Kathmandu, January 4:

Experts say thrust should be on hydropower generation

International crude oil prices briefly touched the psychological landmark of $100 a barrel yesterday. Though the hike did not last long, it is time Nepal looked for ways to decrease dependency on imported oil through short and long-term measures. Experts say Nepal must look into demand management and accord the highest priority for hydropower generation.

Nepal imports all of its petroleum products and even after the recent petrol price hike, losses of the Nepal Oil Corporation (NOC) will be around Rs 560 million, almost the same amount of loss the NOC incurred last month, according to Digambar Jha, managing director of the NOC.

Some experts predict that the price of petroleum products may even go up because of various reasons

like dwindling supply in the international market and wars in various oil-producing regions.

Economist Shankar Prasad Sharma says the country must look at the demand management side and also lessen the impact of rising energy costs. This means efficient use of all non-traditional sources of energy like petroleum and electricity. “Experience has shown that a developing country can save about 15 per cent of energy if it improves efficiency. For example, there are reports that we are using transformers from the 1950’s. The government must look into this.”

Sharma says the problem will be gone if we generate enough hydropower, calling on the government to accord highest priority to hydropower generation.

According to Jha, Nepalis have to be very careful about using petroleum products now. Petroleum products must be determined by the market if the government is not to be too burdened with energy prices, he says, adding: “The nation needs to lessen petroleum imports because some experts say oil prices are likely to rise to $110 in the future.” People will be buying less if the prices of petroleum products rises, says Sharma.

The NOC has announced subsidy on gas for college students and kerosene for the poor. This subsidy is sure to put pressure on the nation’s coffers.

The nation is currently experiencing a current account deficit and higher oil prices will certainly worsen this situation, says Sharma.