous wall bisects the valley, dressing it in white spray, and three huge jets of water blast from its sluices.

Half complete, the dam is already a local wonder that tourists gape at. It generates 450MW for the starved energy grid of Jammu and Kashmir. Once the scheme fully tames the water, by steering it through a tunnel blasted into the mountain, the grid will gain another 450MW.

The river swirls away, white-crested and silt-laden, racing to the nearby border with Pakistan. But there Baglihar is a source of bitterness. Pakistanis cite it as typical of an intensifying Indian threat to their existence, a conspiracy to divert, withhold or misuse precious water that is rightfully theirs. Officials in Islamabad and diplomats abroad are primed to grumble about it. Pakistan’s most powerful man, the head of the armed forces, General Ashfaq Kayani, cites water to justify his “India-centric” military stance.

Others take it further. “Water is the latest battle cry for jihadis,” says B.G. Verghese, an Indian writer. “They shout that water must flow, or blood must flow.” Lashkar-e-Taiba, a Pakistani terror group, likes to threaten to blow up India’s dams. Last year a Pakistani extremist, Abdur Rehman Makki, told a rally that if India were to “block Pakistan’s waters, we will let loose a river of blood.”

Assorted hardliners cheer them on. A blood-curdling editorial in Nawa-i-Waqt, a Pakistani newspaper, warned in April that “Pakistan should convey to India that a war is possible on the issue of water and this time war will be a nuclear one.”

Upstream such outbursts are usually dismissed as proof that troubled Pakistan is, as ever, spoiling for a fight. Water is merely the latest excuse. India is not misbehaving, says Mr Verghese placidly. It fails to take all it is entitled to from cross-border rivers in Kashmir. Run-of-the-river dams like Baglihar consume nothing, since water must flow to run turbines. Such a dam, he says, merely briefly delays a river.

Indians point out, too, that Pakistan enjoys a rare guarantee: the Indus Water Treaty, struck in 1960 by far-sighted engineers and diplomats who saw that after the partition of land, water had to be shared out too. The treaty, which has survived three wars, details exactly how each side must use cross-border rivers. Mostly this applies to the tributaries that flow from Kashmir to form the massive Indus river, Pakistan’s lifeblood.

If Indians abide by the treaty, then in theory at least they cannot be misbehaving. They see Baglihar as proof of co-operation, not a threat. When Pakistan objected to the dam’s design, India accepted international arbitration, the first case in the treaty’s history. Outside experts studied the dam and ordered small changes. But in effect they said it posed no threat to Pakistan. And last year the dispute was officially ended by the two governments.

Downstream, however, few sound satisfied. “The Baglihar decision…allowed a reservoir on a river coming into Pakistan, and now a precedent is set,” laments John Briscoe, a water expert formerly of the World Bank who advises Pakistan. The Pakistanis fear Indian control over the headwaters of the Indus. And Indian bureaucrats fuel these fears with obsessive secrecy about all water data.

Bashir Ahmad, a geologist in Srinagar, Kashmir who studied the Baglihar dam, gives grim warning about the Indians’ future intentions: “They will switch the Indus off to make Pakistan solely dependent on India. It’s going to be a water bomb.” A less excitable report in February by America’s Senate offered a similar assessment: “The cumulative effect of [many dam] projects could give India the ability to store enough water to limit the supply to Pakistan at crucial moments in the growing season.” Dams are a source of “significant bilateral tension”, the report concludes.

More dams are to come, as India’s need to power its economy means it is quietly spending billions on hydropower in Kashmir. The Senate report totted up 33 hydro projects in the border area. The state’s chief minister, Omar Abdullah, says dams will add an extra 3,000MW to the grid in the next eight years alone. Some analysts in Srinagar talk of over 60 dam projects, large and small, now on the books.

Any of these could spark a new confrontation. The latest row is over the Kishanganga river (called the Neelum in Pakistan) as each country races to build a hydropower dam either side of Kashmir’s line of control. India’s dam will divert some of the river down a 22km (14-mile) mountain tunnel to turbines. To Pakistani fury, that will lessen the water flow to the downstream dam, so its capacity will fall short of a planned 960MW.

Pakistan also claims (though the evidence is shaky) that 600,000 people will suffer by getting less water for irrigation. Again it insisted on international arbitration at The Hague. In September, to Pakistani delight, India was ordered to suspend some of its building for further assessments to be made. But India still looks likelier to come away happy in the end, as the treaty foresaw and permitted the Indian design, and India is likely to finish its dam ahead of Pakistan in any case, by 2016 rather than 2018.

When China’s upstream

Countries downstream have genuine reasons to fret. Pakistan is exposed. Like Egypt it exists around a single great river, though the Indus is nearly twice the Nile’s size when it reaches the sea. It waters over 80% of Pakistan’s 22m hectares (54m acres) of irrigated land, using canals built by the British. In turn that farming provides 21% of the country’s GDP, as well as livelihoods for a big proportion of its 180m people. Many of them are already thirsty.

On average each Indian gets just 1,730 cubic metres of fresh water a year, less than a quarter of the global average of 8,209 cubic metres. Yet that looks bountiful compared with each Pakistani’s share: a mere 1,000 cubic metres. Worse yet, South Asia’s fresh water mostly falls in a few monsoon months. The dreadful floods this year and last showed that untamed and unpredictable rivers can be both resource and threat.

More rows between India and Pakistan are certain. India may keep on dismissing them as Pakistani bluster, an easy thing to do if you are upstream. But India is downstream in another highly tricky area: its border with China.

Tension already exists over the status of India’s Arunachal Pradesh state, which China refuses to recognise. A quarrel over rivers in the region could serve as a focus for wider disputes about territory. A measure of the recent slump in relations came when, to the fury of India’s authorities, China blocked an attempt by the Asian Development Bank to prepare for a dam project in Arunachal Pradesh. And one of India’s largest rivers, the Brahmaputra (Tsangpo in China), flows south from the Tibetan plateau and into Assam not far from the disputed land.

Angry Indian politicians, activists, bloggers and journalists claim that water-starved China (with 8% of the world’s fresh water but 20% of its population) has plans to divert the Tsangpo/Brahmaputra to farmers in its central and eastern regions. Feelings are running so high that India’s prime minister, Manmohan Singh, felt obliged to issue a statement on August 4th saying that China’s leaders had assured him there were no such plans afoot. And though a few run-of-the-river hydroelectric schemes are being built upstream on the Tsangpo, none of these could change the river’s course. Cool heads point out that speculation about China channelling the torrent from near the border, at a spot known as the Great Bend, looks fantastical, at least at present.

Chinese engineers would need to use nuclear explosions to have a chance of making tunnels through a series of ridged mountains to get water east from the Great Bend. Although plans have existed since the fourth century to take water from China’s west to the east, and the scheme was pushed by Mao Zedong, the engineering, at least for now, appears to be technically impossible. Yet broader Indian strategic fears—the fact that the Chinese control the Tibetan plateau, which is the source of water for parts of densely populated northern India—will evaporate no more easily than Pakistani fears of India.

An ever-thirstier region

The scarcity of water in South Asia will become harder to manage as demand rises. South Asia’s population of 1.5 billion is growing by 1.7% a year, says the World Bank, which means an extra 25m or so mouths to water and feed: imagine dropping North Korea’s entire population on the region each year. Greater wealth in South Asia brings with it a soaring demand for food, especially for water-intensive meat and other protein. Industry and energy-producers also use water, though unlike farms they return it, eventually, to the rivers.

Worse, overall supply will not only fail to keep up with rising demand but is likely to fall (unless a cheap way is found to turn sea water fresh). The Himalayan glaciers are melting. A Dutch study last year of the western Himalayas reckoned that shrunken glaciers will cut the flow of the Indus by some 8% by mid-century. Flows may also get less regular, especially if glacial dams form, withholding water, and then collapse, causing floods.

