Wednesday, March 25, 2009

Hindification of Nepali words/names

July 20, 2005

Dear Editor
Nepali Times

I had a strong urge to thank you for properly spelling the name of "Pulchok" in your regular feature - "under my hat", and, hence, this email. However, I hope that you have not correctly spelt the word just in the lighter vein (no pun intended!) and that you will continue to spell it correctly always.

The second part of the name "Chok" is mostly spelt wrongly as "Chowk," to my disgust. Chok (courtyard) is a Nepali word and by rechristening the area as Pulchowk, people are doing a great injustice to the ancient heritage of the area. The word Chowk has different connotation and it comes from Hindi. Therefore, there is no need to corrupt the name by Hindifying it.

Actually, people in Kathmandu are converting many a Choks, Dobatos and Chaubatos to Chowks and doing disservice to Nepali language and names of the places.

I hope others too will take cue from you (not just in the lighter vein).

Thanks a lot once more.

With best regards,

Sincerely,

Ratna Sansar Shrestha

Submitted for publication under Letters to Editor page, but unpublished

Tuesday, March 24, 2009

Rhododendron Revolution

April 22, 2006

My greetings to you and all of us in Nepal on the occasion of "Rhododendron Revolution".
I am also one of those that believe that what the king did was "too little, too late." I am not satisfied at all.

However, on deeper contemplation and analysis I have arrived at following conclusion which I hope you will peruse and contemplate too.

The demands of this "revolution" are:
1) Interim government2) Reinstatement of Parliament3) Constituent Assembly.

Based on the kings address of yesterday, I now firmly believe that all three are now on the table and available.

The new cabinet to be formed, in the absence of an elected parliament, will be the Interim Government - parallel to what we had in 1990 - with full authority under Article 35 of the Constitution of 1990, in accordance with public commitment made by the king yesterday.
Armed with executive authority, the new cabinet can re-instate parliament. What remains to be done is just a recommendation of the cabinet, with executive authority, to the "constitutional king" who will have no choice but to approve it under the current constitution (article 35). People have asked why didn't the king himself do that and same question did come to my mind, too. But the answer is: once the king has renounced executive authority he does not have necessary authority to reinstate the parliament. Besides, if he were to try to reinstate the parliament before, it will still be under Article 127 and it will not be right. On the other hand the new cabinet can reinstate the parliament under Article 35 and that will represent popular support who are the sovereign of Nepal as enshrined in Article 3 of 1990 constitution which has been reasserted by the king yesterday.

The reinstated parliament can even forge ahead towards constituent assembly if the parliament is so to decide. Here too, coming from the parliament, the call for constituent assembly will be a lot more legitimate than if the king was to do so, again under Article 127.

Therefore it is high time the street mayhem be brought to a close before things go out of hand! Subsequent to yesterday's speech, security forces will be a bewildered lot and may not be too sure as to what is the right thing to do. In such a situation unwanted elements may take undue advantage and things can even lead to anarchy.

I beseech you to circulate this email to all you know.

With best regards,

Sincerely,

Ratna Sansar Shrestha

रुग्ण उद्योगहरु सम्बन्धमा खरो कुराहरु

२०५८ भाद्र ६

श्री सम्पादक
हिमाल खबरपत्रिका
पुल्चोक ललितपुर

डा. भोला चालिसेले रुग्ण उद्योगहरु सम्बन्धमा खरो कुराहरु अघि सार्नु भएको (हिमाल १-१५ भदौ २०५८) सराहनिय लाग्यो । तर यस सम्बन्धमा एक दुइ अरु खरा कुराहरु पनि बांकी देखेर कलम चलाउने काम गरेको छु ।

