Kathmandu. Association of Independent Power Producers. Vice President Ram Sahaya Prasad Yadav has lauded the role played by IPPAN in the development of Nepal’s energy sector. He described the contribution of IPPAN to achieving self-reliance by strengthening the energy sector of the country since two decades as a foundation for national development and economic prosperity.
Vice-President Yadav was of the view that Nepal is rich in hydropower and renewable energy and dependency on energy import should be minimized. Energy self-reliance was directly related to economic freedom and national security, he said, adding that development was not possible without adequate energy. According to him, if cheap and adequate energy is available, rapid development will be achieved in industry, agriculture, tourism, information technology among other sectors, creating employment and economic prosperity will be assured.
On the occasion, Vice President Yadav said the expansion of renewable energy would help maintain environmental balance by reducing carbon emission and to face the challenges of climate change. Energy expansion in rural and remote areas is also a means to ensure social justice and equal opportunities, he said. He also highlighted that Nepal could play a leading role in regional energy trade by increasing investment in renewable energy and exporting electricity to neighbouring countries including India and Bangladesh.
He stressed the need of prioritizing quality, transparency and accountability in energy production, adding that modern technology, research and innovation should be adopted. He pointed out the need for a long-term strategy from production to distribution, storage and export to ensure that the communities affected by energy projects are benefited.
On the occasion, Minister for Energy, Water Resources and Irrigation, Anil Kumar Sinha, said that the active participation of private sector has contributed to making Nepal load-shedding free and in a situation of exporting electricity. Currently, around 4,000 megawatts of electricity production has reached the country, of which more than 3300 megawatts is contributed by the private sector, which is a matter of great pride.
According to Minister Sinha, the journey of the private sector that started from 5-10 MW small projects has now reached to bigger projects of 100 MW. The development in energy sector has helped a lot in education, health and local development as well, he said, adding that the government has set an ambitious target of producing 28,500 megawatts power in the next 10 years.
“We have already signed an agreement with India to export 10,000 megawatts of electricity within 10 years,” he said. He, however, admitted that challenges such as legal and policy reforms, power purchase agreement, expansion of transmission line and complexities in forest and land acquisition still remain. He also pointed out the need for clarity on policy such as ‘take and pay’ and ‘take or pay’ and ease the environmental impact assessment process.
Minister Sinha also stressed that the private sector should invest in research, legal competence and human resource development along with physical infrastructure. He also suggested that the people’s representatives should be elected in the upcoming elections which are development-loving and understand the importance of energy sector.
On the occasion, a report containing the unveiling of ‘Energy Prosperity Souvenir’ and investment from the private sector was made public. Various personalities who have contributed to the energy sector were also honoured. On the occasion, Vice President Yadav took the 26th anniversary of IPPAN as the resolution for the future and pledged that the government would always cooperate to build a self-reliant, green and prosperous Nepal in the energy sector.
President of Confederation of Nepalese Industries (CNI), Deepak Malhotra, has stressed the need to increase electricity consumption in the country to properly utilize the growing hydropower generation in Nepal.
On the occasion, Chairman Malhotra said hydropower sector should be developed as a backbone for the country’s economy and rapid economic growth could be achieved through electricity consumption. “We have not been able to pay enough attention to other options other than export when the supply is increasing in comparison to the demand in Nepal,” he said, adding that policy-level initiatives were necessary to increase the consumption of electricity in industry, transport and other sectors. ”
According to him, although the industry is a major consumer of electricity, its contribution to the gross domestic product (GDP) has come down from 9 percent in 1996 to less than 5 percent now. However, of the total electricity consumption, more than 35 percent is from the industrial sector and of the 1,800 MW demand during peak hours, about 33-35 percent will come from industries.
Malhotra said that the energy sector was important to earn foreign currency and reduce trade deficit, adding that Nepal’s private sector was taking risk and showing remarkable entrepreneurship in the hydropower sector. He argued that the government has set a target to produce 28,500 megawatts electricity by 2035, and foreign investment would be necessary to meet the target. He stressed on attracting foreign investment through public-private partnership model.
Reminding that the government has long demanded opening up of private sector in electricity trade, he welcomed the directive on open access to transmission and distribution recently issued by the Electricity Regulatory Commission as a positive step. He further said that the hulling charge should be made scientific, practical and affordable to create an environment conducive for internal and inter-country electricity trade for the private sector.
