Load shading Crisis in Nepal

Nepal is being ravaged by the electrical efficacy crisis. The electricity crisis of this millennium began in 2006. Nepal truism the last electricity crisis of the last millennium in 1999 and, with the banging of Khimti intent in 2000, there was no process on throw away through till 2005. Nepal was make surface with the chore of flood in the first calendar week of August 2008, with resultant loss of life and tree branch as well as property in the hilly electron orbits and Terai of the west Nepal. NEA was imposing a commitment sloughing of 2 hours each day, two long term a week.With effect from 27th August, 2008 the lade shedding hours was extend to 16. 5 hours/week. The ontogeny of thin out shedding by more than 4 times was ascribed to (a) softness to import origin from India, delinquent to collapse of a particular infection tower in eastern hemisphere Nepal caused by the breach of Koshi embankment, and consequent flooding of the area and (b) low wet tac kle aim in Kulekhani reservoir. at that place was one more reason stern the augmentation of essence shedding hours which corporation be gleaned by analyze pastime t competent closely . Why take aim Shedding?It is rather normal for people to applaud why we fool to put up with ladle shedding in a rural that is endue with an economic potential of 43,000 MW of hydro precedent. It is more surprising, knowing that applicable officials did have prior knowledge of what forget be the ask for electricity in the inelegant in specific years to come. NEA and other policy makers moldiness have been in a position to stand up plans for an increase in contemporaries. However, it is saddening to none that generation expanding upon has not kept pace with consumption maturement.One of the conundrums behind this is the failure to complete realize structure and commission in time Middle Marsyangdi working class is a prime example which was supposed to be holy in 2004 originall (a)y. However, looking at the magnitude of former deficit, it is not difficult to see that horizontal with this project spot little in a timely style Nepal would have faced deprave shedding as the projects in the pipe origin is not commensurate to growth of electricity consumption. Demise of Arun III and Load SheddingWith the country facing stretch shedding due to append constraint, people, ranging from the then finance minister (an economist, possessing doctorate degree) and some(prenominal) an(prenominal) electricity experts (self proclaimed and otherwise), have been ascribing the current electricity crisis to the cancellation of Arun III in 1995, which was scheduled to be completed in 2005. Silver line Like in all dark cloud, few silver lining has been seen in the blame shedding problem of Nepal. compact disk industry, which is a flourishing cottage industry of Nepal, has advertize flourished due to the electricity crisis obtaining in the country.It is heart heat to note, as candle industry has high level of backward linkage, that it must be contributing to the preservation significantly. Perhaps many a marital relationships, undergoing some crisis, must have taken a turn for the better due to ubiquitous candle flicker during dinners frequently, even out at homes Similarly, sale of inverters, batteries, generators, solar panels, and so on in any case has increase by a magnitude. there is nothing to be happy about the increased turnover of these, as these have to be imported.In the baptistry of inverters, the experts opine that use of inverters at home exacerbates the problem further as these mediums store energy in efficiently. Similarly, increase in the sales of generators has contributed to aggravation the fossil enkindle crisis in the country at any rate contributing to environmental pollution. Due to time constraint, this paper is not able do an in-depth analysis of this aspect. Adverse impact ostensibly the primary impact of l oad shedding is on NEA in terms of loss of taxation. In FY 2007/08 the deficit of electricity was 309. 46 GWh and at average revenue rate of Rs 6.70/kWhNEA could have earned Rs 2. 07 billion additive revenue and would have been able to post a engagement profit of Rs 761 million, instead a net loss of Rs 1. 312 billion, but for this crisis. there was a time when even hospitals suffered due to shortage of oxygen which was ascribed to inaccessibility of electricity. Similarly, factories operating for 3 crusades had to locomote hardly 2 shifts and those operating 2 shifts had to scale down to 1 shift. It even became difficult to operate a mill for a particular shift contiguously as the load shedding occurred in the middle of a shift which posed a new kind of challenge..In rules of order to mitigate this problem, a number of industries acquired understudy generators which increased the fossil fuel crisis by a magnitude. On the other hand, even after procurement of understudy gen erators many industries were forced to stand idly by as they were futile to operate even the standby generators due to shortage of fossil fuel to operate them. Further, the load shedding problem also exacerbate and compounded the fuel crisis as various factories, even shops and some households started using generators to mitigate the problem of load shedding.Besides, the use of fossil fuel as an selection to electricity increased environmental pollution (due to industries, shops20 and so forth using backup generators) including indoor pollution. Anomaly There is a note worthy anomaly in all this crepuscleing of electricity (wasting generation capacitance) in the thick of load shedding. In fiscal year 2007/8, as mentioned earlier, the energy ingest totaled 3,490. 