Others give even scarier predictions. Sundeep Waslekar, who heads a Mumbai think-tank, the Strategic Foresight Group, which has picked water as a long-term threat to Asian stability, sees a “mega-arc of hydro insecurity” emerging from western China along the Himalayas to the Middle East and farther west. The strain of bigger populations, diminishing water tables and a changing climate could all conspire to produce a storm of troubles. South Asia is especially vulnerable: Mr Waslekar sees a cut of 20% in total available fresh water over the next two decades.

The greatest threat of all would be from any change to the monsoon, which delivers most of the region’s fresh water each summer. Here, again, worries arise. Indian meteorologists who have studied rainfall data from 1901 to 2004 have noted signs in recent decades of more dry spells within the peak monsoon months. If these lead to weaker, or less predictable, monsoons in future (though this year’s was about normal) the consequences for farmers could be dire.

In any case, the cost of running short of water is already becoming clearer. The Lancet, a British medical journal, reported last year that up to 77m Bangladeshis had been poisoned by arsenic—the largest mass-poisoning in history. It was the result of villagers pumping up groundwater from ever deeper aquifers. The same poison is now entering crops and more of the food chain.

Filthy water and bad sanitation spread diseases, such as diarrhoea and cholera, which kill hundreds of thousands of Indian children every year, says Unicef, the UN’s children’s agency. Several South Asian rivers, suffering from weaker flows, have become a sludge of human and animal waste, dangerous to drink and wash in and unsafe even for watering crops.

All over the region water tables are dropping as bore holes drive deeper. In the dry season even some of the larger rivers slow to a trickle. Knut Oberhagemann, a water expert in Dhaka, Bangladesh, says that the flow of the mighty Ganges where it enters Bangladesh is at times a pitiful few hundred cubic metres a second, so low that “you can walk across the river”. When the same river, at this point called the Padma, reaches the coast, it is often so feeble that the sea intrudes, poisoning the land with salt.

The same problem curses the delta of the Indus in Pakistan. There a semi-desert was turned into some of the most fertile land on earth by British-built irrigation canals. But as the sea encroaches on low, flat land, rivers at times are flowing backwards, laments a local environmental activist. Take away the fresh water—around 60% of which is now lost to seepage and evaporation because of the bad management of those canals—and the desert will eventually come back.

Save or snatch

Governments in South Asia can respond to growing scarcity in one of two ways. The first is to improve the way they use the water they have, both by managing it better and by co-operating with one another. The second is to try to grab as much water as they can from their neighbours.

Better management of irrigation canals and better farming techniques would help hugely to cut waste. In Pakistan bitter rows between provinces have long scotched coherent planning. Wealthy Punjab, a big farming province, is routinely accused by downstream Sindh (and by others too) of taking an unfair share of the water.

And Pakistan badly needs more dams to control floods, store monsoon water and make electricity (China is said to have offered to help Pakistan build a series of big dams, and has already sent engineers to help speed along the new one on the Neelum/Kishanganga). Only about 10% of the potential hydropower of the Indus has been tapped so far, and only 30 days’ average river flow can be stored (by contrast, the Colorado in America has dams to store 1,000 days’-worth).

Many governments are at least thinking in terms of dams and co-operation. Mr Waslekar reckons that 60-80 big dams (mostly for energy) will be built in South Asia in the next two or three decades, at a cost of hundreds of billions of dollars. In many cases—as for example in mountainous Bhutan, where the economy gets a huge boost from selling hydropower to India—this can foster economic and diplomatic co-operation. India has visions of one day persuading unstable but immensely water-rich Nepal to follow suit. The country is the source of more than 40% of the Ganges’s water, and Indian analysts talk dreamily of 40GW of hydropower potential waiting to be used.

Other cross-border water deals are pending. Cosy ties with Bangladesh’s government mean that India can more easily build dams on some of the several dozen rivers that cross their shared frontier. In September Mr Singh visited Dhaka to sign a deal with Bangladesh to allow the latest hydro dam to go up on the Teesta river. Though the deal was postponed at the last minute by a row with a regional Indian leader, it now looks set to go ahead. However there are bitter memories in Bangladesh of an earlier deal, on the Ganges, which allowed India to put up a barrage to block the river’s flow in the dry season.

Tentative signs of wider co-operation exist. China issues twice-daily reports on the Tsangpo river flow in the flood season, separately to India and to Bangladesh. This could be seen as encouraging, if the two giants of the region wished to consider getting together over water. Indeed if full-scale friendliness were ever sought, an immense opportunity awaits.

Mr Verghese points out that the Tsangpo/Brahmaputra falls 2,450 metres (8,000 feet) over a few kilometres in China just before it reaches the Indian border. Send it through a 100km tunnel from the Tibetan plateau down to Assam and an enormous 54,000MW could be generated. One day its power could light not only much of north-east India and Bangladesh, but nearby Myanmar and beyond. Such a mega-structure would become a keystone for regional co-operation.

It will almost certainly never be built. Analysts have suggested that, given the generally dire relations between South Asian countries, water will provoke clashes rather than co-operation. A 2009 report for the CIA concluded that “the likelihood of conflict between India and Pakistan over shared river resources is expected to increase”, though it added that elsewhere in the region “the risk of armed interstate conflict is minor”. And a Bangladeshi security expert, Major-General Muniruzzaman, predicts that India’s “coercive diplomacy”, its refusal to negotiate multilaterally on such issues as river-sharing, means that “if ever there were a localised conflict in South Asia, it will be over water.”

The Neocolonial Path to Power

The Neocolonial Path to Power
Himal Southsian, August 2010
By: Dipak Gyawali

Nepal’s strategy of developing its power sector based on capacity-building to meet the needs of its own commerce and industry is far from perfect, but it is a better long-term bet than Bhutan’s much-touted model.

Many Nepalis would be shocked to hear that Bhutan will face load-shedding from the coming winter. The citizens of Nepal have, after all, been told for decades that Bhutan has done a great job of developing hydroelectricity, that it has earned significant money by exporting electricity to India, and thus it has been able to achieve the highest per capita income in Southasia. Conversely, Nepal has been ridiculed for wallowing in ‘empty nationalism’ and stirring ‘needless’ controversies over the Mahakali Treaty of 1996 (for water sharing on the Mahakali River) as well as hydropower projects such as the West Seti, both of which involve export of electricity to India.

The socialist and communist leaders of Nepal, seemingly suffering from a sense of moral and intellectual inferiority, have been unable to give a fitting reply from the standpoint of their ideologies. Such a reply would need to point out that it is questionable whether a development path that requires relinquishing defence and foreign policy to a foreign power is beneficial for the country in the long term. Party intellectuals advising politicians and political parties who only see revenue inflow and ignore vital diplomatic and strategic issues are in truth unwittingly pleading to be colonised. Nepal’s chronic load-shedding problem should then come as no surprise when these ‘Brahmins behind the throne’ fail to see the political economy hidden behind the load-shedding that is imminent in Bhutan.

At first glance, Bhutan certainly appears to have achieved better hydropower development than its Himalayan neighbour. Three times smaller in landmass and with a population one-fiftieth of Nepal’s, the current generating capacity of Bhutan (at 1488 megawatts) is twice that of Nepal. The Punatsangchhu-I hydro plant, under construction with a 60 percent grant and 40 percent soft loan from India, will add another 1020 MW by 2016. Such cheap development capital means that Bhutanese consumers pay a mere INR 1.30 per unit of electricity, allowing them to cook food and heat homes with electricity. Currently, about 70 percent of the 123,000 households in Bhutan have access to electricity, and by 2013 the entire country is expected to be electrified.