On the occasion, CNI President Birendra Raj Pandey reminded that Nepal’s history of hydropower is the oldest in South Asia and noted that the 500-kilowatt hydropower project was established in Pharping in 1911 (1967 BS). According to him, the situation taking 10-12 years for the construction of hydropower projects, including survey license, PPA, and completion of construction is the result of complex legal and procedural problems.
Stating that the situation of visiting 16 ministries for a project has discouraged investors, he demanded the government to immediately implement the ‘single window system’. “In today’s situation, hydropower has become the safest and most attractive sector compared to agriculture and tourism. ’
Stressing that the incumbent government focused on election preparations should seriously address these problems after the election, he said, “If the problem is not resolved, a situation might arise among the industrialists and entrepreneurs to move ahead unitedly.” Stating that more than 10 million general shareholders have been involved in the hydropower sector, he said this sector is a common concern of all.
Chairman of Independent Power Producers’ Association of Nepal (IPPAN) Ganesh Karki lauded the contribution of the private sector in the development of hydropower in Nepal. He said that the country would still be in the grip of load-shedding had there been no active participation of the private sector.
More than 900 hydropower projects have been licensed across the country so far, he said. According to him, projects with a capacity of 11,600 MW are in various stages and Power Purchase Agreement (PPA) of about 16,000 MW has already been signed. Of this, 4,000 MW has already been connected to the national grid and 5,000 MW is under construction.
Stating that people have invested heavily in the hydropower sector, he said around 11.3 million Nepalis have already invested directly or indirectly in the hydropower sector. He also informed that Rs 13.10 trillion has been invested in the hydropower sector so far. Stating that the energy roadmap to generate 28,500 MW was welcome, he said the target of exporting 13,500 MW for domestic consumption and 15,000 MW to neighbouring countries was positive.
He, however, said that the ‘take and pay’ policy introduced through the budget has created disappointment among investors. He also complained that the private sector should be allowed to enter the electricity business, electricity generated due to the lack of transmission lines is being wasted and the process of Environmental Impact Assessment (EIA) and Preliminary Environmental Examination (IEE) has become very cumbersome.
Chairman Karki urged the government to extend the date for the commencement of commercial production (RCOD), saying the time and cost of the project has increased while visiting 16 ministries including the Forest Ministry, and natural disasters like floods and landslides have added to the problem. As many as 35 projects are awaiting IPO approval due to delay in the issuance of shares and the provision of issuing shares only after power generation has hit the local and general public as well, he said.
IPPAN Senior Vice President and Coordinator of the IPPAN Day Main Celebration Committee, Mahan Kumar Dagi, said that energy, tourism and agriculture were the major bases for Nepal’s prosperity. Currently, the total power generation in the country has reached 3,195 MW and the private sector has been able to generate 3,335 MW in 26 years.
According to him, reducing the import of diesel, petrol and LPG and increasing energy consumption is the basis for prosperity. The share of electricity produced by the private sector has reached 83 per cent and the under-construction 5,700 MW projects have contributed more, he claimed.
“It is certain that 10,000 MW of electricity will be produced in the next 2-4 years,” he said, warning of serious problems if policies were not made on time for its consumption and trade. He also stressed on allowing the certified private sector to trade electricity and construct transmission lines. Recalling that the country has become bright today due to the then Water Resources Minister Shailaja Acharya fixing PPA rate in 2055 BS, he opined that the present government could usher in a new era in energy sector by allowing the private sector to trade electricity.
On the occasion, a study report titled ‘Study on Investment of Hydropower Sector’ was made public on the occasion of IPPAN Day. IPPAN has launched the ‘IPPAN Journal Award’ from this year. This year’s IPPAN Journal Award has been bagged by Milan Bishwakarma of Naya Patrika and Seema Tamang of Kantipur Daily.
A research conducted in collaboration with IPPAN and BFIS News has found that the private sector has invested Rs 13.10 trillion in Nepal’s energy sector. Similarly, the government sector has invested over one trillion one billion. The total investment of the banking sector in the ongoing and under-construction projects promoted by the private sector is Rs 870 billion while the private sector has invested Rs 403 billion.
The IPO issued by hydropower companies has received Rs 1.63 crore. Research conducted during the same period found that there were 10.8 million shareholders in the secondary market. The hydropower company has raised Rs 41.65 billion through the initial public offering (IPO) to the general public.
