Editorial: Ensure competition

Direct negotiations will only encourage everyone to build a nexus with the govt and power centres to influence its decisions

The government’s bid to award licenses to build hydropower projects to both government and foreign firms by skirting competitive bidding through a new Electricity Bill is likely to discourage the Nepali private sector while endorsing direct negotiations with foreign firms. The new licensing policy plan has been provisioned in the draft of the new Electricity Bill, which was made public by the Ministry of Energy, Water Resources and Irrigation for discussion on Sunday. The government is awaiting feedback and suggestions on it from the stakeholders within 15 days, but the private sector is already alarmed. The private sector is particularly concerned about another provision in the draft bill that allows the ministry to scrap any license already awarded to the private sector should it be unable to build a project. Currently, the government has issued licenses to the private sector to build hydropower projects with an installed capacity of 18,000 megawatts.

Energy Minister Barsha Man Pun has said that this is not the final bill and would finalise it only after addressing the concerns of the stakeholders. But the intent of the government - to promote big projects through government or foreign funding at the expense of the Nepali private sector - is all too clear. At present, the power purchase agreement (PPA) of several private sector power projects has been stalled for the last six months as the Nepal Electricity Regulatory Commission (NERC), whose prior approval is necessary to sign the PPA, has stated that it is awaiting the new Electricity Bill. The contribution of the private sector in Nepal’s power generation cannot be undermined. Of Nepal’s peak demand of 1,369 megawatts, the NEA and the private sector produce nearly equal amounts of power, with the former generating 482 MW and the latter 461 MW. The private sector has built several power plants in the country despite the policy inconsistency, political instability and constant harassment by the locals. Any attempt to pass the bill as it is at this stage will only discourage the private sector from investing in the power sector.

It is not difficult to see why the new Electricity Bill has been drafted. Quite a few companies, namely from India and China, have been lobbying the government to build large hydropower projects without having to go through any competition. The Indian government is interested in building the 400 MW Lower Arun while Chinese companies have approached the government to construct the 762 MW storage-type Tamor. Only recently, Minister Pun signed an agreement in total secrecy to build Tamakoshi III with the developers - two Chinese companies and a Nepali company – by slashing its capacity from 650 MW to 200 MW. The largest of them all, the 1200 MW Budhi Gandaki, is another government priority. What such direct negotiations will do is destroy the level playing field that is there for all and encourage everyone to build a nexus with the government and power centres to influence government decisions. This will invite corruption and end transparency in all government dealings. If the competitive bidding process is tedious, let us streamline it. The process is as important as the end result.

Apples from Bajura

The rural roads built in the countryside have helped farmers sell apples in the major markets where they are getting fair prices for their produce. Apples grown in the Himali region are now finding easy access to markets up to Kathmandu, where consumers prefer homegrown fruits to imported ones. A report from Bajura, an impoverished mountainous district in the far-west, says apples grown there are being sold in Dhangadhi, Martadi and Kolti with the help of a local cooperative, Agriculture Knowledge Centre, which has offered loans to the farmers and has also made arrangements in finding sustainable markets for their produce.

Initially, 600 quintals of apples will be sold in Dhangadi, Kathmandu and local markets. Earlier, the fruit grown there would rot on the trees for want of a market and fair price. The cooperative has also trained the farmers about the technique of grading apples based on their size, colour and taste. As the farmers have come forward to lift themselves out of acute poverty, the provincial government should allocate resources to upgrade the rural roads. The Prime Minister Agriculture Modernisation Project, unveiled last fiscal, should also provide financial and technical support to the apple growers.