In comparison to Nepal, these would be considered significant achievements. And so, one may well ask, if these are the facts, why is the Bhutanese model wrong? And, incidentally, how is it that the country is on the threshold of load-shedding? Though Bhutan has twice the electricity-generation capacity of Nepal, around 80 percent of its electricity is exported to India, leaving only about 300 MW for consumption in Bhutan. Of this, only 80 MW is for domestic use, while the rest goes to southern Bhutan to be consumed by various Indian-owned industries, such as cement factories, lured here by the availability of cheap electricity. Subsidised electricity has led to booming demand, which grew by 19 percent from 2007 to 2008, increasing a further 27 percent in 2009 and 54 percent in 2010. As a result, Bhutan will be compelled to reduce its consumption by around 25 MW via load-shedding this coming dry season, worsening as demand continues to escalate till 2016, when Punatsangchhu-I comes online.

Innovative hydrocrats
This five-year load-shedding scenario is a planning failure born of a faulty political economy. But Bhutan’s supply problems are mild, unlike Nepal’s chronic power crisis precipitated by its unstable politics. While no magic wand can make electricity shortages disappear, Bhutan has already begun to take appropriate corrective measures. Importing electricity from India remains an option, but it is an expensive one, as Thimphu will have to import power at almost twice the rate at which it exports. India, despite its close friendship with Bhutan, cannot provide cheap power to its smaller neighbour due to its own 10,000 MW electricity shortage in the grid of North India, a fact not understood by today’s Nepali politicians.

The search for demand-side management options has led to other alternatives to Bhutan’s load-shedding problem: biogas for cooking and solar panels to heat water to reduce power consumption during peak hours every day. Economic incentives are being looked at to encourage industries to develop their own captive hydropower. Another option would be to build ‘pump storage’ schemes below existing power plants, which would pump water up to reservoirs during the night for use during next day’s peak time. Bhutan has also put forth the idea of an ‘energy bank’, whereby it would store surplus power generated during the rainy season in India, dipping into this ‘account’ in the dry months. Such a system of ‘energy barter’ would be far cheaper for Bhutan than direct purchase, and Thimphu is already in negotiations on this issue with New Delhi. Nepal’s Water and Energy Commission likewise initiated a policy of energy barter in 1992, but the mirage of the Mahakali and political infighting has left such innovative thinking in limbo.

Exploring new power policies beyond the straitjacket imposed by hegemonic Indian plans, Bhutan’s hydrocrats have initiated medium-sized plants more suited to Bhutan’s economy. The 126 MW Dagachu and the 208 MW Nikhachu schemes are being developed using a public-private partnership model supported by the Kyoto Protocol’s Clean Development Mechanism, which has come about in the wake of international concerns over global climate change. Recent changes in water policy require all power exporters to give 15 percent of their energy free to the Bhutanese grid as royalty. Such changes demonstrate the evolving Bhutanese understanding that an export-oriented policy alone does not strengthen a country’s energy security. Yet while there is immense potential to develop small- and medium-sized hydropower schemes, agreements with India preclude this option on cost grounds. Consequently, rather than ending load-shedding in two years, Bhutan has been compelled to wait until 2016 to achieve this goal.

As in Nepal, vagaries of the weather possibly related to climate change have led to severe winter droughts in recent years, and Bhutan’s rivers have been drying out significantly from January to May. Since the country only has ‘run-of-the-river’ hydropower plants, without monsoon water stored in reservoirs, they do not produce more than a third of their installed capacity in the dry season. If reservoirs are built that store the monsoon flow, more power can be generated in the dry season when the capacity of run-of-river plants has drastically reduced production. But, as is also the case in Nepal, Bhutan has limited locations on which small- and medium-storage hydropower plants can be built, and the locations that do exist might not be economically viable due to rapid reservoir sedimentation. Also, large reservoirs permanently flood fertile and populated valleys, and Thimphu seems reluctant to go this route. The feasibility study of the 4000 MW Sunkhosh is now complete, but Bhutanese officials do not seem interested to push it. During a recent four-day stay in Thimphu, this writer heard a uniform refrain from many officials: We cannot be confrontationists like you Nepalis – but inundation projects are our last priority, to be done only if the pressure from India becomes too strong to resist.

Slow, small but sure
A multipurpose hydroelectric storage project is similar to a factory that produces multiple goods. If the costs incurred in the construction of the factory, including the loan and interest repayment, are included in the price of just a single item, it will yield little profit, and could even fail to sell in a competitive market. Furthermore, if other goods produced are then distributed free of cost, there is likely to be disagreement and infighting between the various consumers. Besides electricity, storage dams provide flood control, irrigation, fisheries, navigation and tourism, from which different economic actors benefit in varying degrees. As Nepal (and India) has not built any significant multipurpose project, its policymakers have no idea how these benefits can be allocated in an equitable manner, nor how the political, economic, social and environmental issues need sorting out.

Thimphu, on the other hand, seems more aware of these concerns. It has taken a position in its talks with New Delhi that at least 50 percent of the benefits of a storage dam are in areas outside the electricity sector, which must be accounted for.

For example, the regulated water released in the dry season would lead to massive agricultural expansion in the plains, and flood-control benefits would result when the summer peak flood is lopped off to be stored in the reservoirs. As Bhutan does not have any Tarai plains, it is the downstream riparian areas that will reap the non-power benefits from reservoir projects in upstream Bhutan. New Delhi hopes to capture these valuable benefits from regulated water released from storage reservoirs in the dry season and, through its river-linking plan, to transport such waters to the dry western part of the country. This would also ensure that Bangladesh does not become a ‘free rider’ beneficiary, benefiting from the regulated dry season flow coming from Bhutanese dams. While the Bhutanese model of developing its hydropower for export in return for royalties might have been profitable in earlier years, it is today creating more problems than benefits.

The export-oriented path that Bhutan has taken cannot be an option for Nepal, unless it forsakes its independent foreign and defence policies. From a political-economic perspective, the Bhutanese model is one of neocolonial resource extraction. If the much ballyhooed ‘new Nepal’ were to adopt a similar policy, it would be tantamount to its political masters admitting their incapacity to develop Nepal as a self-reliant and independent economy. Growth in hydroelectricity production cannot be the sole standard by which to measure success. After all, a plantation economy using slave labour can produce more efficiently than an independent economy crawling along the path of capacity development. A rent-seeking, royalty-earning model might enrich governments, politicians and senior bureaucrats for some time, much like the Arab sheikhdoms, but it does nothing to develop national capacity – which is what development is, in the true sense.

Even though Nepal’s demand for electricity currently far outstrips supply, the development of small and medium hydropower plants over the last three decades has led to significant ‘upstream-downstream’ sector capacity built in the economy. Despite state indifference due to the Nepali hydrocracy’s infatuation with foreign aid, the survey, design, geo-technical engineering, contracting, construction and some equipment manufacture and maintenance are now done by Nepalis in small factories and consultancy services, for projects from a few hundred kilowatts to some 20 MW. The importance of such capacity is evident from the fact that Bhutanese power managers, during visits to the Bhutanese gomba (monastery) located in the Boudha area of Kathmandu, also take the opportunity to visit nearby factories to procure services for plant maintenance in Bhutan. The biggest complaint of Bhutanese officials, on the other hand, is that their contractors, rather than working to build national capabilities in these areas, only serve as rent-seeking middlemen for Indian contractors, thus defeating the commendable government policy of ‘Bhutanisation’.

In Nepal, the hydropower sector is soon to test its political leadership, with a new electricity bill pending in Parliament. If passed as drafted, the Electricity Act would reward exporters of electricity with tax breaks but would penalise those developing hydropower for Nepali consumption. This would push Nepal inexorably towards a neocolonial political economy similar to that of Bhutan’s, and away from the slow but self-reliant development path pursued so far. Fortunately, thanks to the activism shown by members of the National Association of Community Electricity Users Nepal (NACEUN), members of Parliament from across the political spectrum have tabled 142 fundamental amendments that would re-define the Act towards a self-reliant, ‘national capacity enhancement’ model. We may not have to wait too long to see which historic path the country will take, the Bhutanese or the Nepali.

