The government has been developing special economic zones to promote exports by overcoming supply side constraints. The burgeoning trade deficit due to skyrocketing imports and sluggish exports is expected to narrow down along with industrialisation in the country. However, Bhairahawa SEZ, which was inaugurated in February last year, has yet to come into operation. Though the industries for the SEZ were selected last year, they have not yet set up plants due to lack of power supply. Meanwhile, Nepal Electricity Authority and SEZ Authority Nepal have been blaming each other for this situation. NEA has said that it can supply up to six megawatts of power immediately but SEZ has not developed a substation to redistribute the power to industries. However, SEZ Authority has been solely blaming NEA for the power crisis. Pushpa Raj Acharya of The Himalayan Times spoke to Kul Man Ghising, managing director, NEA, and Chandika Prasad Bhatta, executive director, SEZ Authority Nepal, to know the actual problem on this issue. Excerpts:

‘NEA can provide optimum quantum of power to Bhairahawa SEZ’

— Kul Man Ghising

How is NEA managing mismatch of demand and supply of power this winter?

We have optimised power plants as much as possible and are importing around 400 megawatts of electricity from India. Water flow in the snow-fed rivers has gone down early compared to last year and run-of-the-river (RoR) projects are being operated at one-third of the total capacity but we are trying to optimise them as much as possible. Import component is slightly up this year compared to last year as we are able to import more quantum from Raxaul-Parwanipur after completion of the cross-border interconnection. We have managed the industrial load and there is power cut for only three hours a day. Thus, we are supplying electricity 24/7 to domestic consumers.

Many believe that NEA has started ‘unannounced load shedding’ as power supply for households is not reliable like last year?

It is not true. Demand side is almost stagnant like last year and supply has increased. Currently, peak demand is around 1,300 megawatts and supply is around 964 megawatts in peak hours. Chameliya of far-west region has started generation and it has also supported us to manage the demand of that particular region and we do not have to supply there from Kaligandaki. Water depth in Kulekhani reservoir project is 2.5 metres higher as compared to the same period last year. So, why would NEA cut power to domestic users? It is not load shedding. It is interruption in supply because our distribution mechanisms are not reliable as they are old. Most of the substations, feeders, transformers and cables are overloaded. And sometimes, overload causes interruption in power supply. At times the major transmission system suffers from tripping due to lack of safeguard mechanism. This is why we have been developing the distribution master plan and executing it to make distribution system robust. We have segregated distribution system upgradation in three segments — upgrading distribution system in industrial corridor and areas where there is prospect of industrialisation, upgrading distribution substation in urban areas and installing safety measures to prevent transmission line from tripping. We have not operated Kulekhani because we have to carry out major maintenance of Middle Marsyangdi dam by next month and the plant will be shut down for almost 10 days. We also have to carry out maintenance of Kaligandaki in May and it will be shut down for two weeks. During that period we will manage supply by operating Kulekhani project. Currently, there is surplus of night energy and from next year after Upper Tamakoshi starts commissioning power we will have to seriously work on increasing power consumption as we will have to manage the surplus energy. This is why, augmentation and upgradation of distribution system are being carried out massively.  It will explore industrial potential, help promote electric vehicles and use of electric home appliances, among others.

You mentioned that we will have surplus power from next year. From when will NEA be able to supply adequate power to industrial sector which is important for industrial expansion?

We are preparing to announce Birgunj industrial corridor load-shedding free. At the moment we do not have any problem to provide 24/7 electricity to Birgunj industrial corridor but for other areas it will take some time. We will make the major industrial corridors/estates load-shedding free in a gradual manner along with sufficient supply.

NEA has been criticised for not providing electricity to Bhairahawa SEZ. What is your take on that?

We can supply sufficient power to Bhairahawa SEZ. They actually have not done anything till date. The industries going to be set up there have not even started constructing their plants. We have repeatedly told them that we will provide sufficient power to them to set up their plants and instal the transmission line that can supply 30 megawatts within next three months. We have 11 kV line to Bhairahawa SEZ. We had approved 500 kV load a decade back to SEZ but later they cancelled the order. Bhairahawa SEZ has to set up a substation to distribute power. We can supply up to two megawatts power to SEZ immediately through which the industries can be operated. I have told the SEZ Authority that we can actually supply up to six megawatts of power immediately as there is one transmission line that was earlier used to import power from India connected with Bhairahawa SEZ. I think it will take two-three years for Bhairahawa SEZ to consume two megawatts of power.

‘We have called selected firms for site mobilisation’

— Chandika Prasad Bhatta

It has been almost a year since the firms were selected to set up industries in SEZ. Why have they not constructed their plants yet?

Initially, they were saying that there is lack of power supply to start construction. However, NEA has made commitment to supply construction power from January 22 following the high-level meeting organised by National Planning Commission that comprised NPC members, secretary of the Forest and Soil Conservation Ministry and managing director of NEA. I too was part of the meeting and represented SEZ Authority Nepal. Following the assurance of electricity supply we have urged all the selected firms to register their industries within 15 days since we received assurance of electricity supply and also asked them for site mobilisation as early as possible.

THT also spoke to the managing director of NEA and he says there is no problem to supply construction power. In fact, he has mentioned that NEA can supply up to six megawatts immediately. Why didn’t SEZ Authority Nepal coordinate with NEA when the firms were selected?

We had repeatedly coordinated with NEA for construction power but we had not received any assurance of electricity supply. The issue of electricity was resolved through high-level meeting of January 22 and then after we notified all investors to register and set up industries.

NEA has said that SEZ has not even issued a tender notice to develop substation in SEZ to redistribute power to industries and it has asked the SEZ to complete its task before raising questions against it. Why are the two entities embroiled in this blame game?

We are not embroiled in any blame game. We had not received assurance of power supply from NEA earlier and we were focusing all our efforts on how we could get electricity as early as possible from NEA. In this regard, we have been doing our works. The tender document of the substation is ready. We will issue a tender notice soon and award it by next month. The substation within SEZ will be developed under supervision of NEA. It will be completed within three months when NEA concludes its work of installing 33 kV double circuit transmission line from Butwal (Yogikuti) to Dhagdhagi, which is 15 kilometres away from the Bhairahawa SEZ.

But the SEZ has not started work to instal 15 km transmission line from Dhagdhagi to Bhairahawa SEZ?

This component will be implemented by NEA and the Ministry of Industry will provide the fund to NEA to implement this component.

There is lukewarm response from investors to set up industries in the SEZ. Only 19 firms have been selected. When will the SEZ Authority call for request for proposal for other industries?

There are 69 plots in Bhairahawa SEZ and 19 industries will cover 55 plots. Once these industries are set up we will call for request for proposal (RfP) from other firms too. The industries set up in Bhairahawa SEZ will start to export one year after they start operations. There have been some issues on the plot rent of the SEZ and export provisions (75 per cent of the production needs to be exported). We are looking into how we can attract more industries in SEZ.

Could you please elaborate on the progress of other SEZs?

SEZ Authority Nepal has been developing Garment Processing Zone in Bara district and we have achieved 95 per cent of the progress we had targeted in this fiscal and we will be able to bring it into operation by the end of next year. The GPZ has been planned to attract readymade garment factories as it is close to the Birgunj dry port and will be cost-effective to export goods and import raw materials. Likewise, Panchkhal SEZ is also moving ahead as we have identified 4,000 trees that need to be cut down to develop it. Also, the SEZ Act has provisioned that the private sector too can develop SEZs and some investors from India have made commitment to establish pharmaceutical zone and automobiles assembling zone if we provide land to them.