Hydropower Prospects

In 1911, Nepal installed 500-KW Chandrajyoti Hydro-electric power station in Pharping in south west of Kathmandu during the reign of prime minister Chandra Shumsher. The country’s first ever power project was a milestone in giving a push to the nation’s economic development. It was set up almost 29 years after the world’s first power plant was established in USA in 1882. This was indeed interesting that the country was reeling from the dark age in terms of political freedom and social equality but the rulers of the time showed their inclination to illuminate the country albeit in a limited scale. Despite this early initiative, there was no headway in electricity development for over a century owing to lack of technology, investment, human resources and more importantly, the inhospitable political climate. 

The country was able to generate just 750MW of electricity by 2012. This also tells why the country failed to prosper notwithstanding the frequent political changes over the decades. Electricity is the prerequisite for the industrial development. The industrial countries have achieved notable economic growth on the back of surplus energy that can be generated from water, solar, wind, and thermal and nuclear plants. Nepal is endowed with abundant water resources but it could not tap it even when it entered an era of openness and economic liberalisation since the early 1990s. The electricity production requires huge investment and cutting-edge technology. In our case, labyrinthine bureaucratic process and policy adjustment also come in the way. 

However, the country has witnessed headway in electricity production in the last one decade with the adoption of favourable government policy, increasing participation of the private sector and access to foreign market. The growing call for embracing green energy also created atmosphere conducive to investing in electricity generation. The rising global warming, caused by the excessive use of fossil fuels, has posed a threat to the sustenance of human, animal and plants on the earth. Over 95 per cent of the population has access to electricity, while the country's installed power capacity has reached almost 3,000MW. Nepal has also started exporting power to India in rainy season. Now it is poised to generate 28,500 MW power in next 12 years. 

After Nepal government inked an agreement with India to export 10,000 MW electricity to the southern neighbour in next 10 years, the private sector has been further encouraged for investing money in the clean energy. In its Energy Development Roadmap and Action Plan, the Ministry of Energy, Water Resources and Irrigation plans to export 15,000 MW of electricity to India and Bangladesh, and distribute 13,500 MW to domestic consumers out of 28,500 MW to be generated by 2035. The ambitious target to produce such a large quantity of electricity in little over a decade may be challenging but it is not unachievable given that around 269 hydropower projects – big and small – are under construction in the country. 

It requires about $47 billion investment to meet this target. The government mulls to manage $24 billion from domestic investors and $23 billion from foreign direct investment. Now it should focus on policy reforms that include formulation of necessary acts and regulations, and making amendments to the existing policies to attract both the domestic and international investors. Timely clearing of trees in the project sites and construction of transmission lines facilitate the completion of hydro projects within stipulated time and avoid the cost overruns. One door system is essential to deal with all associated administrative procedures. All stakeholders including government, domestic and foreign investors, lending institutions and local community should cooperate for this.