धेरैलाई थाहा होओइन कि एक तप्काका नेपाली उद्यमिहरुको व्यवसाय नैं "रुग्ण उद्योग” हो । यस्ता "उद्यमिले” उद्योग स्थापना गरेर त्यसको सुसंचालनको परिणति स्वरुप राम्रो प्रतिफलको अपेक्षा राख्दैनन् । बरु उद्योग स्थापनाको क्रमसंगै आफ्नो "भाग” बिभिन्न तरीकाले स्थापना/निर्माणकालमा नै निकाल्दछन् । जसको फलस्वरुप संचालनमा आएको पहिलो दिन देखि नैं यस्तो उद्योग अधिक पंूजिकृत (over capitalized) हुन पुग्छन् र रुग्ण हुनु यस्ता उद्योगको निश्चित नियति नै बन्दछ । यस प्रकृयाकै फलस्वरुप यस्ता उद्योगहरु आफू मात्र उंधो लाग्दैनन् यस्ता उद्योगमा जानाजान बैंकका अधिकृतहरुको मिलोमतोमा वा नजानी, बैंकका अधिकृतहरुको नालायकीले लगानी गर्ने बंैकहरु पनि राम्ररी थला पर्छन् ।

तर आफूले भने जति मूल्य निर्धारण गर्न र खरिदकर्तालाई यस्तो मूल्य तिर्न बाध्य पार्न सक्ने उद्यमी भने अधिक पंूजिकृत भएतापनि रुग्ण बन्न पर्ने नियतिबाट बच्न सक्छन् । यसको ज्वलंत उदाहरण हो भोटेकोशी आयोजना । टर्नकी (Turn-Key) आधारमा ४.८ करोड डलरमा ठेकेदारले आयोजना निर्माण सम्पन्न गर्दा पनि ६.८ करोड डलर लाग्ने अनुमान भएकोमा आयोजनाको कूल लागत ९.८ करोड डलर कायम गरेको छ र यस्तो गरिएतापनि यो उद्योग रुग्ण हुने अवस्थामा पटक्कै छैन । चाख लाग्दो कुरा त के छ भने यो आयोजनामा बहुराष्ट्रिय बैंकहरुले लगानी गरेको छ, यिनका अधिकृतहरुले अधिक पंूजीकरण बारे जानाजान लगानी गरे कि अन्जानमा अनुमान अथवा शोध को विषय हो ।

यसै तप्कामा अलि फरक खाले हुन्छन्, उद्योगको इजाजतपत्र प्राप्त गरेर बिक्री गर्न खल्तीमा बोकेर िहंड्नेहरु जुन बिक्री मूल्यले पनि उद्योगलाई स्वतः रुग्ण पार्दछ । यस खाले "रुग्ण उद्योग” व्यवसायीहरुले जलबिद्युत क्षेत्रमा पनि हात हालिसकेको देखा परेको छ । धेरै आयोजनाहरुको लागि सर्बेक्षण तथा उत्पादन गर्ने इजाजतपत्र जारी भई सकेकोछ, कतिपयले नेपाल बिद्युत प्राधिकरणसंग बिद्युत खरिद सम्झौतामा हस्ताक्षर पनि गरिसकेका छन् तर पिलुवा आयोजना एउटा बाहेक अन्य कुनै पनि आयोजनाले निर्माण प्रारम्भ गर्ने उपक्रम समेत गरेका छैनन् । हालै मात्र संभाव्यता अध्ययन सम्पन्न गरेका वा हालै मात्र बिद्युत खरिद सम्झौतामा सही गर्नेलाई अहिले तत्कालै यो समूहमा राख्नु भने अन्यायपूर्ण हुनेछ ।

अर्का खाले रुग्ण उद्योग छन् नक्कल गर्ने होडबाजीमा शुरु गरिएका । यो समूहमा नयां खुलेका होटलहरु, पश्मिना उद्योग जस्ता पर्छन् । यो समूहमा पनि उद्योग संचालन पश्चात हुने नाफाको प्रतिक्षा गर्ने धैर्य नभएका उद्यमी हुन्छन् भने निम्न गुणस्तरिय उत्पादन बढी मूल्ममा बिक्री गर्ने आकांक्षा राख्ने (जस्तै पश्मिना) उद्यमी नहुने पनि होइन । यस कलमचीलाई आश्चर्य लागेको कुरा चािहं के छ भने बहुराष्ट्रिय बैंकहरुले पनि पर्यटकीय होटलका कोठाहरु अधिक आपूर्ति भई रहेको नेपालको अवस्थामा पनि नयां ठूला होटलहरुमा लगानी गरेका छन् । यी बैंकहरुले पनि यस्ता उद्योगमा मिलोमतो गरेर वा नालायकीबस ऋण प्रबाह गर् यो खुल्दुलीकै कुरा छ । तर पराकाष्ठा तब नाघ्दछ जब जोमसोम जस्तो स्वच्छ पर्यावरण रहेको र निरन्तर स्वच्छ पर्यावरण राख्नु पर्ने ठाउंमा धुंवाको मुस्लो ओकल्ने, डिजेल र मट्टितेलले संचालन हुने जेनरेटर प्रयोग गरेर कोठाहरु र पौडी पोखरी न्यानो पारिन्छ । अनि बिडम्बनाः यो होटल पर्यावरण मैत्रीपूर्ण छ भन्दै विश्व बैंकको आई.एफ.सी.ले लगानी गदर्छ ।

