Date: December 16, 2016

Seminar Paper
EMBA - Second Semester
By: Ashish Singh

Bright future for Nepal ?

Riding on the success of recent campaign to keep Kathmandu load-shedding free this winter, the
Ministry of Energy (MoE) has instructed the Nepal Electricity Authority (NEA) to come up with an action
plan for expanding the load shedding-free campaign nationwide. Speaking with a similar gist, NEAs
Managing Director Kul Man Ghising said the national power monopoly is working in a bid to make the
nation load shedding-free starting from the Capital (THT Online, 2016). Apparently the drive has been
successful as there has been no power outages since tihar and the prospect looks promising. Ghising
credits the success to management reforms in the only state owned authority of nations energy sector and
due cooperation from the government - especially the Minister for Energy Janardan Sharma. If the current
pilot testing campaign is successful during the winter months, the concerned stakeholders are optimistic
that the drive will hold throughout the year. As for the denizens of the valley and the country in
prospective, should we really keep our hopes high and embrace this campaign as an end to our energy
woes that have been plaguing the nation for the past so many years or should we remain skeptic and not
take them at their word alone and draw any conclusions so early on. After all, we cannot be blamed upon
as judging from the rate of promises made by government in the past with the ones they actually kept, we
cant really trust everything they say. I believe that the current effort to eradicate load-shedding is
anything but sustainable and infeasible at the least. In order to achieve permanent freedom from power
outages, we not only need to overhaul the supply side but also instigate behavioral changes in the demand
side as well.
Load-shedding in retrospective
If we look historically, load-shedding started early on during 1960s with low voltage supply
during the evening hours. The actual scheduled cutting off of the power only started during the late 90s.
The outage hours slowly started to spike and peaked in 2009 where we faced up to 18 hours/day of power
outages (Shrestha, 2014). Although we see an inflection point from there on, the actual outages hours

were still in double digits up until 2014. Then in 2015, we sustained a double blow with the earthquake
and the blockade which not only incapacitated some of the countrys energy infrastructure but also
increased the demand on the power outlets due to inadequate supply of other energy resources like
petroleum products.
How can the government and specifically NEA go from imposing 12 hours a day of power
outages just couple of years ago to no load-shedding now ? Current daily electricity demand of the valley
is at around 300 MW. This year alone, a total of 150 MW of additional power has been introduced to the
national grid with 90 MW imported from India (Biyog, 2016). NEA is looking at importing an additional
70 MW of power directly to Kathmandu from Kathmandu-Hetauda transmission line once the
synchronization is finalized with the Indian grid (Acharya, 2016). All these trickles of energy might just
help us get by for a year or two but what about the future prospect. In a discussion session I held with
Ritesh Gupta, assistant manager at Kathmandu Grid Division, it was mentioned that the projected demand
of energy of the valley alone will grow seven folds in the next 15-20 years amounting to a total of 2000
MW and the current load-shedding free drive has been mostly possible by cutting off the power supply to
the industrial sector in and around the valley. This made me realize that all these salvaging of energy to
keep the lights on in our homes is not sustainable or feasible to meet the long run demand. To be truly
independent from energy woes, we need to take up some measures that I will be addressing next.
Policies
Presently the policy is focused on getting free energy by allowing developers to implement
projects as export oriented. This has caused us to pay higher price to import from India while exporting at
substantially lower rate due to monopsony. According to the Department of Electricity Development, as
of December 7 2016, 117 generation licenses have been issued with a total capacity of 3340 MW which is
more than twice the total energy demand of the country right now. Policies like take or pay under which
government purchases electricity on necessity basis have caused major hindrance for independent
developers to build projects. However, as of recent, government is planning to do away with it and
purchase all the electricity generated by producers. According to Sharma, The government will now sign
PPA with power generating projects on take and pay basis, among various other policy reforms that
MoE has initiated. (Himalayan, 2016)
It has also been mentioned that the reason for inefficiencies at NEA is primarily due to
conglomeration of functions namely, generation, transmission and distribution of power all under one
roof. This together with lack of transparency has caused projects over taken by NEA to be the most
costliest in the country. For example, 30 MW Chameliya Hydropower project has incurred a total cost of