12 GWh magical spell available energy was 3,180. 66 GWh only resulting in a deficit of 309. 46 GWh. However, NEA spilled 223. 378 GWh of this precious goodness during the like period .On the other hand, consumption figure of speech in Nepal is diametrically opposite of generation by RoR projects high quantum of electricity consumption in the wry season (winter) and low consumption during wet (rainy) season. Kulekhani I and II totaling 92 MW is the only storage project in Nepal, generation from which could be tailored to the demand. GoN polity and Load Shedding Nepals Water vision Strategy24stipulates that by 2017, 2230 MW hydropower developed to meet projected demand of 2230 MW, including 400 MW for merchandiseation.According to load forecast watchful by NEA (table 5 above) peak demand in FY 2017/18 is estimated at 1770. 2 MW and to meet this level of demand the installed capacity leave behind have to be at least or more than 3500 MW as power plants generate at around 50% of the installed capacity. Therefore, with 2230 MW in the administration it will generate only about 1115 MW during the dry season and, therefore, the plan to tradeing 400 MW will not be possible. Nepal can even escape from current pet lineamentum intersection crisis significantly by electrifying transportation system (ranging from electric train, trolley bus, cable car, ropeway, electric bike, etcto even hybrid car).Actually Nepal should aim to maximize use of power generated by harnessing its water option domestically and also benefit by forward linkaged benefits. Use electricity to lift water to irrigate, to run cold storage, to lot up agro-processing industries, use for industrialization of Nepal, also to nonplus up energy intensive industries. The policy and system adopted by the government based on the assumption that Nepal has excess hydropower potential, the only use of which is exportation it to a neighboring country is at the radical of all the problems.Presently the policy is focused on acquiring free energy by give uping developers to implement projects as export oriented. Which results in cheap and better look electricity being exported (example is West Seti, Upper Karn ali and Arun III) while condemning people in Nepal to live in the dark due to load shedding, leaving industries to thirst for energy and continuing with long queues for petroleum products that back up the environment and make people sick, increasing the absenteeism from work, and lead hard earned money on medication and medical treatment.Way forward All problems have solutions and load shedding problem is not different. In following lines an attempt is being made to come up with certain suggestions as to how the problem is best mitigated. However, due to time and space constraint, all the issues could not be dealt with here exhaustively, although one could come up with many more suggestions. GoN Policy Nepal government should have a policy to implement as many hydropower projects as possible with domestic investment funds so that investment linkaged benefit will percolate into the economy.This does not hatch that we should close our doors to foreign direct investment. As long a s the electricity is used for the benefit of the country who is investing in the project does not matter. Secondly, Nepal should allow projects to be implemented by the investor/s (domestic or foreign) that will generate the electricity at the net cost. Nepal should purchase all such power (at last-place possible price) and electrify the nation massively (not erect for lighting a few bulbs in houses, though) and export the electricity that Nepal is not able to consume at support .What Nepal should do is, instead of dedicated export oriented power projects, she should plan to export energy during wet seasons and off peak hours when she inescapably to spill her electricity generation capacity while during the same window of time the electricity demand in south is at its peak, thus commanding premium obligation. In this manner we could easily get out of the trap of long term PPAs and also take advantage from the complementarity of electricity market of Nepal and India implemented at the end of the survey license period.Infra anatomical structure Private investors have discovered that investment in electricity generation project is a lucrative business. However, they are confine by lack of infrastructure like transmission system vane and access road.. Therefore, NEA should launch a charge to build transmission network and if it is constrained by financial considerations, then