पुछारमा सम्झन जरुरी एउटा कुरा के पनि छ भने यस्ता रुग्ण उद्योगहरुमा "स्वामित्व” हुनेहरुलाई आफ्ना उद्योगहरु रुग्ण भएर खासै फरक पनि पर्दैन । कम्पनी ऐनको सीमित दायित्वको कवचले प्रदान गरेको सुरक्षाका घेरा भित्र यी उद्यमीहरु बस्दछन् र यिनका ऐसोआराम एवम् बिलासिताका सरसामान तथा सम्पत्तिमा कुनै प्रभाव पर्दैन, उद्योग रुग्ण हुंदैमा । प्रभाव पर्छ त यस्ता उद्योगहरुमा लगानी गर्ने बैंकहरुलाई, यसरी ठगिने बैंकहरुमा लगानी गर्ने तथा आफनो पैसा यी बैंकहरुमा निक्षेपमा राख्नेलाई । अन्तमा डा. चालिसेले उल्लेख गरे झैं रुग्ण उद्योगहरुलाई ब्याजमा सहुलियत दिने कार्यक्रम नयां बजेटमा राखिएर पनि यिनैं बैंकहरुलाई थप नोक्सान ब्यहोर्न लगाउने तामझाम तैयार भई सकेको छ । यस कृयाकलापले अहिले नै रुग्ण दुई बैंकहरु थप रुग्ण हुन्छन् वा निजी क्षेत्रका बैंकहरु पनि त्यहि बाटो तताउन थाल्दछन् ।

भवदीय


रत्न संसार श्रेष्ठ

उपरोक्त बमोजिम प्रेषित पत्रको केहि खण्ड मात्र २०५८ आश्विनमा प्रकाशित भएको छ

Sunday, March 22, 2009

Re: Your Article on Arun III

March 15, 2009

Ms Mandira Shrestha

Water Resource Expert

Dear Mandirajee

Glad that you took the initiative to comment on my paper. You have raised a very important issue and it will be my pleasure to share with you my perspective with regard to the points you have raised which will be of interest to the silent majority too who do not take initiative to send in comments, unlike you, but are monitoring such a debate very closely. I couldn’t revert back to you promptly as I had to rush from Kathmandu to Laos at a very short notice. Hence, I am writing following to you now.

Answer to a difficult question (you indeed have thrown a tough gauntlet at me) can be given in a very simple manner if the question is turned on its head. This will make it easier for the general readers to understand it effectively as well. That’s what I propose to do (and fulfill my obligation of picking up the tough gauntlet you have thrown, too).

I. Let’s assume that WB is lenient about the said covenant and, therefore, Nepal goes ahead with the implementation of Arun III (201 MW) along with other private sector projects making many a hydrocrats happy. Even under this scenario there are several important issues that people needs to be considered:

Before Enron implemented Dhabol project in Maharashtra, the oft repeated mantra in India was “it is better to have expensive electricity than not to have electricity.” Post Dhabol Indians have become wiser and the new mantra there is “it’s better not to have electricity than to have expensive electricity.” If Nepal would have implemented the previous incarnation of Arun III (estimated to cost over $ 5,000/kW), then Nepal would have been relearning the very basic economics that Indians learnt from Enron fiasco – like finding out that the fire does indeed burn as the popular saying goes, instead of learning from those who have already got burnt. This wouldn’t have been prudent at all, in view of the inordinately high upward pressure on consumer tariff or negative pressure of higher magnitude on NEA’s bottom-line had Arun III been built at that time.