Mr. Gyawali was Nepal’s Minister for Water Resources during 2002-03.

Power to India

Power to India
NepaliTimes, Issue #517 (27-Aug-10 to 02-Sep-10)
RATNA SANSAR SHRESTHA

It's folly to think Nepal can replicate Bhutan's model of hydropower development

People in Bhutan must have felt magnanimous after reading the Times of India (ToI) article on June 20, 2009 that read: 'Bhutan PM pledges power aid for India'. For a tiny country like Bhutan to be able to 'aid' its giant neighbour India must be a thrill. Advocates of the Bhutan model in Nepal are also salivating at the possibility of wielding immense power (not electricity!) over India by exporting hydropower, in the hope that control will be in Nepali hands.

Of course, they will have forgotten that India will circumvent the possibility of Nepal controlling the flow of power by demanding that they get to ensure the 'security' of such projects, with Indian security personnel. The Karnali Chisapani project, meant to generate 10,800MW, was shelved in the mid-70s by the then Nepali government for this very reason.

These people have their collective heads in the sand for a couple of other reasons. Bhutan's example illustrates a few ground realities. Kuensel online, Bhutan's national English-language news portal, reported that "contrary to existing notions, a new study says it is economically more beneficial for Bhutan to supply power to its industries than export to India." The report details findings from the Bhutani Ministry of Economic Affairs and the royal audit authority, which note that the government makes a profit of Nu 64 million if it exports electricity to India, compared to a profit of Nu 152.8 million from tax receipts if it supplies 15 major national industries. Economic Affairs Minister Lyonpo Khandu Wangchuk was reported to have said, "Electricity is the only plentiful raw material that can be used by our industries to compete with external competitors by value adding on reasonably priced power." Ministry Secretary Dasho Sonam Tshering reportedly alluded to Norway, which "also used its hydropower to initially bankroll its industrial development through power intensive metallurgy and fertilizers".

The export-oriented model of hydropower development in Bhutan has threatened its own industrial development. As early as 2008, Zeenews.com reported that "a severe power shortage may hit Bhutan in view of new industries readying up to kick start operations even as India is banking on borrowing electricity from the Himalayan country by 2020." Bhutan Power Corporation Limited is reported to have confirmed this. Kuensel online echoed this anxiety in February 2010, suggesting setting up captive thermal power plants and in May 2010, even calling for the import of electricity from India.

Due to the unique geopolitical relationship between India and Bhutan, the three hydropower projects built so far, with a total capacity of 1,416MW, are owned by Bhutan but funded by India as a 60 per cent grant and a 40 per cent soft loan. But this 'inter-government model' has been found wanting by the Indian Government of late. The ToI last year noted that "The power ministry is getting the jitters over venture models for setting up hydel projects committed to Bhutan, with a view emerging that the amount of investments India will have to make at one go till 2020 under the present inter-government arrangement may adversely affect our budgetary provisions."

According to records of a recent meeting called by Indian power sector officials, India is committed to projects in Bhutan of 10,000MW by 2020. This will require fast-track investment of Rs 500 billion at
Rs 45 billion per year till 2020. The Indian Government, therefore, is endeavouring to drastically reconfigure the model so future projects are built with 70 per cent loan and 30 per cent grant. According to Kuensel online, the Bhutanese government has not yet agreed to this.

Under the current model, Bhutan seems to be profiting even by exporting power at a dirt cheap rate. But once the financing modality is turned on its head, the benefits to the Bhutanese economy will shrink by a magnitude. By exporting power, furthermore, it is condemned to remain underdeveloped.

For Nepal, with a population of 28 million, to reach the same level of 'gross national happiness' achieved under the current India-Bhutan inter-government model would require India to finance 52,864MW of electricity. Unfortunately, India is already experiencing financing fatigue after its relatively small investments in Bhutan. It's time for the hydrocracy in Nepal – the politicians, policymakers, planners, bureaucrats, and intelligentsia who deal in hydropower – to acknowledge the ground realities and grow out of their short-sighted, juvenile vision for Nepal's hydropower future.

Ratna Sansar Shrestha is a water resource analyst

BBC Nepali Service Discussion Politics in Hydropower Development

BBC Nepali Service's Mr. Surendra Phuyal moderates discussion between Kantipur's Bikas Thapa and Maoist CA member Mr. Hari Rokka as to why there is so much politicization in hydropower develoment in Nepal on June 12, 2010.

Developers keeping PPA signing on hold

Developers keeping PPA signing on hold
Republica, 1-Apr-2010
Dinesh Karki

Rapid rise in interest rates of commercial banks has distracted potential investors as they are delaying the signing of Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA).

According to NEA, the sole authority for power distribution, 26 hydro projects are ready to sign PPA but the developers are hesitating to come for negotiations. Commercial banks have jacked up interest rates for hydropower projects to 13-14 percent. The interest rate was about 11 percent about a few months ago.

Hari Bairagi, chairman of Small Hydropower Developers´ Association Nepal (SHDAN), said developers are keeping PPA negotiations on hold due to skyrocketing prices of construction materials and political hooliganism, besides high bank rates. “The rate proposed by NEA is very low. Private sector can´t generate electricity at the present rate,” he added.

NEA has been offering an average rate of Rs 4.50 per unit for private developers. However, the developers are demanding that the NEA purchase electricity as Rs 6 per unit. NEA is importing electricity from India at the price (Rs 9.80 per unit) double than the rate offered by it to the private sectors due to massive power deficit.

Private developers, who have already met necessary criteria for PPA, are also not encouraged to sign PPA. Shashisagar Raj Rajbhandari, director of Power Trade Department at NEA, said earlier they used to sign at least three PPAs every month. “But we signed PPA with only three projects in the past four months,” Rajbhandari told myrepublica.com.

NEA has signed PPA with 63 hydropower projects so far. It has received application for additional 110 projects.

According to developers, the rate of return in hydropower projects has dropped down to 12 from 15 percent due to different constraints in hydropower development.

Pradip Gangol, executive manager of Independent Power Producers´ Association of Nepal (IPPAN), said commercial banks do not invest on projects where the rate of return is lower than 15 percent. “The developers are in dilemma. They are not interested to commission new projects due to high construction cost. But if they don´t develop projects on time, they might lose their license,” Gangol added.

Investment climate in the country has deteriorated in recent days. “Developers complain about extortion by different groups and skyrocketing prices of construction materials,” Rajbhandari shared.

The cost of power generation hovers around Rs 150 million to Rs 170 million per megawatt, according to experts.

Suggestions to govt

Hydro power developers have forwarded various suggestions to the government to incorporate them in the budget for fiscal year 2010/2011.

Issuing a joint press statement, Independent Power Producers´ Association (IPPAN) and Small Hydropower Developers´ Association Nepal (SHDAN), on Wednesday demanded the government to endorse Electricity Act and Nepal Electricity Regulatory Commission Act at the earliest.

They have also sought exemption of VAT on construction materials, plants and machineries and impose customs duty of one percent, as included in the proposed Electricity Act.

“The exemption of VAT on construction materials and machineries can significantly reduce production cost and ultimately attract more investment,” the statement added.

At present the government is imposing 28 percent tax on the service of foreign consultants in hydropower projects. Developers have asked the government to reduce the tax to 15 percent.

They have demanded to change the criteria for dry and wet season for Power Purchase Agreement (PPA) rate. They have also demanded the government to fix PPA rate at Rs 5.99 per unit. They have also demanded exemption of income tax for ten years.

