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With Kaligandaki hydro plant down due to mechanical issues, it is projected that 2 more hours will be added on top of regular 14 hours blackout in major cities of Nepal. With the crippling demand /supply chain of electricity, most of the residents of major cities of Nepal have learned to live in darkness for years while more than 40% of the population doesn’t have access to electricity at all. Most of the hydro power plants of Nepal are of Run of River (RoR) model, based on flow of river. Since flow of water in most of the rivers of Nepal is very low during dry season these plants cannot produce more than 15% of their installed capacity. Around 750 megawatt of electricity is connected to national grid so far. Based on this data, approximately 200 megawatt of energy is available during dry season for domestic/industrial consumption. Since demand of electricity is very high during dry winter season, Nepal Electricity Authority (NEA), only institution responsible for trading electricity in Nepal don’t have other options other than to increase blackout period during this time.
Kulekhani I & II are the only storage type hydro plants in Nepal with the installed capacity of 90 megawatt. These plants are used as a backup power plant to supply energy during peak hours. Since water is collected in a reservoir, flow of water is steady which in turn produce consistence energy at any given time. Often time water is collected in reservoir during rainy season and used for electricity generation during dry season. Given the nature of rivers and topology of Nepal, storage type hydro projects are very essential to bring the demand/supply curve in right track and secure energy security in near future. Some of the storage type hydro projects already in the pipeline are West Seti (750 megawatt) to be constructed by Chinese firm, Budigandaki (600 megawatt) to be constructed by Nepal Electricity Authority and Upper Seti (140 megawatt) invested jointly by Jica, European Investment Bank and Asian Development Bank.
Upper Karnali hydro project:
From various studies conducted by national/international hydroelectric experts, Upper Karnali Hydropower Project of Midwestern/Far western region of Nepal was found to be most lucrative megaproject in the whole world. Most lucrative in this sense that only 3 km of tunnel is required to be constructed to harvest full capacity, 4000 megawatt of energy and very less money will be spend on compensation and resettlement as population of people living on and around the project site is very low. In any hydropower project, it is the tunnel construction that is most time consuming, expensive and challenging. Looking at ongoing construction of Upper Tamakoshi project in Dolakha district of Nepal, management team is struggling to complete the project on time due to the fact that nearly 16 km of tunnel has to be constructed to produce 456 megawatt of electricity. Compared to Upper Tamakoshi there is very less hassle for project management for timely construction of project. With low production cost and post production profit scenario some hydro experts have tagged UKHP as a diamond of a crown. Moreover, this power plant could become a milestone in socio-economic development of deprived population of Midwestern/Far western region of Nepal.
Government of Nepal (GoN) awarded this project to private Indian company GMR back in 2007 for development with installed capacity of 300 megawatt on RoR model without proper consensus of Constituent Assembly (CA). Moreover, House Committee on Natural Resources didn’t object this move. Local residents were not consulted and hearings on the national level were not conducted prior giving this project to GMR for construction. Later it was found from memorandum of understanding between GoN and GMR that this project was awarded to GMR on Build, OWN, Operate (BOT) model for 30 years. According to the agreement sole responsibility for project construction, operation and maintenance will be on hand of GMR and Nepal will get 70 megawatt of energy free of cost. GMR later increased the production capacity to 900 megawatt and Nepal to receive some 100 megawatt of energy free of cost. Rest of the energy is to be supplied to Indian grid at very minimal cost.
Why GMR led UKHP is not beneficial to Nepal?
1) One of the most disastrous consequences of this GMR led project is the construction aspect based on RoR model with installed capacity of 900 megawatt only. When it is established fact proved by various studies that this project can be constructed as a storage plant with installed capacity of more than 4,000 megawatt, GMR model will kill the true “beauty” of Upper Karnali project. Said so this will crumble the energy security of Nepal.
2) Since big chunk of this project is going to be supplied to Indian grid at very minimal cost, Nepal will lose huge portion of revenue collected from tariff. As GMR is charging less money per unit of electricity to power trading agency of India, tariff generated by Nepal from such is also less.
