The discussions currently taking place in Nepal are no different from those that took place after India imposed an embargo on Nepal in 1989. Twenty-six years ago, there were talks about importing petroleum products from China and developing a transit route in the north. There were also talks about Nepal’s need to be self-reliant on energy. The then king’s advisors and emissaries made ultra-nationalist statements, very similar to the ones made by present day politicians. Hence, more than two decades later, in the face of yet another informal blockade by India, Nepal has nothing new to offer but old statements in new formats—on the social media and as breaking news on television.
We need to develop a long-term transportation policy that relies on mass transit using electricity. With research on electric cars taking place at a rapid pace, in another ten years, Nepal can switch to electric vehicle.
In 1989, leaders flaunted their statements carried by government newspapers—The Rising Nepal and Gorkhapatra. Now, leaders take pride in watching themselves on television and on being discussed on Facebook and Twitter. And they think that they have fulfilled their responsibility. The Finance Minister did not make a statement on how the blockade is impacting the economy and his plans to address it. He has been busy tweeting about the multi-purpose hall he inaugurated or the certificates he distributed. Who cares if the economy has incurred losses amounting to $2 billion? Who cares about a nation that continues to face economic hardships after being battered by an earthquake that cost $8 billion? The earthquake followed by the human-induced shortage of fuel and essential goods has cost Nepal close to half of its Gross Domestic Product.
Crisis Management Plans
After the quake, there were talks about the need for crisis management plans. But even after six months, the Reconstruction Authority is yet to take shape. Supply channels could still be disrupted by natural calamities. Yet no one has a plan B.
Many talk about importing fuel from the northern neighbour, but has anyone studied whether petroleum products in China have octane levels in fuel that is compatible to Nepal? What will it take to make Chinese fuel compatible to automobiles in Nepal based on the Indian octane levels? Where is the nearest supply point in China from where tankers transport oil to Nepal, what is the cost of transportation? Can we lay a pipleline in the north or can railway networks carry oil? What will the long-term impacts of importing fuel from China be for Nepal? Economics is about long-term sustainability, not short-term kneejerk reactions.
In 1989, after the embargo and when an interim government was formed post 1990, energy security became a key political agenda. The government wanted to generate electricity to meet the energy demands of Nepali households as well as the transportation sector. Various legislations and policies relating to hydropower were promulgated. Then Prime Minister Girija Prasad Koirala asked Prabhakar Rana, then Chairman of Soaltee Hotel to take the lead in this sector. Then US Ambassador Julia Chang Bloch arranged a meeting with leading US energy firms and Harza Engineering took the lead to build the Bhote-Koshi Power Project. Nepal became one of the first countries to use electric vehicles for public transportation as it assembled three-wheelers to replace the diesel belching Vikram Tempos. Electric buses went on trial runs and ropeways drew attention in boardrooms.
Multiple deliberations have taken place on the strategic storage of petroleum products across the nation to tackle natural and human-induced calamities, but these discussions have not progressed beyond the proceedings report. However, over a period of time, the myopia of the political leaders coupled with a strong automobile lobby—which makes a significant contribution to government revenues—and multiple scams in providing hydropower licenses put an end to Nepal’s long-term plan to produce energy and switch to alternative transportation systems.
Future Opportunities
If two quakes within a span of six months cannot shake a country’s policy makers, nothing will. It is high time Nepal focused on being energy and supply secure to ensure that it is no longer affected by supply embargos used as a geopolitical tool.
First, hydropower development should be pursued with an objective to fulfill domestic demands. To substitute half of the Liquefied Petroleum Gas demand Nepal needs 1,000 MW just for cooking food. If ropeways, alternative mass transit systems based on railways and electric transport are encourage looking at close to 5,000 to 6,000 MW of domestic demand which is line with average electricity consumption in lower rung middle-income country. Malaysia, which population is equivalent to Nepal’s, consumes 28,000 MW. However, the production of power has to go beyond Powerpoint presentations and materialise into reality.
Second, we need to develop a long-term transportation policy that relies on mass transit using electricity. With research on electric cars taking place at a rapid pace and some great products like Tesla and others in the offing, in another ten years, Nepal can switch to using electric vehicles and establish a nationwide network of charging stations.
Third, we need to explore options to outsource operations and management of the Nepal Oil Corporation to global energy companies who have the clout to handle governments and supply disruptions. Nepal should call a global tender which can excite Shell, Exxon Mobile and other global companies including those from India and China with experience in managing supply chains in landlocked countries.
Finally, we need leaders who can lead Nepal till 2030 or 2040, not people who will be in their afterlife by then. Perhaps, it is a good time to consider contracting out the management of key government functions to young Nepalis. After all, we have a good pool of people in Nepal and the diaspora.