“Enhancing the competitiveness of Nepali hydropower industry is a must”

Kumar Pandey currently holds the position of vice-president of Independent Power Producers’ Association Nepal (IPPAN), an umbrella organization of the hydropower producers of the country. In his exclusive tete-a-tete with ceotab.com, he divulged his views on the challenges and opportunities pertaining to Nepal’s hydropower along with the recently “Power Summit” that was held by his association in the capital on November 21-22.  Excerpt:   

First of all, how do you assess the Power Summit that was held on November 21-22 in the capital?

The seventh edition of the summit, which saw the participation of 764 delegates from 21 countries, was held with the prime theme ‘Powering the Asian Century’. It was

Most importantly, it clearly disseminated the message that Nepal will soon have surplus energy to export.   The country is almost sure to see the generation of additional 1,000 MW from a plethora of hydropower projects waiting in the wings.  Such extra power might well be exported to regional markets like India and Bangladesh after the completion of the new Butwal-Gorakhpur 400 KV cross-border transmission line.

Similarly, it brought together the government, private sector, foreign investors et al to express their commitment to invest in Nepal’s hydropower sector. 

Has Nepal been able to extract any benefits from it?

Yes, of course. A major benefit was that the summit helped Nepal identify the needs for electricity trading based on the economic benefits rather than the surplus production. During it, the Bangladeshi government signed a deal with the Nepal government to purchase 500 MW of power from the Upper Karnali Hydropower Project. Similarly, Indian government-owned NHPC Ltd and Hydroelectricity Investment and Development Company Ltd of Nepal reached two different agreements for investing in the Nepali power sector. Similarly, the IPPAN also signed various agreements with Indian and Bangladeshi firms, among others, to boost investment in the very sector, as well as for power trade with neighboring countries. These all would definitely help Nepal benefit in the long run. 

How feasible do you see for Nepal to benefit from cross-border power trade?

India and Bangladesh are more than keen to purchase electricity produced in Nepal. If the needed transmission lines are put into place, it will open up whole new vistas of opportunities to sell our electricity to these two countries.  In order to sustain their fast-growing economies, they each are in dire need of more energy. Bangladesh, in particular, has already expressed its willingness to purchase up to 9,000 MW of electricity from Nepal. To meet such Bangladeshi desire, Nepal needs to diplomatically impel India to allow it to us transmission lines. In addition, the Nepali authorities have to sketch necessary legal frameworks for facilitating cross-border power trading.   

What are the main obstacles for Nepal to carry out power trading?

The country is totally bereft of the rules and regulations required to govern the international power trading. So, like India, Nepal also needs to come with a comprehensive electricity act as well as common guideless for energy trading with other countries. Besides the policy hurdle, the absence of transmission lines with adequate capacity is also something that has inhibited Nepal’s cross-border trading.  As such, it is imperative for the government to accomplish the above mentioned Butwal-Gorakhpur Transmission Line Project, which Nepal and India agreed to execute some two months back, in a timely way.

How can the country enhance its competency and competitiveness in the international electricity market?  

Under the existing legal structure of the country, we cannot produce hydroelectricity at a cheaper and competitive rate. Whether it is the hydro plant run by the government, private sector or the foreign firm, all are facing the high cost of energy production. The cost of producing per megawatt of electricity has surged to Rs 300-320 million. The very anomaly could well erode the competitiveness of the entire Nepali hydropower industry in the international market in the long run.  So, the government needs to address this problem without much ado.

At the same time, it must sharply focus on two major things- floating soft loans to the private hydropower players and building more storage-type hydropower projects.  Such measures can go a long way in enhancing the efficiency and competitiveness of the Nepali hydropower industry.  

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