BBC Nepali Service Discussion on Load Shedding

BBC Nepali Service's Mr. Naryan Shrestha moderates a discussion on power shortage and load-shedding with Energy Minister Mr. Prakash Sharan Mahat (प्रकाशशरण महत), Maoist CA member Mr. Hari Rokka (हरि रोक्का) and an energy expert Mr. Puspa Chitrakar (पुष्प चित्रकार) on March 7, 2010.

Loadsheding 51 hours a week; 12 hours a day likely from next month

Loadsheding 51 hours a week; 12 hours a day likely from next month
Nepalnews, 30-Dec-09

Nepal Electricity Authority (NEA) has increased the load shedding hours to 51 hours a week starting today.

NEA will cut power in all areas in rotation for seven hours a day for five days and eight hours a day for two days in two slots everyday.

According to chief of NEA's load dispatch centre Sher Singh Bhat, the load shedding hours were increased as the electricity production is decreasing, while the production is falling.

NEA had been cutting power only in the mornings and afternoons so far. From today, it will also cut power in the afternoons.

With the advent of dry season, the water level in the rivers has gone down affecting electricity production. All the hydro-power plants in Nepal except Kulekhani and Mid-Marsyangdi are based on run-off-the-river system.

According to NEA, the demand for electricity across the nation at peak hours is 845 MW, while the supply is only 450 MW.

Going by the current trend, outage timing is expected to rise to 12 hours a day starting as early as January.

Although, NEA and energy ministry officials had been touting the loadsheding hours this year would be limited to 10 hours a day, it is likely power will be cut for as long as 18 hours a day in the driest season, like last year.

The forecast of NEA officials, who had been banking on India to rescue Nepal from its power crisis, failed as India agreed to supply much less power than expected by the Nepali officials.

Chinese company agrees to invest 51 percent in West Seti Hydro-project

Chinese company agrees to invest 51 percent in West Seti Hydro-project
Nepalnews, 28-Dec-09

A Chinese government venture, China National Machinery Import and Export Company, has agreed to invest 51 per cent share in West Seti Hydro-project.

Director of West Seti Hydro-project Himalaya Pande told journalists in Kathmandu over a video conference Monday evening that he signed an agreement to this effect with president of the Chinese company Jia Zhiqiane this afternoon.

The agreement was signed in presence of Prime Minister Madhav Kumar Nepal, energy minister Prakash Sharan Mahat and foreign minister Sujata Koirala in Beijing.

After assurance of investment PM Nepal has directed energy minister Mahat to extend the license period of the project by one year. The license of West Seti Hydro-project was due to expire on December 31, this year.

The project is being constructed under an export plan where 90 percent of the production will be exported to India.

Ten percent of the production will be provided to Nepal for free for 30 years, and the entire project will be handed over to Nepal after that.

With the latest arrangement, the 750 MW West-Seti Hydro-project can go ahead without the investment of Asian Development Bank (ADB), which was considered one of the major investors for the project before this.

The estimated cost of the project is USD 1600 million. ABD had earlier showed interest for 15 percent share in the project beside loan to Nepal government for another 15 percent share. Australian company SMEC is another chief investor for the project.

US company shows interest in Tamorkhola hydel

US company shows interest in Tamorkhola hydel
Nepalnews, 16-Dec-09

A US based development company has shown interest in the construction of the 500 MW Tamorkhola hydro-electric project located in the border of Taplejung and Tehrathum, Kantipur daily reported.

Representatives of Hillsdale Group, incorporated in Alexandria, US, has met with energy minister Prakash Sharan Mahat, energy secretary Shankar Prasad Koirala and chief of Nepal Electricity Authority (NEA) Jeevendra Jha and expressed its interest on the project.

The group also queried about the legal procedure and investment environment in Nepal. The chairman and Chief Executive Officer (CEO) of the group is S.M. Sainju, a Nepali doing business in the States for 20 years.

The group has also met with UCPN (Maoist) chairman Pushpa Kamal Dahal, CPN (UML) chairman Jhala Nath Khanal and Nepali Congress vice president Ram Chandra Poudel and discussed the project.

Oh! Pancheshwar

Oh! Pancheshwar
myrepublica.com, 19-Aug-09
ADITYA MAN SHRESTHA (adityaman@hotmail.com)

Prime Minister Madhav Kumar Nepal is looking forward to push the Pancheshwar project during his visit to India but no matter how hard he tries, it is going to be a futile exercise. The project was never meant to be implemented and I am not saying this now; I said this almost a decade ago. The project still stands today where it was when it was agreed upon between India and Nepal about 13 years back.

“Pancheshwar is actually a jinxed project. When India wanted it seriously in the sixties, seventies and eighties Nepal resisted it. When Nepal wanted it in the nineties and onward India became lukewarm about it. When both these countries will be equally serious and capable of taking up this project on the ground instead only in the paper is anybody’s guess. However the best bet is that it is shelved for many decades to come” (Himalayan Times, 6/12/2001).

The pessimism was not without reasons. The basis of Pancheshwar project is the Mahakali Treaty. “But the main objective of the treaty”, I said, “was not to develop the Pancheswar project but to legitimize the Tanakpur dam. The Tanakpur dam was unilaterally built by India toward the end of eighties using a part of the Nepalese territory without Nepalese consent. The Mahakali Treaty embodied the Sarada dam, Tanakpur dam and the Pancheshwar dam. Legally speaking there is no longer any hitch between Nepal and India as far as these three dams (existing and potential) over the Mahakali River are concerned.”

The more than 80-year old Sarada dam was aging and its days were numbered. It did not matter as its function was taken over by the newly-built Tanakpur dam to irrigate about half-a-million hectares of land in northern India.

When the Mahakali River Integrated Development Treaty was signed amid great fanfare in 1996 between Nepal and India, the signatories declared that the DPR (detailed project report) would be ready within an incredibly short period of six months. Since then, about 26 six months have elapsed but it is nowhere to be seen. That is why I had described the DPR as Diligently Procrastinated Report. In a routine ritual, numerous meetings between the officials of the two countries on DPR promise that the report would be ready in yet another six months. The most we can expect from our PM’s visit is yet another pledge to complete it in the coming six months.

Pancheshwar is too big a riddle. Nepal wants this project to have a 315-meter high dam to generate 6,480 MW of power by building a storage facility capable of holding 9.72 billion cubic meters of water in the mountains. But India wants a much smaller dam. She is thinking of a 262-meter high dam with a storage facility for 5.5 billion cubic meters of water. This facility can produce only 1,750 MW of power. Whether and how this difference will be ironed out is in itself a big question that may prolong the bilateral negotiations for a long time.

Even if the two countries succeed in reconciling the height of the dam and the volume of power production from the project, the funding aspect poses a big question mark. In 1996, the Pancheshwar dam was estimated to cost about US$3 billion, which would have escalated many times now. The Treaty of Mahakali prescribed equal sharing of cost and benefits in water and power. In that sense, Nepal would have to raise half the cost. Private investment might be ready to come in on behalf of Nepal. But will India be ready to let a third-party investor join the Pancheshwar project is yet another question. India is capable of bearing the total cost of the project. In that case, India will ask for too big a share from the benefits. Will Nepal be ready to remain contented with a crumb from a project that has sold big dreams to the people of Nepal? No government would dare to do that.

Pancheshwar is full of other hassles as well. Even if the investment question is resolved, many other difficulties are bound to occur. For example, according to the Mahakali Treaty, Nepal is obliged to sell excess power of its share only to India but it is not obligatory on India to buy it. In other words, India will buy power generated by this project from Nepal at an acceptable price. The treaty does not speak anything about how the price should be determined. So, naturally India would like to set the price as low as possible and vice versa. Will the two haggling parties be able to come to an acceptable pricing? It is not just a matter between two government officials. They have to explain and satisfy the people on the fairness of the pricing.

