The Himalayan nation has reportedly imported 653MW electricity from India, touching the highest-ever quantity imported till date since it ended power cuts three years ago.

Winter peak load and declining production from run-of-river schemes due to low river water volume in rivers contributed to the rise in import.

Eventually, the Nepal Electricity Authority (NEA) had to import additional power from India after the total local power demand reached 1,243MW, last week.

“The amount we import depends on the total demand, so it keeps going up or down,” says Suresh Bhattarai of NEA. 

But unexpectedly, 58 percent of electricity demand on January 12, 2018 was met by import from India.

According to NEA Managing Director Kulman Ghising, the country needed 500 MW electricity more to cater to local needs this winter, but the actual import went 153MW beyond his estimate.

It is noteworthy here that Nepal had spent Rs 20 billion on electricity imports from India, on top of the Rs 90 billion worth petroleum imports.

“If we compare the cost of importing 500MW electricity to the loss that Nepal’s industries would incur without that electricity, then the loss is much higher. It will take many years for us to construct 500MW hydropower plants. But the power is immediately available for import, which is economically more beneficial for us,” adds Ghising.

As per the reports, many local areas of the country have been facing power shortage since the mid of December 2018. But NEA did not declare resumption of load shedding.

“The distribution systems and transmission lines are overloaded, and that has led to transformers exploding and feeders catching fire. These incidents have led to electricity service being interrupted, it cannot be called load-shedding,” explains Bhattarai.

On the other side, the government is working on ways to address the gaps in the domestic power sector through a special committee.

Hope the ongoing efforts would end the public and industry power concerns.

Also Read: Nepal, India Consider Power Banking in Energy Meet

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Towards this end, the officials are preparing a final a draft of Memorandum of Understanding (MoU) for energy cooperation and power trade agreement between the two countries.

According to Dinesh Kumar Ghimire, Joint Secretary at the Nepal Ministry of Energy, Water Resources and Irrigation (MoEWRI), Nepal Government has already given its nod for the deals and is awaiting the response from the Government of Bangladesh.

We are currently holding discussions with the Bangladeshi Government to finalize the MoU, says Ghimire.

Ghimire further informed that Nepal has proposed a new energy mechanism for power trade and investment in its finalized draft.

Post signing the agreement, Nepal plans to set up a joint examining and working committees for bilateral energy cooperation and also hold trilateral discussions with Bangladesh and India for a feasible solution to address all the pending issues pertaining to transmission lines.

The latest update comes in the backdrop of earlier talks, where the Bangladeshi Government had promised to build a large hydropower project in Nepal and also received nod from the opposite side for related investment. However, things did not materialize then.

“Power trade between Nepal and Bangladesh is complex because the transmission lines would have to traverse India,” explains Ghimire.

The proposed project framework is based on SAARC Framework Agreement for Energy Cooperation signed among SAARC member countries in 2014.

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The second edition of the three-day Nepal Power Investment Summit 2018, held during January 27-29, 2018, saw the participation of renowned personalities from international bodies such as SAARC, BIMSTEC and ASEAN, global leaders and investors, ambassadors, bankers, ministers and businessmen, among various other key delegates from different parts of the world.

A total of 350 delegates from 24 countries including China, Korea, Europe and the United States, around 100 participants representing 30 international companies and around 400 participants from Nepal including policymakers and private sector players took part in the summit.

As part of the summit, various government and industry experts expressed their views on Nepal’s energy sector and its potential.

President Calls for Energy Investment

Inaugurating the summit on January 27, 2018, President Bidya Devi Bhandari called on the global and local investors to tap the untapped hydropower potential of Nepal.

“We need capital and technology for the implementation of large scale hydropower projects and the government will accord top priority to attract foreign investment and technology. The investors will also benefit from the growing demand for electricity in Nepal as well as South Asia,” said the President in her inaugural address.

In this regard, she promised an investor-friendly environment in line with their interests and needs to all the players coming forward.

Need to Act Fast, says Ambassador

Highlighting Nepal’s strong energy potential, Indian Ambassador to Nepal Manjeev Singh Puri said the country should act fast in implementing the hydropower projects considering the inclination towards renewable energy projects at the global-level.

“In the backdrop where solar power is getting cheaper day by day, hydropower will lose its competitive advantage to solar energy soon. Therefore, Nepal should act fast in developing the hydropower projects,” said Puri in his keynote address.

