Even as Nepal braces for yet another Power Summit, we have lost count of the number of meetings, seminars, discussions and conferences we have had in the past two decades. However, the reality is that a whole generation is growing up not knowing what it is like to have 24-hour electricity. Nepal remains one of the bottom 20 countries of the world in terms of per-capita electricity consumption. If all the money that was spent on reports on the hydropower sector produced over the past 20 years were directed to actual spending on a real project, definitely many more megawatts (MW) would have been generated.
Nepal’s demand for electricity is projected to cross only 2,000 MW by 2020. Whereas if one is to project the demand for electricity along the lines of average global consumption, it would be closer to 18,000 MW. Malaysia, a country with Nepal’s population, currently consumes 22,000 MW. If Nepal is to consume electricity at par with India, the number would be closer to 6,000 MW. Unfortunately, no studies have been conducted to explore the latent demand, especially for energy substitution. If electricity was as abundantly available as mobile phone connections, then the substitution for expensive Liquefied Petroleum Gas (LPG) for cooking would lead to a further demand of 1,000 MW. If long-term plans are prepared to run trolley buses and other electricity consuming rapid transport systems, then the demand would rise even more. Let us not forget that Nepal, through SAFA tempos, actually pioneered the use of electric vehicles for public transportation. Today, Nepalis who can afford smartphones do not buy washing machines a quarter of the prices of those phones purely because of a lack of continuous electricity supply. In a country where the cost of human security guards are increasing courtesy of rising labour costs, we are not able to switch to electronic gates and surveillance systems purely because of a lack of continuous supply from the grid.
No Electricity Authority
The problem in Nepal is that there is continuous electricity where is there is no Nepal Electricity Authority (NEA). There are many areas where micro-hydro projects have been able to deliver continuous electricity to consumers and in these areas, these projects have been successful only because the NEA is not present. The NEA has become a monolith saddled with employees hired by different political parties over the past twenty years. It can probably boast of the highest number of studies conducted for its reform and interestingly, even donors don’t tire of putting more money into this bottomless pit. From the time this author was involved in a project on the commercialisation of the NEA twenty years ago, there have only been more cut and paste reports generated and more politicisation of the utility. The NEA also boasts of probably the highest employee per MW in any utility in the world and unfortunately, the people who run it do not realise there is no global prize for this category. Until the NEA is unbundled to make distribution into a separate entity as consumption is market-based, generation with private players, as the business is risk-based and transmission the only utility, there is little that can happen despite a conference a month.
The time has come to re-calibrate the hydropower discourse. Like telecommunication, there is a market for people who are ready to pay for an uninterrupted supply of reliable electricity. Public Private Community Partnership (PPCP) models must be used to make municipalities responsible for distribution. These municipalities can outsource the selling of prepaid electricity cards to large telecom companies that have networks to sell pre-paid cards. People do not think of telephone pre-paid or post-paid based on minutes, they think on the basis of how many rupees they spend, be it a Rs 50 recharge card or Rs 500! Similarly, like in many countries in Africa, the pre-paid tariff structure can enable bottom of the pyramid families to buy Rs 100 recharges of electricity rather than pay Rs 1,500 for a cylinder of LPG or Rs 100 for a litre of kerosene.
This can lead to a lot of people switching to electricity power from LPG, firewood and kerosene. Private generators can enter into PPAs with distribution companies owned by municipalities and these contracts can be secured by financial guarantees from companies that are selling the recharge cards. The NEA can then just allow the use of its existing transmission lines or even that can be owned and rented by a separate entity. What Nepal requires a new pair of lenses to look at how electricity can be produced, transmitted and distributed.
Call for a pilot
For the donor community that is keen on supporting Nepal’s relief from darkness, rather than getting more experts from around the world to write more reports, it would be better to put money into a pilot project. A 30-40 MW pilot project with a municipality like Dhul-ikhel or Pokhara with a developer that is willing to take the risk and a municipality that wants to show the way can be supported by multilaterals and bilaterals to make the new model workable. Replication of the model in other parts of Nepal will change not only our future but the future of the next generation. Power now has to move away from powerpoint presentations to power lines.