Nepal | May 29, 2020

Annual growth of 9.2pc needed: WECS

18,000 MW required for Nepal to graduate to league of middle-income countries by 2030

Himalayan News Service
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Kathmandu, January 9

The Water and Energy Commission Secretariat (WECS) of the government today unveiled energy demand forecast for next two-and-a-half decades.

WECS has said that Nepal needs to achieve at least 9.2 per cent growth every year to achieve its target of graduating to the league of ‘middle-income countries’ by 2030, and to achieve this annual growth, the country requires 1,721 MW energy at present.

As the size of the economy expands over the years along with the achievement of higher economic growth, the country’s energy demand is projected to stand at 6,814 MW by 2020; 10,803 MW by 2025 and 18,000 MW by 2030, according to the demand forecast made by WECS.

“The demand of energy can surge further if we are able to focus more on industrialisation,” said Madhusudan Adhikari, secretary of WECS. “We have made the forecast based on the growth led by agriculture and service sectors.”

According to WECS, to continue the pace of economic growth, the country would need 29,000 MW electricity by 2035 and 51,000 MW by 2040.

Purchase rates

The Ministry of Energy (MoE) today also proposed the power purchase rates for winter (dry) and wet seasons for different types of projects.

The rates proposed by the ministry also vary depending on the nature of projects — whether they are reservoir- or peaking-run-of-the-river (PRoR) type.

As per the government’s policy to promote reservoir projects, the proposed electricity purchase rate for such projects is higher as compared to PRoR and RoR. According to the proposed rate, generator of reservoir project can sell per unit electricity at Rs 12.40 during dry season (from December to May) and Rs 7.10 during wet season (from June to November).

Likewise, Rs 10.55 and Rs 4.80 per unit electricity purchase rate have been proposed for PRoR-type projects during dry and wet seasons, respectively.

As there is domination of and RoR projects, which generate only one-third of their capacity during dry season, currently, NEA has been offering Rs 8.40 and Rs 4.80 per unit for dry season and wet season, respectively.

The MoE has proposed the electricity purchase rates to ensure higher rates of return in reservoir projects, as the government is trying to attract foreign investment in mega reservoir projects like Budhigandaki and Nalsing Gad.

Share investment

The MoE today also unveiled a new website — — to receive the commitment of share investment in hydropower projects that are going to be developed through the generation company of the government.

“The government wants to mobilise domestic resources in developing hydropower projects, which are considered to be the lucrative investment in our country,” said Minister for Energy Janardan Sharma.

“From now on, people would not need to queue to apply for shares in hydropower projects and Nepalis living abroad can also apply for stakes in the given projects.”

Hedging fund

The MoE will soon set up a hedging fund to minimise the risk of fluctuations in the US dollar.

This arrangement is aimed at roping in foreign investors to harness the abundant hydroelectric resources in the country.

“We have to assure power purchase in US dollars for certain years to lure foreign investors in the hydropower sector, which is why we are going to set up a hedging fund to minimise the exchange rate risk,” said Minister Sharma.

Reportedly, The World Bank and Asian Development Bank have pledged certain amount for the fund. The government and the developers will also have to chip in a certain amount to the fund.

As per Minister Sharma, the operation modality of the fund will be unveiled shortly.

IPPAN hails MoE’s announcements

KATHMANDU: The Independent Power Producers’ Association, Nepal (IPPAN) has hailed the announcements made by Ministry of Energy (MoE) on Monday as ‘encouraging’. However, the umbrella body of IPPs in the country has said that execution of ‘take-or-pay’ has remained only a political statement of the minister so far. Until this provision is endorsed by Nepal Electricity Authority (NEA) board, it will not come into force. IPPAN has also requested MoE to waive penalty levied by NEA in hydrology, meaning the power producers need to pay fine to the off-taker if the generator fails to supply the said quantum of electricity. Likewise, IPPAN said the provision included in ‘Energy Crisis Prevention and Electricity Development Decade, 2016’ to provide grant worth Rs five million per megawatt for IPPs after power generation has not been implemented yet. In this regard, IPPAN stressed on implementation of all the announcements made till date.

A version of this article appears in print on January 10, 2017 of The Himalayan Times.

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