Encouragement for small/medium projects
Energy crisis has lost its novelty now and has become a part of our life. Having to collect drinking water after waiting for hours, cross rivers riskily on a tube or by hanging on a tuin (rope bridge) to go to school or other works and other hardships have become part of Nepali lifestyle even as other countries have taken a huge leap in development. The government data claims that electricity has already reached to 60 percent of the population, and looking at the poles and wires strung for distribution of electricity may justify that claim. But the reality is opposite with 60 percent of the population deprived of electricity. The difficult geographical terrain and scattered settlements make taking electricity to every settlement virtually impossible. The government data claims that just 23 percent of the people are below the poverty line but the recently updated data of the United Nations Conference on Trade and Development (UNCTAD) shows that 39 percent of Nepalis are below the poverty line as per international standards. Being below the poverty line means inability to spend for basic minimum living standard. The fact that one needs citizenship certificate and land ownership certificate to get connected to the government distribution system means a large number of land-less population does not get electricity connection. This has raised questions about credibility of the government data on access to electricity.
Access to electricity does not merely mean getting connection and holding a bulb, but multi-dimensional use of electricity. Many consumers still are forced to use electricity only for light. A huge amount is going abroad in import of liquefied petroleum gas (LPG) even though using electricity for cooking is a cheaper option due to lack of regular supply and interest of the consumers to substitute LPG with electricity. Similarly, electricity can be used to power trains, metro, monorail, trolleys and other means of transportation but the possibility has been limited merely to science books in Nepal. Such pathetic is the state of Nepal Electricity Authority (NEA)—responsible for generation, transmission and distribution of electricity—that it has not been able to even provide sufficient electricity for lighting purpose far from powering industries. The country has to face power cuts for over 12 hours a day during the dry season due to the huge disparity between demand and generation of electricity. The NEA issues load-shedding schedule to inform the consumers, but it cuts supply even when there should not be power cuts from time to time leading to damage of electrical/electronic appliances. Service-providers like the NEA and the Nepal Telecom (NT) do not even fulfill the formality of apologizing for obstruction of services without prior information due to lack of a legal provision in Nepal to sue for losses incurred due to substandard and irregular service, and get compensation.
The measures to address energy crisis include construction of enough hydropower projects, maximizing use of solar energy at public places and government offices, and connecting additional electricity generated by big corporate houses, shopping malls and industries to the national transmission line. Construction of big hydropower projects need big investment and is not possible through efforts of Nepali investors alone. We should, therefore, also try to construct small and medium projects, and many Nepali investors have invested on construction of such small and medium projects in recent years. But these projects have been facing uncertainty in lack of timely power purchase agreement (PPA).
The government is preparing a policy to sign PPA at a single flat rate for projects with installed capacity of up to 100 MW after the government made some policy arrangements in the budget for the current fiscal year to promote construction of small and medium projects. Flexibility should be maintained to ensure that the PPA rate can be reviewed on the basis of the prevailing cost of constructing projects and rate of inflation while determining the rate in such a manner. It is also necessary to hold adequate discussions with the investors concerned before bringing such policies of long-term significance.