EDITORIAL: Growth forecast

The provision of the ‘take or pay’ would assist in attracting more investors in the hydropower sector, for it guarantees returns on investments made

Energy forecasts have been made for the next two and a half decades. This was made by the Water and Energy Commission Secretariat (WECS) of the government. However, there is a hitch to it as it is essential to attain an economic growth rate of at least 9.2 per cent annually if Nepal intends to achieve the goal of becoming one of the middle-income countries by the year 2030. This would be possible if we were able to generate 1,721 MW of energy now. Anticipating that the economy of the country would be growing over the years the forecast of the projected demand of electricity is estimated to be 6,814 MW by 2020, and it would grow further in 2025 to 10,803 MW and 18,000 by 2030. If the industrial sector grew robustly there would be more demand for electricity. The forecast that has been made is mostly based on the growth that would be made in the agricultural and service sectors. To keep up with the envisioned growth there would be needed about 29,000 MW of power by 2035 and 51,000 MW by 2040.

It would be wise to mobilize more domestic resources for the high paying hydropower sector. Towards this end, the government has opened a new website so as to receive commitments of share investment in the hydropower plants by the generation company of the government. So far, there are serpentine queues of people intent on applying for shares in various hydropower projects. The website would thus facilitate the investors at the same time making it possible for Nepalese residing abroad to apply for the shares in the hydropower sector. Concerns about the execution of ‘take or pay’ provision in the power purchase agreements had been superseded by the ‘take and pay’ provision. Under the take and pay provision NEA would only have to pay for the electricity it would be consuming from the independent power producers (IPPs). Now onward, IPPs would be paid for the electricity they generate whether NEA uses it or not. The NEA had introduced the ‘take and pay’ provision two years ago which did not go well with the energy developers. The provision of the ‘take or pay’ would assist in attracting more investors in the hydropower sector, for it guarantees returns on investments made.

As such, the Independent Power Producers Association Nepal (IPPAN) has welcomed the announcement made by the government. They say that this latest development is ‘encouraging’. The MoE has also proposed price rates for the electricity generated during dry and winter season. The tariff would also be different depending on the nature of the projects generating electricity that is whether they are reservoirs, peaking-run-of-the-river or run-of-the-river. It is the government’s efforts to promote reservoir-based projects. The government would be paying more for the reservoir-based and PRoR projects than RoR plants. This has been done to attract more foreign investments in the big reservoir projects such as the Budhigandaki and Nalsing Gad and also by setting up a hedge fund that would help minimize the risk of the fluctuations of the US dollar with the aim to encourage more foreign investments in the hydropower sector.

Waste of resources

Most of the interaction programmes run by the government, I/NGOs in Nepal are largely a waste of financial resources which could otherwise be utilized more fruitfully to serve real needs of the people. In fact, it is the foreign donors’ agendas and priorities that dictate the kind of programmes that are launched in Nepal. Otherwise, all the seminars, interaction programmes, etc. would come to a grinding halt for lack of money. It is a general disease that affects most government programmes, and programmes of the private sector, and NGOs.

Just to take a recent example (but such examples can be easily multiplied), the Central Regional Office of Hetauda of the Commission for the Investigation of Authority (CIAA) organized an interaction programme in Ramechap on the topic “CIAA Role in Controlling Abuse of Authority”. Does anybody have to shed any more light on the role of the CIAA in controlling the abuse of authority? Precious energies and money should not be spent on such too obvious things but on doing the main thing for which the CIAA has been created. In a country rife with corruption, it is not very difficult to show concrete results. What is required is willpower.