There are several other questions relating to downstream benefits, use of excess water of Nepali ownership, contracting, consulting etc that pose difficulties in carrying out the Pancheshwar project. Nepal and India are fully aware of these problems. So, we will be discussing about it for many decades to come as we have been hearing about it for many gone by.

At the time of negotiations on Mahakali Treaty, it was claimed that Nepal would accrue a benefit of Rs 120 billion a year (US$ 2 billion) on the completion of the project. The myth was promptly exploded as none could believe that a project, which was estimated to cost US$3 billion in total would yield US$2 billion revenue annually. People in Nepal listened in awe and utter disbelief about this hidden treasure of theirs.

Water resources will be the next contentious issue in a federal Nepal

Sharing water resources
NepaliTimes, Issue #464 (7-Aug-09 to 20-Aug-09)
RATNA SANSAR SHRESTHA

Water resources will be the next contentious issue in a federal Nepal

Nepal's forests are no longer a natural resource to be tapped for development, water is.

Only 12 per cent of Nepal's 4 million hectares of arable land is irrigated, that too mostly during the rainy season. Most of the rivers are snow-fed, so if we construct reservoirs and channels networks, we can irrigate land in the hills and the Tarai all year round. Farms can have three, even four harvests, a year. There is no need for Nepal to be food-deficit.

Water resource has multi-dimensional utilisation (irrigation, drinking, transportation, tourism, industrial) and therefore it shouldn't just be understood as a source of energy. We can earn more from rafting-based tourism than generating hydroelectricity from the Bhote Kosi, for instance.

Kosi, Gandaki, Karnali including Bagmati can be used as waterways, the cheapest means of transport.

Nepali leaders often talk about the country's hydropower potential, and dream of exporting it to India. Even if hydro-electricity is generated, its most productive use would be domestic, to power industries and generate employment locally. By exporting raw power to India, we can earn some cash in the form of royalties of under three per cent, which will not help domestic economic growth.

In a federal system, there is a bigger chance that federal units will independently negotiate to export power to India. Electricity rich provinces can sell power to those who pay the most. Majority of Nepal's hydro-energy sites are in the mid-west, which generate over 300MW but only half of it is consumed in the region.

At present, the central development region generates over 250MW, of which almost all power is consumed here. But the eastern region generates only 14MW but this is the region which consumes the highest amount of power. The mid west will export to the eastern region only if it is ready to pay the amount it demands or else it will export to India for a better price.

Melamchi is in future Tamsaling province. If the Newa province wants to bring Melamchi water, it should be ready to pay the price Tamsling demands. Kathmanduites who are paying Rs 50 per month for water will have to pay a lot more as the price of water. If Newa fails to pay the price, Tamsaling is free to sell it to whichever province pays the price.

Nepal Mandala has no potential for hydro electricity. If it is declared a separate province, either people will have to live in the dark or import the power at a high price.

For energy and regulated water, we need to build reservoirs on our rivers, which will inundate the fertile valley floors. The upper riparian province will therefore be deprived of using the water, and the lower riparian will benefit. A federal Nepal will face the same issues we now currently face vis-?-vis India about river basin development. How will it be possible to irrigate Jhapa without submerging valleys in the Limbuwan province?

When two provinces compete, a third province can benefit, and these disputes can weaken the nation. Decisions on water resources should therefore not be devolved to the provincial units but be the prerogative of the centre, like foreign policy and defence.

But the proposed ethnic-based provinces will not accept this idea. Nepal has already signed the ILO Convention 169, which allows indigenous communities control over the natural resources. In other words, this convention goes against the argument that there should be central jurisdiction over water resources.

The bottom line is that a federal system will not be conducive to Nepal's national interest with regards to sharing benefits from water resources, and it will affect our development process.

Ratna Sansar Shrestha is a water resource analyst.

Related News
PM says Pancheswor will figure predominantly during his deliberations in Delhi
Lower Modi Hydropower starts construction works
Melamchi construction to begin

Govt plans to import 500 MW electricity from India, says PM

Nepalnews, 17-Mar-09

Prime Minister Pushpa Kamal Dahal has said the government is preparing to import some 400 to 500 MW of electricity from India in order to address the ongoing power crisis.

Ministers and secretaries had gathered at the PM’s office Tuesday afternoon to discuss solutions to the ongoing power crisis.

The PM also said the feasibility of constructing two 133KVA transmission lines connecting Janakpur-Dhalkebar and Dhalkebar-Kathmandu to import electricity from India would be discussed with other political parties and experts at the meeting, according to Om Sharma, the PM’s press advisor.

The meeting was participated by home minister, finance minister, labour minister, industry minister, and the respective secretaries along with experts in the field.

Meanwhile, finance minister Dr Baburam Bhattarai has blamed the coalition partner UML for the long loadsheding hours.

The plans to install a thermal plant to provide immediate relief to people from load shedding was delayed as the water resource minister was busy in the UML general convention, Bhattarai told journalists at his office Tuesday.

Minister Bhattarai also informed that funds would not be a problem to install such plant. “There should be no load shedding next year,” minister Bhattarai said. “We will install a 200 MW multi-fuel plant and also buy some electricity from India in order to meet the power demand.

Kulekhani hydro-power project on the verge of closing

Nepalnews, 22-Feb-09

The 60 MW Kulekhani Hydro-power project is on the verge of closing due to the dipping water level.

Due to the prolonged dry spell, water level at the nation's only reservoir based hydro-project has reduced to 1495 metres. Production needs to stop when water level reaches 1483 metres, according to Sher Singh Bhat of the load forecast centre of Nepal Electricity Authority (NEA).

The project is currently producing 0.9 million KwH of electricity every month. At this rate, the reservoir can produce electricity only for next three weeks.

Run-off-the-river projects are supplying183 MW power currently. If the dry spell continues, production will reduce further.

With this bleak reality in the backdrop, the import of 60 MW power from India through the Kataiya-Duhabi transmission line will not provide any respite from the current 14 hours load shedding.

GMR project halted in Nepal

IANS, 17-Feb-09

A year after it broke the ice in Nepal’s politically charged hydropower sector by becoming the first Indian company to win a major power project, GMR Energy is now facing the pricks experienced by other foreign investors with work obstructed by villagers in remote western Nepal.

GMR Energy’s associate vice-president (hydro business) Harvinder Manocha flew down to Kathmandu from New Delhi Tuesday to firefight the obstruction to the 300-MW Upper Karnali hydropower project that spans three remote districts.

Villagers stopped work in the Bhairavsthan area of Accham district and Satla in Dailekh from Sunday, alleging that the company had not informed them about the work.

On Feb 11, a local committee formed by residents of these two and three other villages issued a statement, warning they would stop work if their demands were not met.

Local dailies quoted GMR officials as saying that the obstruction was causing a loss of Nepali Rs.10 million (Rs.623,800) per day.

GMR Energy officials have reportedly written to the chief district officers of Achham, Dailekh and a third district Surkhet, that too will come under the ambit of the project, seeking security.

All three districts are Maoist strongholds. Ironically, during the 10-year Maoist insurgency, the project could not be developed due to the lack of security in the region.

Last year, GMR Energy pipped several formidable Indian bidders to wrest the licence for the hydropower project that they target to develop in seven years.

Another foreign investor, Australian Snowy Mountain Energy Corp, is also finding it an uphill task to develop the 750-MW West Seti project, Nepal’s biggest hydropower deal, due to local resistance.

India is closely watching the progress of work on West Seti in western Nepal, in which the Mumbai-based Infrastructure Leasing and Financial Services is a partner. The Indian government-owned Power Trading Corp will purchase the power.

While new projects are moving at snail’s pace due to local obstruction, Nepal is smarting under a massive power crisis with nearly 18-20 hours’ blackout daily.

The GMR problem comes at a time when India’s foreign secretary Shivshankar Menon is in Kathmandu to review the progress of the commitments made by Nepal during Prime Minister Pushpa Kamal Dahal Prachanda’s visit to New Delhi last year.