I can feel it in my bones that you are having an urge to interrupt me and point out that the estimated cost was so high merely because this project was burdened with the cost of infrastructure like over 200 km road and high voltage transmission network covering almost the same distance. I have to admit that the value added to the economy due to construction of the road and erection of the transmission network in such an area will be significant. Every paisa incurred for the purpose is worth its while as these itself do go a long way in uplifting the economic wellbeing of the beneficiaries/denizens of the area. Meaning construction of infrastructure can never be underestimated.

However, I am sure that you are aware that the new incarnation of Arun III (402 MW) is estimated to cost $ 2,137/kW only and this cost is inclusive of investment in infrastructure at the same level. Meaning there was a lot of padding in the cost estimate of the previous incarnation of Arun III and its cancellation has deprived the corrupt people within and without Nepal of a lot of moolah and, no wonder, they are unhappy. They even dislike coming across an analysis like mine because it exposes their malafide intent and design. But Nepal was saved from a big financial fiasco as such – building 201 MW at over $ 1 billion, instead of just $ 400 million, the reasonable level of cost for a 201 MW. This should make patriots like you very happy.

Please allow me to repeat here that the previous incarnation of Arun III, estimated to cost $ 5,000/kW, was likely to have ended up costing over $ 8,000/kW as do the track record of Nepal’s public sector infrastructure projects demonstrate (you are aware that Middle Marsyangdi is not the sole example). Due to cancellation of Arun III, Nepal didn’t get trapped into this vicious cycle and all economically conscious intellectuals should be appreciative of this fact – mainly because of, to repeat, the potential upward pressure on electricity tariff and negative pressure on NEA’s bottom-line as well as on the macro economy, by a huge magnitude.

II. You also question whether “the covenant (will) also hold for IPPs” too. I would like to wonder aloud along with you but for following facts”

1. I wonder if you are aware that private sector wing of WB has financed both Khimti and Bhotekoshi projects and in such a scenario there is no question of these projects getting IFC funding if Arun III was implemented with WB funding. You may have had a valid point if these projects were to be financed from sources other than WB. Therefore, with the implementation of previous incarnation of Arun III, 96 MW (out of 128 MW of private sector projects) would not have seen the light of the day.

2. Moreover, you may recall that I was working for the implementation of Khimti in those days (at the critical time) and I know for a fact that it was a case of either or from their perspective. I can even confide in you with the information I gleaned in those days that IFC people too were instrumental in getting Arun III cancelled to ensure that their “pet” project/s got financed.

III. Moreover, I hope you know that due to the cancellation of Arun III, Nepal lost only 57 MW as ADB used the same pot of money to finance Kali Gandaki A – daily pondage project, and at much lower cost ($ 2,600/kW). From this perspective too cancellation of Arun III was a lucky turn of event for Nepal.

IV. Although my analysis was focused on Arun III, but the achievement during the decade that I highlighted, was due to the policy change but I pointedly didn’t dwell in this aspect due to space constraint. Besides, the policy change became helpless in the 10th plan period as the new policy initiative got muddled up in the bureaucracy and politics and people’s war also ruined the investment climate.

I agree with your concluding sentence and I am doing my bit by writing and publishing to empower people with more information and knowledge.

