KATHMANDU: The bold announcement that the government made to end the power crisis within three years now seems next to impossible as the budget has not prioritised the energy sector. Though the energy sector can rejuvenate the country’s economy by managing the trade deficit, generating more employment opportunities and enhancing the living standard of people after the destructive earthquake, the government seems indifferent to problems relating to the sector.
As many as 19 independent power producers’ projects directly suffered damage and 14 projects came to closure which resulted in 40 MW power disrupted from connecting to the national transmission grid. Stakeholders said that the government has not offered any relief package and incentives for the energy sector in the budget.
WHAT'S IN THE BUDGET ?
The government has allocated Rs 45.72 billion for hydro-power production, transmission and distribution and Rs 5.49 billion for alternative energy. Though the budget ceiling has been extended as compared to last year, stakeholders said that the allocated fund is not disseminated properly. “The budget does absolutely nothing to address the energy needs of Nepalis in this fiscal year. It did not take a single measure to bring more electricity into the homes of Nepalis,” said Sujit Acharya, Chairman of Energy Development Council. He further said, “Instead of working to reduce the consumption of imported cooking gas or imported petroleum products, the government wasted taxpayer’s valuable resources in funding projects that will probably take 20 years to complete.”
Pointing out weaknesses in the budget, Acharya said, “The Ministry of Finance does not seem to understand that the energy sector budget heading needs to make an impact on the energy situation of all Nepali’s living in Nepal.” He opined that the energy sector would have been positively impacted if the budget announced zero duties on electric vehicles and electric cooking stoves which would have made many people less dependent on petrol and gas based products.
As per the budget, Rs two billion has been allotted to complete the Upper Tamakoshi Hydropower Project within two years. Similarly, Rs 3.37 billion is appropriated to initiate the first phase of construction work of the 1,200 MW Budhigandaki Hydropower Project and additional budget will be made available to the project depending on its work progress.
The government will also start construction of Tanahu Hydropower Project (140 MW) and detail design of the Nalsinghgadh Hydropower Project with a budget of Rs 470 million. The budget provides for accomplishment of required preparatory work for the commencement of the implementation of Pancheshwor Multipurpose Project and the construction of West Seti Hydropower project that will be initiated through the attraction of foreign direct investment.
“This fiscal budget is the worst budget ever for the energy sector,” said Gyanendra Lal Pradhan, Chairman of the Energy Committee at the Federation of Nepalese Chambers and Commerce Industry. He questioned, “Where is the commitment that the government made earlier to eradicate load shedding within three years?” Citing that the government could make it more in favour of development of the nation in this harsh situation, he said, “This year’s budget has come as a confused budget over the earthquake and its issues. It could have been the most effective budget for the energy sector to boost recovery of the nation.”
THE MISSING POINT
According to Pradhan, the budget plans only to provide shelter to the earthquake victims without electricity. He said, “The development of the hydropower sector means more employment opportunities, lights to households and it could also slash the trade deficit of the country by reducing consumption of petroleum products.” He added that the budget allocation of Rs 4.85 billion for portable metallic rocket stoves for the family of earthquake affected districts is the only positive thing.
“There is nothing new that the budget has addressed for the energy sector,” said Khadga Bahadur Bisht, President of Independent Power Producers Association of Nepal. Citing that the budget is abstract, he said, “There is no concrete statement on how and what facilities and concessions will be continued from the earlier budget which is creating confusion among developers.” Complaining that the government has no provisions for projects affected by the earthquake, he said, “We have requested the ministry to address the problem by making provisions to provide soft loans to rehabilitate these projects. This was not addressed.”
According to him, the announcement that transmission lines be constructed through Build-and-Transfer method including the private sector under the National Transmission Grid and commitment to establish an Electricity Trading Company for national and international electricity trade are positive aspects of the budget. “With the establishment of the Electricity Trading Company, the path will be paved for power trade with India,” he asserted.
For the construction of transmission lines, the government has allocated Rs 12.73 billion and committed to solve the problem of land acquisition and tree logging in a coordinated way. NIDC Development Bank and Hydropower Investment and Development Company will be restructured to make these organisations capable of increasing investment in infrastructure.
The private sector is unhappy with the budget not addressing current issues and problems of the energy sector and the Ministry of Energy (MoE) has also agreed to it. “As we had prepared the budget proposals by the end of March, the budget did not include any of the problems that appeared post disaster,” said Sameer Ratna Shakya, Joint Secretary at MoE. He further said that the budget is bigger in size than the previous year and will benefit projects in the long run.
Informing about relief packages for earthquake affected projects, Shakya said, “Relief packages and provisions will be addressed through the Reconstruction Authority.” According to him, 456 MW Tamakoshi Hydropower Project which was supposed to be completed this fiscal will be completed by the next fiscal due to the earthquake. He further said that it will hamper the target to curtail power cuts to eight hours this fiscal.
Assuring that the government will create a favourable environment for the development of the sector, he said, “Both the government and private sector should fulfil their responsibilities.”