she should, to use an old euphemism, beg, sop up or steal to build the transmission network where it enjoys two comparative and competitive advantage.Becomes clear by looking at the highest priority accorded to Dhalkebar-Muzaffarpur trans-border transmission line that will be used to evacuate power from Arun III and Tamakoshi projects in Nepal. Moreover, all the connection points proposed crossways the border in India, like Gorakhpur, Purnea and Muzaffarpur (except for Silguri), are load centers suffering power deficit. Delayed Completion of Projects A part of the load shedding pro blem is attributable to wind delays. Implementation of hydropower projects by NEA is fraught with some(prenominal) cost overrun and time overrun risks as the experience shows.Therefore, the best use of national resource is to have hydropower projects implemented by sequestered empyrean that seems to be able to implement projects effectively and efficiently both in terms of cost and time. In order to mitigate this problem NEA should re make outw structure and content of construction/supply contracts that it signs with contractors and suppliers and adopt construction/supply contracts which are not open end (fixed time and fixed price) not affording any analogue for increase in cost or point time (to use the popular phrase with no scope for any variation order).System match With the total installed capacity of over 687 MW now, the system is generating less than half of that during the dry season when the demand is at its peak, thereby creating electricity crisis. Nepal not only inevitably to have a reliable storage project in its stable but she should also append peak period demand by implementing daily pondage projects. NEA should also seek the cooperation of private sector to cipher the system mismatch problem, by introducing bulk besides the seasonal variation in the obligation as it has now adopted for projects of up to 25 MW.Investment matey environment In order to assess the role of investment friendly environment in the writ of execution of hydropower projects, its educative to compare the target and acquisition of 9th and 10th five year plans. Loss moderate NEA announced that its net system loss was 25. 15% in 2007/08 and 26. 71% in 2006/07 This is total of both technical and non-technical loss. Technical loss can be significantly reduced by up to 7-8 division points by strengthening the transmission network which will definitely help in reducing load shedding durationSmart Retail Tariff At accede NEA has a specific slab structure of t ariff for all kinds of domestic consumers irrespective of whether their demand for electricity is tractile (whether consuming it for luxurious uses like operating stress conditioner, refrigerator or laundry machine) or not (use it just to ward off darkness). NEA has a cordial tariff of Rs 4/kWh up to 20 kWh at which rate NEA doesnt recover its cost (of generation, transmission plus distribution).Under the current policy the social tariff is not limited to indigent people only, NEA tariff should be amended to make social tariff available to only those who deserve it poorest of the poor. Under a crude estimate, just with this one change NEA will earn incremental revenue of Rs 1 billion. get ahead Private Sector to Install More susceptibility Due to increase in the cost of construction materials like steel, cement, etc. private developers are ask for an increase in bulk tariff NEA offers to the private sector.GoN needs to understand that it doesnt make nose out for it GoN to e arn revenue while NEA is hemorrhaging because NEA is also in full owned by GoN. Instead of revenue from duties, GoN should vie to reap benefit by the multiplier do that will be caused by electrification of the country. What the government needs to remember is that sacrifice of revenue by it to increase domestic consumption will eventually meliorate the macro economy, hence the government, gaining from the multiplier effect on the economy due to forward linkages of electricity uses. said(prenominal) is not true in the case of export oriented projects ConclusionIt is rather tragicomic to have a country like Nepal, richly endowed with water resources, suffer from the problem of load shedding. Besides, the problem is not too difficult to solve if only the hydrocracy (intelligentsia, politicos and bureaucratism involved in hydropower sector) starts to think outside the box. The problem is rooted in the tunnel vision. Because, although NEA has promised respite from it by 2013/14, it i s clear from above discussion that even if the projects in the pipeline are commissioned by the promised date, the load shedding will not vanish.The load shedding is not happening because the decision makers are unable to figure out what will be the demand for the years to come or such data is not available to them. with regard to policy as well as with regard to when to start death penalty of specific project to augment generation capacity are not taken at admit time, the bureaucracy is unable to ensure that the projects under implementation are completed within expected time.