With best regards,

Sincerely,

Ratna Sansar Shrestha,

From: mandira shrestha [mailto:shrestha_mandira@yahoo.com]
Sent: Sunday, March 15, 2009 16:27
To: rsansar@mos.com.np
Subject: Your Article on Arun III

Dear Ratna Sansar ji,

Thank you for sharing the Arun III article which I read with interest. It is always good to reflect and derive lessons from past experiences to move forward. From your article I note that all your analysis is based on one particular point on the covenant imposed by the World bank in the loan documentation of Arun III. I quote " The covenant stipulated that NEA … would seek IDA’s specific consent before undertaking any investment projects that would increase generation capacity by more than 10 MW capacity or transmission projects costing more than $ 3 million". With this as your main assumption you have come up with a detailed analysis of the various scenarios and where we are at now with load shedding. I was just wondering whether in your analysis you have accounted for the policy change and the government's efforts towards encouraging IPPs during the 1995-2005 period. As you show in the Table1 over 128 MW is from IPPs. My question is would the covenant also hold for IPPs or only NEA. If it is for both then your analysis holds but if it is only for NEA then the scenarios I would say would be different. With the Arun III implementation would the governments approach towards IPPs been different or would it have been the way as it has developed? Anyway, these are just some thoughts that come to my mind as I read your article.The most important thing is how we proceed forward collectively to manage this electricity crisis and develop our hydropower for a more secure future for us all.

Best Regards
Mandira

Friday, March 20, 2009

Monarchy and Rhododendron Revolution in Nepal

May 2006

Dear Editor
Newsweek

The king deserves a back handed compliment for the success of the Rhododendron Revolution (people's movement in April 2006). His direct rule did not leave any alternative for the mainstream political parties but to hobnob with the "terrorists" - the Maoists. The silver lining of this strange "understanding" was that Maoists also got involved in the peaceful demonstration beginning from April 6 and snowballing in bringing out 1.5 million demonstrators from peripheral areas of capital on Friday, April 22 when people inside the city were yet to decide to rise, and converge on the Ring Road in a unprecedented show of people's strength (Nepal Is Burning, May 1).

He also provided the people with the proverbial last straw by presiding over a council of ministers comprising of blacklisted defaulters of loan from banks, congenial high stake gamblers, convicted murderer, commission agents convicted of bribery, "Harvard" returnee with mixed politics and priority, and a good sprinkling of "Mandales" (student leaders of pre 1990 era too believed firmly in absolute monarchy in this age and time). The king's cabinet was so indifferent towards the blood and gore that they even refused to reciprocate the peace overture (4-month cease fire in October 2005) of the Maoists.

Even under his direct rule, had the king provided good governance by having a team of competent and dedicated nationalists who could deliver, thereby emulating, for example, Singapore (development even without democracy) neither the people would have been disenchanted and, hence, agitated to this extent and nor the political parties would have been able to galvanize so many people. He was rather busy following the footprints of Emperor Nero by, for example, procuring a fleet of over priced limousines and by undertaking costly jaunts to nowhere (having been "dis-invited" by institutions like UN) or sending his son and daughter-in-law to Austria to escort a pair of baby rhinoceros.

Therefore, the people of Nepal needs to be grateful to the king for assisting to start a process of establishing a Republic in Nepal, which the Maoists had not succeeded with their sustained armed campaign in the rural area lasting over a decade. This is going to set an unprecedented example of a king presiding over probable abolition of a monarchy, aided and abetted by royal family, friends, courtiers, sycophants, etc. who don't see beyond their collective noses!

Long live Rhododendron Revolution!

With best regards,


Sincerely,

Ratna Sansar Shrestha


Submitted for publication but not accepted.

Wednesday, March 18, 2009

Interview on Unbundling of NEA

1. How do you look at the unbundling idea the government is introducing in the power sector?

In contrast with the extant brouhaha against the very concept of unbundling I am in favor of it as far as the fundamentals are concerned. Because being a student of economics I do believe that introduction of the element of competition in the electricity sector will definitely help the sector in general and the consumers as well as other stakeholders in particular as the very purpose of the exercise is to make the electricity market competitive. Unbundling, as a process, is not undertaken for its own sake rather it is a means to achieve competition in the electricity market. Till a while ago it was drilled into people’s minds that the vertically integrated utilities are natural monopolies and, notwithstanding inherent inefficiencies thereof, we have been forced to tolerate it and even pay for its inefficiencies through our noses.

Technological developments, like wireless in local loop (WLL) and cellular phone, have dispelled the notion that telecom sector too is a natural monopoly. Although no such technologic breakthrough has occurred in the electricity sector and nor is it likely that it will do so in near future, the economic tool of unbundling will bypass the technologic constraint and afford us the benefits of competitive electric market.