NPR 15 billion about NPR 500 million per MW as compared to NPR 150 million per MW generally
incurred by private developers. FNCCI President Pashupati Murarka has suggested to unbundle NEA to
pave the way for formation of separate entities to look after energy generation, transmission and
distribution.
Renewable Energy
Renewable resource energy that are feasible for Nepal are micro-hydro, biomass, solar, waste to
energy and wind. Currently, the total contribution of such resources to the total energy mix of the country
stands at 36 MW or about 1.66% (Adhikari, 2016). Investing on such resources does not only have
positive socio-economic impact by increasing employment in all corners of the country, but is also
environment and human health friendly. Micro-hydro is not only suitable for rural hilly areas of Nepal
but socio-economically viable as we have the technical knowhow to manufacture most of the machineries
required to build one. With 300 days of sunshine in a year solar energy is one of our best alternatives for
energy source. According to Anil Chitrakar, the rooftops of Kathmandu alone have a capacity to generate
500 MW of solar energy.
Consumer behavior
While most of the discussion regarding the energy issues in Nepal is targeted at the supply side, I
would like to point out few issues regarding the demand side as well. First of all, consumers need to be
aware that the energy crisis is due to aggregate demand. So using energy efficiently and investing on
efficient devices will not only reduce the electricity bill, but also lower the total demand significantly.
Another serious issue concerning the nations energy scenario is electricity pilferage. According to NEA
Executive Director Ghising, a total of 26% electricity produced is being stolen currently. People should be
educated against committing such acts they directly contribute to financial burden of the economy which
is levied as taxes.

Conclusion
While we enjoy perennial power supply this winter season, it is imperative that we look beyond
our immediate horizon and work towards more sustainable solution that will meet the future demands as
well. One thing we need to understand here is that while NEA is able to meet our current daily
requirement of 300 MW, it is merely a suppressed demand. In order words, if we were to fulfill all our
energy requirements other than lightning like cooking and transportation from electricity, we would need
much more than 300 MW. Making policy level changes and implementing them should be the top most

priority of the government. As noted earlier, investor friendly policies like take and pay and NPR 5
million VAT rebate per MW lined up by current government should be implemented at the earliest.
Investing not only on the projects but also auxiliary infrastructures like transmission lines and access
roads should be the top priority of institutions like NEA. This not only help the nation in uplifting the
rural communities by providing employment and accessibility but also give NEA competitive advantage
by controlling the distribution channels. As for the demand side is concerned, there needs to awareness
drive among consumers to use energy responsibly by using energy efficient devices like CFL light bulbs,
adopting renewable resource like solar energy and refraining from stealing electricity which is one of the
major source of financial burden for NEA as almost 26% of the total electricity produced is pilfered.
Although today we are merely trying to meet our basic energy requirements, for the prosperity of
our country we need to be energy independent, i.e. produce enough to meet our own requirements
including the industrial demands and also be net energy exporter. With the wealth of resources at our
disposal, such ambition is not outside our reach. We already have the skills, all we need is incentives. We
need to understand that energy is the only factor that creates an environment for economic growth and
prosperity enabling the possibility of a very bright future for Nepal.

References

Acharya, Pushpa Raj (2016, November 16). Feasibility study on power grid synchronization at 220kV to
be finalized soon. The Himalayan Times, pp. 13.
Adhikari, Devendra (2016, April 15). Sustainable energy for all: Can Nepal achieve it? The Himalayan
Times.
Biyog, Laxman (2016, November 12). The capital in load shedding. Nagarik, pp. 1, 2

Himalayan News Service (2016, December 16). PPA to be signed on take and pay basis. The Himalayan
Times, pp. 11.
Shrestha, Dr. Jagan Nath (2014, November 10). Application of Clean Energy in Nepal: Prospects and
Problems. Kathmandu, Nepal: SAR/StANCE.

THT Online (2016, November 14). Nepal is becoming load shedding-free, assures NEA boss. The
Himalayan Times. Retrieved from http://thehimalayantimes.com