He went on to say that Nepal should start mega energy projects for both employment generation and economic development and to stay ahead in competition.

“Nepal should immediately start developing large projects to provide energy at competitive rates,” he added.

Industry Experts Seek Faster Implementation

Though Nepal’s energy policies for foreign investors look promising, the government agencies working in the process need to pace up the rate at which they implement the projects, say the energy industry experts.

“We are the private sector who looks maximized return within short period of time, but here in Nepal we have to invest more than five years doing basic things, getting approvals and clearances,” said a Vietnam-based businessman who participated in the summit.

The experts also lauded the Government of Nepal’s power purchasing policies in USD term, ease in removal of land ceiling for big hydro projects and management of technical human resources as some of the notable developments required for attracting foreign investment.

Innovation in Investment

Speaking at a panel discussion on ‘FDI in Nepal’s Power Sector’ held as part of the summit, various energy industry experts and investors called for innovative ways of financing in the Nepali hydropower sector.

“Since hydropower projects are capital intensive and have longer gestation period, innovative financing solutions like equity financing is the need of time,” says a Nepal-based private industry player.

The panel speakers also pitched for independent regulatory body to check the demand and supply along with fixing energy tariff in the country.

Towards Energy Development and Expansion

According to the summit organizer, Energy Development Council (EDC), this summit is aimed at creating a platform to ensure one-step business and business expansion in the energy sector while matching the interests of industry players.

The summit was hosted a participant-investor platform allowing participants to meet investors for a debt financing of around
USD 5-20 billion for various power projects including solar, wind and hydro energy.

Speaking on the occasion, EDC Chairperson Sujit Acharya highlighted that Nepal holds a 40,000MW electricity generation potential over the next 10 years.

“The resources needed for harnessing hydropower to that level could be available from the international financing institutions under Engineering, Procurement, Construction and Financing modality,” he added.

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The country’s energy sector that saw 2017 beginning with the addition of 50 MW capacity to the national grid continued a successful path adding 15 other hydropower projects with a total installed capacity of 100 MW by end of 2017.

Overall, the country witnessed a total installed capacity of around 150 MW from 16 hydropower projects in 2017.

Interestingly, private sector held a largest share in all of these projects with only a limited participation seen from the state-owned Nepali Electricity Authority (NEA).

However, few other key projects of NEA that are set to generate good amount of power are likely to be completed soon.

30 MW capacitive Chameliya Hydropower Project and 456 MW capacitive Upper Tamakoshi Hydropower Project are among NEA projects nearing completion.

Besides hydropower projects, the energy sector also saw a major milestone in the construction of transmission lines across the country.

The 132 KV Blanch-Attariya line that would evacuate the power from the Chameliya Hydropower Project to the national grid has been brought into operation.

2017 also saw the endorsement of the Electricity Regulatory Commission Act 2017 that facilitates the establishment of the Nepal Electricity Regulatory Commission (NERC), an independent body to regulate the country’s power sector. 

The country’s energy ministry has also brought a regulation to sign dollar-denominated power purchase pacts with hydropower projects that resort to foreign loans. 

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“Nepal is a country that has an abundant potential for hydropower and it is a matter of time before it could become a leading hydropower generating nation,” said the German company Voith in its official release.

The Nepali power sector has received the company’s services over the years with regard to building the country’s hydropower projects. Now, with an official branch in Kathmandu, the company intends to get much closer to Nepalese in meeting their power needs with their quality services.

Nepal is one of the key markets for the company and it has opened the branch office to get closer to its customers and serve them better, says Chief Marketing Officer Martin Andrae.

From supplying equipment at the Gandak Hydroelectric Project for the Nepal Electricity Authority in 1968 to offering support to the Trishuli Hydroelectric Project in 1970, Kulekhani-I in 1982, Marshyangdi in 1990 and Middle Marshyangdi in 2008, the company has been extending its services to the Nepali power sector.

It is currently working on the Rasuwagadhi, Dordi Khola, Lower Hewa Khola, Thapa Khola and Mistri Khola hydropower projects.

Globally, the company has so far provided equipment for hydropower projects, all together, holding a capacity of 300,000 MW i.e. one-third of the world’s hydropower capacity.

Voith Hydro’s Indian subsidiary is responsible for operations in Nepal and Southeast Asia. It is currently working on various projects in India, Nepal, Bhutan, Southeast Asia and Africa.

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