They include working with India for mutual benefit to generate 10,000 MW of power in the next decade that could transform Nepal’s economy.

The road to 10,000 MW

ekantipur, 14-Feb-09
Peeyush Tiwari

The issue of hydropower development is once again in the spotlight. Unlike in the past, the present government seems quite serious about the development of hydropower in the country and attaining the much talked about goal of generating 10000 MW in 10 years and two digit growth figure within the next three years. Honestly, water resources is by far the only resources we can really bank upon; since other resources such as petroleum are out of the question, and the industrial resource is still a far cry. Similarly, our experience with tourism shows that we have not been able to actually leapfrog in economic development as expected.

Nepal's water resources have been by far a wasted asset. Though its potential is never undermined, we have not been able to tap into this goldmine and reap the benefits. Although water resources have seemingly unlimited uses, looking into the picture, and the overall development of the nation at stake, hydropower seems to be the only option. That is, if we are talking about being export oriented and such. The much hyped 83,000 MW potential and 43,000 MW which the experts believe to be economically viable indicates that our power market must be export-oriented. And given Nepal's geographical location, it is clear that India is our only market. The chairman of Power Trading Corporation of India (PTC), Mr. T.N. Thakur, during his visit to Nepal has clearly indicated that within the next 10 years, India is looking forward to develop 50,000 MW of hydropower, though it will need 140,000 MW of power within that time. It doesn't need a rocket scientist to understand that there should be supply when there is demand in the market. It is estimated that the cost of generating 10,000 MW of energy would cost about NRs. 200 billion. Since such a huge investment is not quite practical for a fragile economy like ours, and for the local investors, investing in hydropower is regarded as too big a gamble. This is where the issue of attracting foreign investors comes in.

In the last decade, the country has seen some landmark agreements regarding foreign investments in the hydropower sector. In 1995, the government of Nepal signed a deal with SMEC for the development of the 750 MW West Seti Hydroelectric project. This agreement was signed as a Public Private Participation (PPP), with the government of Nepal investing 15 percent (with loan from ADB). Similarly, the past year saw the agreements reached between the government of Nepal and Sutlej Jal Vidyut Nigam (SJVN) for the development of the 402 MW Arun-III hydel project, and GMR-ITD Consortium for the development of 300 MW Upper Karnali Project.

The issue of water resources management has been fiercely debated. Some people have preset notions about the dealings with India and have repeatedly raised the issue of past deals such as the Koshi, Gandaki and Mahakali Treaties where Nepal did not quite receive the benefits it was entitled to. During his visit to Nepal, the Indian State Minister for Energy and Commerce, Mr. Jairam Ramesh said in a televised interview that we must not spend our time pondering over the past; that we must look into the future and work towards it. India will try to reap as much benefit from a deal as it can. It is their duty towards their people. That's what we too must do. It's our duty to get good deals out of our agreements. In the recent agreements of Arun-III, Upper Karnali and West Seti, I think our country has got good deals with the private developers. These projects are to be implemented on the Build Own Operate Transfer (BOOT) principle, where the projects would be handed over to the Government of Nepal "in good running condition" after 30 years of operation. So, if the goal of 10,000 MW in 10 years is attained and all the power is exported, we will have at least 1000 MW for free, which is nearly double what we have been able to generate in the past 100 years.

However, to attain such goal, the challenges need to be met. Investors are a sensitive lot. The government needs to ensure that there is an investment-friendly environment so that they can feel safe to invest here. Having potential alone doesn't guarantee investors. For example, we could not find any investors for the 650 MW Burhi Gandaki. Even after calling the Expression of Interest (EOI) twice, no investors turned up. We must take an example of the Tata Motors pullout from Singur after investing billions; we cannot afford to bear such a letdown. We must work our best to convince the investors that investing in Nepal wouldn't be risky. The issues regarding displacement of locals and ecosystem are in place; but we must look for the proper management of such issues. An example can be made of the 18,200 MW (stated to be finally 22,400 MW) Three Gorges Project of China, where 1.2 million people were successfully relocated.

Lastly, after the recent political breakthrough, it's high time for the country to attain an economic breakthrough. As Mr. Jairam Ramesh had said, all this time we have been born members of the NATO (No Action Talk Only). Now we need to change that perspective. Concrete measures need to be taken to transform this decade into a decade of economic revolution, as finance minister Dr. Baburam Bhattarai hinted in his budged speech. It's imperative that we now do something so that the next generation will regard the first decade of the 21st century as the dawn of development.

Power outage to hit 16 hrs from Sunday

Power outage to hit 16 hrs from Sunday
ekantipur, 9-Jan-09
PRAGATI SHAHI

Nepal Electricity Authority (NEA) has announced 16 hours load-shedding a day from Sunday, a jump of four hours from the present situation.

Sher Singh Bhat, director of NEA's Systems Operations Department on Friday said, “Due to the receding water level in run of rivers and Kulekhani Reservoir, NEA is not able to meet the demand and there is no option but to increase the power outage time,”.

The total power outage will be increased to 108 hours a week starting Sunday.

However, in order to support the operation of industries in the country, the government has decided to provide electricity to industrial estates declared by the government including Balaju, Pokhara, Bhirahawa, Butwal, Dharan and Biratnagar among others through separate feeders.

According to Bhat, all industrial estates that are under the government will be supplied electricity regularly for five days while the remaining two days of the week will be totally without electricity.

“If a particular feeder is used to supply to both the general public and industrial units, the factories will not get this facility,” Bhat said.

Bhat hopes there will be no further increase after the announcement of the 16 hour-load-shedding per day. “This is the climax of load-shedding for this winter,” he said. As per the new schedule, the NEA will cut power for 16 hours a day for six days a week and 12 hours on one particular day in the week.

He said, the water level in the rivers that earlier supplied 255-MW has now decreased to 230-MW.

Bhat said this schedule will apply in most parts of the country including Kathmandu and other major cities - Biratnagar, Pokhara, and Butwal.

The power outage in Hetauda-Birgunj area will be about 84 hours a week (12 hours a day) and it will be around 40 hours a week in some western districts.

The current morning, day/night and evening time power demand is 550 -MW, 480 -MW and 800-MW respectively. Likewise, supply during the morning, day/night and evening is 260-MW, 260-MW and 326-MW respectively.

According to him, the 70 MW Mid-Marshyangdi Hydro Electric Project will generate electricity in the next two weeks and the government is working to import 80-MW from India through Koshi-Kattaiya transmission line by mid February.

“If the government succeeds in importing the 80-MW from India and the Mid Marsyangdi starts to generate electricity then load shedding hrs will be substantially decreased in the coming months,” said Bhat.

16-hr-day power cut to greet nation soon

16-hr-day power cut to greet nation soon
ekantipur, 7-Jan-09
Pragati shahi

Citing significant differences in the demand and supply of power, Nepal Electricity Authority (NEA) is planning to increase the load shedding hours to 16 hours a day in a couple of days, much earlier than projected.

Earlier, NEA authorities had predicted this increase in early February after the water volume in rivers started to recede significantly. Now, electricity consumers in the country are facing daily load shedding up to 12 hours.

According to an official at NEA System Operations Department of NEA, the load shedding hours are likely to jump further after power generation from Kali Gandaki ‘A’, decreased by more than 60 percent. “The 144-MW Kali Gandaki ‘A’ is generating only 60 MW now a days and power generation is expected to decrease to 50-MW in the coming days,” a source added. Likewise, the 60-MW Khimti Hydro Electric Project is only generating 18-MW.

Meanwhile, the water level at Kulekhani Reservoir is at its lowest ever.

“NEA is doing homework to increase load shedding to 16 hours a day in a couple of days, though the official announcement date has not yet been decided,” according to the source. Officials at the Systems Operation Department said they had started to increase the power outage to 16 hours a day from Thursday as the deficit of units is too high to handle.