The unbundling exercise will begin with the setting up of separate entities for generation, transmission and distribution functions. The transmission function along with the ownership of the high voltage network will be entrusted to a new entity planned to be christened as “National Electricity Transmission Company” by the draft Ordinance, which will initially have to play the role of single buyer and wholesaler. There will be room for multiple generation companies (in addition to current IPPs) and a number of distribution entities. Eventually the transmission company will merely serve as a wholesale market, surviving and/or thriving on “wheeling charges” paid by generators and/or retailers purchasing energy in bulk. Then the owner of distribution network (low tension system) will also start to play a role of facilitating retail market; it too sustaining on wheeling charges paid by retailers.

Finally, when the model for retail competition is fully put in place the consumers will be afforded choice as to which retailer to buy electricity from without having to worry that the connection from her/his home is fixed. There will be no need to change the connection as s/he will have connection to low tension network owned by a different entity that does not buy or sell but only facilitate flow of electricity from any retailer to any consumer. Consumers, for example, in Biratnagar may choose to buy from an efficient retailer in Pokhara at cost effective rate and my neighbor could very well be buying electricity from the retailer in Birgung. Moreover, the consumers will also have the freedom to change the supplier as and when deemed appropriate. Eventually this will pave path even for spot market.

Notwithstanding my enthusiasm at the prospect of getting to choose and change supplier of electricity as a consumer in not too distant future I am apprehensive as to how the whole thing will be implemented. I am not very proud to have to confess that many good plans on paper have been bungled when put to practice. Botched unbundling will result in 3 or more public enterprises horribly sick in the place of one sick public enterprise now (loss in the order of Rs 2 billion/annum).

2. Why is the idea moving, especially by the means of ordinances, at this particular time?

That is a mystery to me too. I also have been wondering why hurry at such a scorching pace particularly at this time of instability? This deprives of wider discussion and also opportunity to receive input from a broad base. Besides, spinning off or (splitting) NEA is a matter of long term implication/impact but an Ordinance is an instrument valid for 6 months only. There is no doubt in my mind that the unbundling should be undertaken such that electricity market in Nepal becomes competitive and unwarranted and unnecessary inefficiencies could be eliminated. But the relevant law should only be promulgated after it is discussed and fully deliberated upon by a popularly elected parliament accountable to the citizenry of Nepal who are both owners of NEA and also consumers.

3. Why was it not introduced or at least moved ahead in a known manner when you (or the team shall we say) were still with the NEA board?

You have caught me there (ha ha ha …)! However, I happen to have valid excuses. One, although the new “Hydropower Development Policy 2001,” promulgated in October 2001, did envisage unbundling of NEA, the then Parliament survived only about 6 months after that. There was no opportunity for the concerned to contemplate and complete the draft law and submit for the deliberation by the Parliament. Two, by the time I was nominated to the board the Parliament had already been dissolved. Lastly, drafting law is not in the jurisdiction of board of directors of NEA.

But I am happy to confide in you that we did initiate necessary work for the internal unbundling of NEA which to an extent has paved path for future unbundling. These steps, designed to cut down on inefficiencies, curtail leakage (particularly non-technical), enhance effectiveness, did start to show positive results while I still was working there. First, in the capacity of the Convener of a committee, I was involved in finalizing necessary regulation for internal unbundling of NEA. This involved readying regulations under which respective General Managers of (a) Generation (b) Transmission and (c) Distribution and Consumer Service Departments were to be granted semi-autonomous status to enhance efficiency resulting in generation of “differential surplus,” a part of which to be shared with the respective teams. Second, we accomplished plan to spin off eighteen urban and semi-urban distribution areas as the semi-autonomous “Distribution Centers” with provision for financial incentive for better performance resulting in “differential surplus,” a part of which to be shared with the respective teams. I recall that people in quite a few distribution centers were already computing the differential surplus that they were entitled to as incentive subsequent to improvements that could be quantified based on composite performance indicators (CPI) by the time I had submitted my resignation the first time (which was not accepted). Three, we also succeeded in designing and implementing a scheme for community participation in rural electricity distribution network which was launched to involve local communities (as cooperatives, users’ groups, non-governmental organizations or widely held companies owned by the consumers) in the construction of distribution networks and management of the same under which the rural entities buy energy in bulk from NEA and retail it amongst the members. This policy was very well complemented by Dr Prakash Chandra Lohani, who made provision for matching 80% of the cost of erecting distribution network if the cooperatives mobilized 20%, in his budget speech of 2060. This has revolutionized the rural electrification work by galvanizing rural communities. NEA even has handed over distribution networks to many a communities in the rural areas and the communities are buying electricity in bulk from it for local distribution. This is a beginning of unbundling of rural distribution work.

