Birds in the bush

The government is considering an amendment to the Electricity Act 1992 ostensibly to give a boost to the hydro-power sector. Officials say this reform will simplify the law, making the Nepali power sector more attractive to foreign investors. The reform, it is said, will also take into account the objective of exporting power, particularly that generated by the Upper Karnali and the West Seti, and this may also necessitate harmonisation of the related legal provisions between India and Nepal. Any export of power by Nepal virtually implies India as importer. The draft ordinance also defines the responsibilities of the agencies concerned with power. That means some of the powers of the Nepal Electricity Authority (NEA) will be distributed to other agencies. The completion of the transitition to a new system is expected to take two years after the law is amended, probably by this year-end.

The government will still be in control of the national power grid, whereas the proposed Nepal Electricity Regulation Commission (NERC) will be entrusted with making and implementing the rules and regulations for the operation and distribution of power from this grid. Dr Govind Raj Bhatta, chairman of the Electricity Tariff Fixation Commission (ETFC), says, with more foreign investment, the power tariff would come down over time. The proposed reform provides that the Department of Electricity Development will still be awarding the licence for the survey of any power project, but an NERC nod will be required to start construction. However, for the survey of any project with an installed capacity of over 350 MW, NERC will issue the licence.

One need not disagree with the idea itself, though the government’s emphasis in several other sectors has been on one-door policy. The idea of relieving NEA of an important part of its responsibility looks reasonable as the existing tasks have proved too heavy for it. Indeed, most government agencies are not known for efficiency. This explains why the Nepali consumers have to pay the highest power tariff in South Asia. However, the ETFC chief’s prediction of any reduction in power tariff as a result of the new changes sounds as premature as it is speculative. This at a time when a price hike of about 10 per cent is reported to be on the cards. The cost of power projects and overheads could be cut, for example, by minimising the non-technical leakage, waste and mismanagement of resources, and by extracting accountability from those in authority. Real reform in this regard is yet to begin.