According to NEA, the daily demand of power is 500-MW in the day time and 800-MW in evening. However, the supply is only 320-MW including the power imported from India.

On Tuesday, the water level went down by 30-35 centimetres in Kulekhani Reservoir while the level of water to be used from the Reservoir should be only 10 centimetres to generate electricity from Kulekhani till April.

There will be darkness ahead

There will be darkness ahead: And you thought 12 hours a day was bad
NepaliTimes, Issue #432 (2-Jan-09 to 8-Jan-09)
DEWAN RAI

There is no greater proof of failure of governance since the restoration of democracy in 1990 than the unprecedented 12-hour power cuts that the country is going through this winter.

And worse is yet to come. If it doesn't rain soon, power cuts will go up to 16 hours a day by mid-February. If nothing is done, these crippling cuts will last at least for another four winters.

At present Nepal's peak evening power demand has risen to 770MW, but production is only 286MW. Peak power generation from the Kulekhani system is down because the reservoir is nearly empty. All of Nepal's run-of-the-river schemes are generating half capacity because of low flow. The 60MW that used to come from India every winter is cut because the Kosi flood washed away the transmission line.

The Middle Marsyangdi that was inaugurated last month by Prime Minister Dahal will only generate 25MW, but only from spring. Power demand is rising at 10MW, but no new major capacity has been added to the grid since the 144 Kali Gandaki came on stream in 2003.

The surprising thing about this crisis is that it shouldn't have been a surprise. Planners and experts have been warning about the growing gap between demand and supply for nearly a decade. (See: 'Loadshedding till 2015' (#289). But successive governments did nothing. According to NEA, the 10th Five-Year Plan target was to produce 314MW but only 40 MW was generated over the period.

"This crisis will continue and we have to be prepared for up to 16 hours of daily load shedding," warns Jugal Kishor Shah at the NEA. The prolonged power outage has crippled industry, with an 80 per cent fall in production. Already crippled by militant unionism, most manufacturing, businesses and hotels are on the verge of closure.

After the announcement of national power emergency on 25 December, the government has come up with National Energy Crisis Working Plan. It plans to re-negotiate Power Purchase Agreement rates for private owners that generate up to 25MW. Projects of up to 50MW do not need EIA or the consent of the forest ministry. It plans to distribute Compact Fluorescent Lamps (CFL) all over the country for which the government has allotted Rs 100 million.

The plan also allows a 10-year income tax waiver for hydro projects that are commissioned in the next two years. And, most controversial of all, the cabinet has approved the installation of diesel plants to generate 200MW before next winter and has called for proposals from the private sector.

The government would import 30MW from Tanakpur, India, beginning Thursday. Critics say the government is reacting in knee-jerk fashion, and hasn't pursued more immediate do-able options. Electricity pilferage amounts to 30 per cent of the generated capacity. Reducing that by even half would be the same as adding another Middle Marsyangdi.

If distribution is handed over to local communities, theft goes down as shown by Mugling which reduced pilferage from 36 per cent to 9 per cent after distribution was handed over.

NEA has also never looked into demand side interventions to control energy use through pricing mechanisms such as time-of-day tariffs. And one immediate solution would be to reduce the price of diesel from Rs 59 to Rs 45 so that industries will find it viable to generate power from their captive plants and even sell it to the grid.

However, the water resources ministry is sitting on nearly 3,000MW worth of licences for hydro power projects all over the country.

The government's record of running existing diesel plants are not good. The 39MW Duhabi plant and the 15MW one in Hetauda don't generate even 20MW between them because of shoddy maintenance and high diesel cost. Adding 200MW worth of diesel would push up NEA's losses by another Rs 25 billion a year.

Marshyangdi generating only 4 MW

Marshyangdi generating only 4 MW
ekantipur, 24-Dec-08
PREM KUMARI GHALE

Despite formal inauguration of the 70 MW Mid-Marshyangdi Hydro Electricity Project (MMHEP) a week ago, the power house has only generated a total of 4 MW till date, according to officials.

The 4 MW power was generated at the time Prime Minister Pushpa Kamal Dahal inaugurated the project on December 14, 2008. Out of the total 70 MW power of MMHEP, only 35 MW line was connected to the national grid on the day of inauguration.

Sunil Dhungel, project manager of MMHEP said, "Power generation work at MMHEP has stopped as tests that have to be carried out at the initial phase of every hydro project remain incomplete."

According to him, it will take another three weeks to generate 35 MW of power daily from MMHEP as testing was halted after workers took leave for Christmas and New Year.

Officials said though MMHEP will start its daily power generation from the third week of January, the power house will at first generate 70 MW for five hours and 35 MW for the remaining hours of the day.

"The 75 MW MMHEP will generate full capacity from the first week of February, 2009," said Dhungel.

Meantime, locals are visibly agitated by the increase in load shedding hours despite construction of a 70 MW project, the second largest hydro project in their vicinity.

Mid–Marshyangdi goes operational

Mid–Marshyangdi goes operational: Relief from outage still far away
ekantipur, 14-Dec-08

Prime Minister Pushpa Kamal Dahal inaugurated the Mid-Marshyangdi Hydro-power Project (MMHP), the second largest power project of the country, amid a function here Sunday.

The much awaited 70 MW-capacity power project finally became operational Sunday. However, only one of the two 35 MW turbines is operational at present, generating merely 10 percent of its total capacity. The generated electricity has been linked to the 132 KV national transmission grid.

"The power project will be generating 10 percent power in its first phase. Power production will be 25 percent and cent percent respectively in the second and third phase," said MMHP project manager Sunil Dhungel.

The project was launched in 2001 and was scheduled for completion by Dec. 2004. However, it was delayed by four years due to some problems, including security related ones. The project management informed that construction work was obstructed for about two years at different times in the past.

German Development Bank has invested 178.26 million euros, Nepal Electricity Authority invested 67 million euros and the government, 61 million euros.

The project is arguably Nepal's most expensive hydropower project in terms of per unit cost.

Meanwhile, leaders of political parties and locals demanded of the prime minister that Lamjung should be a load shedding free district since it has the second largest hydroelectricity project here.

Power tariff hike likely

Even after the commencement of MMHP, people may not be able to breathe a sigh of relief immediately, said an official of Nepal Electricity Authority (NEA) on Sunday.

These days, the country is facing severe power cuts, a 45-hour-week load-shedding schedule.

"There is no possibility of reducing the power outage immediately," said Sher Singh Bhat, director at NEA Systems Operation Department.

Currently, the country has a demand of 750 MW, but NEA has been supplying only 420 MW. MMHP, which has a maximum 70 MW generation capacity, will generate 35 MW before it reaches full capacity.

"We have not yet tested the capacity of this project. The machines don't produce exactly the same amount of energy as mentioned by the project," he said.

Still, Nepal is unable to import 60 MW electricity from India as the transmission towers, swept away by the Koshi flood, have not yet been repaired.

Bhat also said that during the dry months of March and April, the load-shedding schedule may go up.

Officials have said electricity tariff may rise as NEA has been bearing huge loss. The cabinet formed a five-member Electricity Tariff Fixing Commission led by former secretary Mahendra Nath Aryal on Dec. 3 to review the electricity tariff.

"NEA is at present bearing a loss of 70 Paisa per unit," said Shankar Prasad Koirala, Secretary at Ministry of Water Resources. "As the electricity tariff has not been reviewed since 2001, the commission may increase it." Koirala said NEA spends Rs. 7.40 for a unit of electricity, but it's selling price is Rs. 6.70 per unit.

An NEA official told the Post that it has been regularly pressuring the government to increase tariff.

"The NEA has incurred a loss of nearly Rs. 5 billion. So there is no option but to hike the tariff to make up for the loss," he said.