Policy shift in offing for hydropower development

Himalayan News Service

Kathmandu, June 24:

In order to tap the vast potential of hydroelectricity in Nepal, two major ordinances are being promulgated within this year, with special emphasis on involvement of private sector to develop the sector. The government is busy giving finishing touches to a new Electricity Ordinance and the Nepal Electricity Regulatory Commission Ordinance, which are expected to be formalised within 2005. “The proposed laws are aimed at providing a more enabling environment for investments and growth of the power sector through a level-playing field for all participants,” said Dr Shanker Sharma, vice-chairman of the National Planning Commission.

He added that these legal provisions would provide a systematic legal and independent regulatory framework. Dr Sharma was speaking at a seminar on ‘opportunities and challenges

for hydropower investment in Nepal’, jointly organised by Independent Power Producers’ Association-Nepal (IPPAN) and Nepal-USA Chamber of Commerce and Industry (NUSACCI), today. He also presented a dismal picture of power sector development in Nepal, despite being one of the richest countries in hydropower potential. More than 14 million Nepalis still have no access to electricity and its per capita power consumption is one of the lowest even among developing countries.

“Revisiting existing policies and restructuring current regulatory framework have been of prime concern for the smooth growth of the sector,” he said. Dr Sharma also assured that the government is committed to promote private sector’s investment in power development, helping to minimise technical and non-technical risks and barriers. “Major reforms are underway in the power sector to facilitate private sectors’ investment as well as making electricity cheaper,” said Mahendra Nath Aryal, secretary at the ministry of water resources.

Referring to the fact that 60 per cent of the total population has no access to electricity, Aryal stated the proposed laws will take more flexible measures in terms of power generation, transmission and distribution by private sectors. “The government’s role will be of a facilitator rather than a regulator,” he said. As of now, private sector’s involvement has been limited only at generation, whereas transmission and distribution are being carried out by the state-owned power utility, the Nepal Electricity Authority.

Elisabeth Millard, US Charge d’ Affairs, also recommended on timely policy reforms and effective implementation to have more investments from private sector. “Hydropower is one of the most promising sectors in Nepal, but largely unexploited,” she added. “Supply is outstripping demand every year, whereas commencement of new projects are almost static,” said Millard, urging that private investors should join hands with the government in realising the huge potential. “There are many technical and non-technical barriers one has to face while developing a power project in Nepal, which needs to be addressed,” said Dr Sandip Shah, president of IPPAN. “Stability in policy and country politics, along with a conducive legal framework as well as security, is the most sought after factor by private investors,” he said. Sunil Shakya, president NUSACCI and P P Adhikari, general secretary IPPAN also expressed their views on the occasion. Seven different working papers on various aspects of investment opportunities as well as challenges in hydropower sector in Nepal were presented during the event.