3) 70 megawatt of free energy provided by GMR will be like “Hattiko Mukhma Jira” almost nothing when Nepal Electricity Authority (NEA) has clearly projected Nepal will need at least 2,000 megawatt of energy by 2020, just for domestic consumption. If demand/supply is not balance during that time Nepal won’t have choice other than to import more electricity from India at high cost. It is not wise in any sense to let GMR construct such a lucrative project to supply electricity to India at low cost and import same electricity from India at high cost.
4) GMR led UKHP would not help to Nepal to secure its energy security given the following circumstances:
A) If we consider rapid industrialization in Nepal in near future (which is very probable) with construction of large cement plants, food processing plants, herb processing plants, steel and iron plants and chemical fertilization plants that consume lot of energy, there would be demand of another 2,000 megawatt of energy.
B) More than 40% of population of Nepal doesn’t have access to electricity to this date. With increasing flow of remittance from foreign countries in rural areas, more and more people are demanding NEA to connect their region with national grid. With rise of middle class population they are more likely to expend foreign earned remittance on luxury goods like TV, refrigerator, water pumps, rice cooker that consume electricity in city and rural areas. To meet this increasing demand, it is utmost importance for NEA, only national power trader of Nepal to secure project like UKHP, Arun 3, Tamakoshi 3 and Upper Marsyangdri in its hand.
C) With the proposal of SAARC grid, it is wise and farsighted step for Government of Nepal to keep financially feasible projects like UKHP, Arun 3, Tamakoshi and Upper Marsyangdri in its basket. If the concept of SAARC grid is somehow implemented in near future, exporting electricity will generate huge revenue. This will help to minimize trade loss in one hand while government would have sufficient money to fund social and economic projects of national pride such as free health care, free education up to high school, aanath aasram, bridda aasram, interstate highways, railways, ropeways and other infrastructures.
D) From national consensus Nepal government can also ask various political parties to fund these hydro projects or provide some stocks to them so that they have resource to fund their political activities. This can help to reduce some corruption.
E) Even if the SAARC grid doesn’t come to action Nepal will still need huge supply of energy for implementing projects like electric railways, cable cars in various parts of Nepal which are already in the pipeline.
It is clearly seen that awarding hydro projects to foreign countries that are export oriented in nature and are of UKHP model neither help Nepal to ease its growing demand of electricity nor generate huge revenue. This will only help India to get cheap electricity and secure its interests in rivers of Nepal. Of the major river system of Nepal, Karnali is only the left over that has not been victim of foreign interest.
Possible ways to fund this project:
1) By forming project development committee, giving it necessary authority to develop and operate the project in public private partnership (PPP) model. Government can create a project fund and attract public to invest the project. With proper back up and guarantee from government public and private sector both will feel secure to invest. Government is an institution, not a person. Person can be corrupted but an institution cannot. Government is the guardian and caretaker of citizens.
Official data shows that nearly 1 million Nepalese citizens are working abroad while unofficial data reveals the fact that nearly 3 million Nepalese citizens are living and working in various countries. If government can only attract NRs 50,000 from one person, nearly NRs 50,000 million would be accumulated in project fund which is quite enough to finance the project for an entire year. Successful implementation, strict monitoring, honest and dedicated management and technical team and timely progress will lure more and more investment from public. It is not impossible for honest government to lure NRs 50,000 per year from a person working abroad who makes NRs. 30,000 per month in average. This cycle will go on and on until the project is completed.
2) Forming official company like Upper Tamakoshi Hydropower Limited (HTKHPL), funding project with joint investments from private sector, public and national banking and financial institutes.
3) Forming project development committee, attracting foreign direct investment (FDI) while securing national interests first.
It is utmost important for Nepal and Nepalese to build this project on their own. It is a matter of pride, sense of responsibility and dedicated act to secure national interest to build and operate projects like Upper Karnali with our own investment and skillful people. It is not “Blind Nationalism” to act to protect our national interests before it’s too late. Nations around the globe have become prosperous with the combination of foresighted institution/bureaucracy, proper exploitation of available natural resources, mobilization of national capita/foreign direct investment (FDI)/human resources and effective management of resources so that the change is sustainable. Foreign aids and loans can help to meet our short term needs but for financing our needs sustainably, national capita and FDI are our only option. If foreign aids and loans would help to develop our nation, Nepal would have become a rising nation until now with billion of dollar pouring in Nepal annually.