The hydro route: My Republica : MARCH 2, 2014

After months of wrangling the new government has taken a near full shape. It is a pleasure that the government is led by a Gandhian democrat Sushil Koirala. The number of promising faces in the cabinet has given some hope to the people. Koirala government has two main responsibilities: promulgating the constitution within a year and at the same time taking measures to address the problems in various sectors. To meet the second objective, the government needs to work on several fronts and fill the vacuum created by past governments whose focus on constitution had pushed development issues to the backburner. Thus the current government needs to identify key priority areas and work on them. Many economists and development experts have recommended a plan-holiday, which seems advisable as the nature of this coalition government is transitory. But I would say the government should make energy its top priority. Nepal is one of the darkest countries in the world with long hours of power-cut. In winter there is more than 12 hours of daily power outage, which negatively impacts the country’s economy, education, livelihood and social harmony. Industries have been using imported fossil fuels for survival. Same is the story of other service sectors like hotels, national/international offices, hospitals and private colleges. Likewise, a number of households have been using inverters that store electric power in batteries. People are free to use such inverters if they can afford them. But such use results in 10 to 20 percent energy loss. Besides, it also creates inequality in the society—allowing only well-to-do to use these devices and letting the rest to grapple with darkness.  Unemployment has magnified in recent years. As past governments failed to address this problem, thousands of promising youth are leaving the country each day to find work. Unemployment cannot be solved solely by focusing on industrialization, education, technology and/or good governance. Developing enough energy is as crucial. Once the government launches energy projects in massive scales, it will create job opportunities for millions. In the long run it will help improve ever-increasing trade imbalance that is estimated to cross Rs 500 billion this year. Industries cannot be run without adequate energy, nor can health and education establishments. Due to the abundance of high altitude water sources, hydroelectricity is our most promising source of energy. Solar power, fossil fuel, biomass, and hydropower are also used to generate energy in Nepal. But two factors should determine which source to depend on primarily: cost and environment friendliness. But fossil fuel, coal or gas is neither cost friendly nor environment friendly. Hydroelectricity is the best option. But despite having abundance of rivers, we have not been able to utilize them fully. After more than 100 years of first hydroelectricity generation at Pharping in 1911, we have only been able to generate about 750 MW power so far, less than one percent of the estimated potential. Even today 60 percent of population have no access to electricity and depends on firewood or other means for illumination and cooking. The daily energy demand exceeds 1500 MW but we can generate only around 400 MW during the summer. Receding water level during the winter results in low generation. To solve this crisis, we need to develop reservoir systems instead of depending solely on run-of-the-river systems. Or we will always have energy crisis in winter and have to import it from India at a steep price. According to International Energy Agency (IEA), hydroelectricity accounts for only 16 percent of total energy in the world. China, Brazil, Canada and the US together generate 52 percent of total hydroelectricity. The top-ranked China produces about 700 terawatt (1 TW=10 million MW) hydroelectricity. Running large hydro-projects is costly. Thus private sector should be encouraged to invest. Citizen’s Investment Trust (CIT) and Nepal Telecom must be appreciated for investing in around 456 MW power projects so far. We need to encourage banks and financial institutions to join the fray. Nepal receives more than Rs 400 billion in yearly remittance. But the hard-earned money is used in purchasing luxury items, adding to our trade deficit. We need to channel remittance into hydro-development. Remittance we receive is sufficient for medium hydro-projects. Thus the new Finance Minister should devise policies to tap this resource. Remittance money is mostly deposited at cooperatives and financial institutions. Cooperative law should be amended to channel this deposit to development projects. The projects concerned should share profits and benefits with those whose money they use. Before the election, Nepali Congress and CPN-UML had promised to produce 500MW electricity in three years. They pledged in their election manifestoes to make the country load-shedding free in the next five years. But the bitter reality is that we have not been able to run mega power projects in recent years. Political parties themselves are responsible for nullifying mega projects like Arun-III, Pancheshwar, West Seti and Upper Karnali. The government needs to ensure that does not happen again. It needs to make energy production and promotion our first priority. This will be an important step in solving a myriad other problems facing the country.