4. In the early 80s it was the bundling idea donors including the ADB had conditioned and now it is the same international aid agencies that are pressing for unbundling. Is that not a flip-flop or changing of the horse in the middle of the stream, especially in an underdeveloped and troubled country like Nepal?

Yes, poorer economies like ours have been subjected to the covenants imposed by these multilaterals and many of such conditionalties tend to look capricious. If one looks at this particular concept dispassionately one will be forced to conclude that NEA has too small a system (just about 465 MW of its own and about 149 MW belonging to IPPs – already unbundled) to warrant splitting. The action could very well end up costing more to the poor consumers as the unbundling only increases the number of institutions ending up as an opportunity for powers-to-be to hire more CEOs and leading to unnecessarily high fixed as well as semi-fixed expenses. Besides, post unbundled successors of NEA could still continue to be subjected to interferences from HMGN (bureaucrats, politicians, and the like) – a business as usual scenario – and at that time people could be forced to fondly remember the merits of vertically integrated NEA. In my considered opinion, NEA is not performing badly for lack of unbundling. Rather it is suffering from high dose of interference, leadership problem, lack of corporate governance and other factors which could be redressed without resorting to splitting it in the name of unbundling.

5. Now that they are talking about unbundling the government agencies, what is the guarantee that it would work? If it does not who should take the responsibility?


In Nepal many a sound plans on the drawing board have floundered when put to practice. I too am apprehensive that the economic model that I firmly believe in will be called total failure and people again clamor for reintegration (bundling). This will be very messy. Because the provisions of the Ordinance has single minded focus on splitting the NEA while it is deafeningly silent as to how will competition at both wholesale and retail levels will be instituted. The onus of botched unbundling will have to be shared by those responsible for drafting the necessary law hurriedly, implementing the spin off and regulating it. Factors important are sound framework (founded on well deliberated law – Act, Rules, Regulation and policies), transparent process, accountable agencies for its regulation and so forth. More importantly, current instability is not conducive to take up such work.

6. Do we have the right and adequate infrastructure for the unbundling of, say, distribution and especially if the private sector is allowed in?


Forget the infrastructure which will have to be thought through and created, even its layout is not visible to me (at least are not visible in the draft Ordinances). With due respect to my colleagues in the private sector, they will exploit any loophole available and the whole exercise could boomerang on the economy and the consumers. Aviation sector is a good example. Private aviators were required to provide services in the non-lucrative routes too but this rule has been followed more in breach. On the other hand the very concept of creating competitive market for electricity depends on participation by multiple entities including the private sector. Stronger and stringent regulatory mechanism needs to be placed before allowing private sector to play significant role in the electricity market that is an integral part of human life and important from the perspective of forward linkages vital for the economy.

7. The presumed effectiveness of the unbundling idea seems to hinge almost absolutely on the regulatory board the government is introducing through a separate act. Given the fiasco of the tariff fixation commission, why should one be positive about this regulatory board?

Yes, you are absolutely right. If you look closely there is more regulation in “free economies” than in the ones like ours. One has to complete so many regulatory processes in the developed world to the extent that I have had American friends wondering aloud that it is almost too easy to do things in Nepal like “acquiring land” for project work.

The regulatory work will only be effective and efficacious if the agency reposed with regulatory work is made accountable and answerable. Under current draft the proposed regulatory commission is required to furnish annual report to HMGN and that’s about it. There is no provision for deliberation of such a report and holding the commission accountable.

Besides, there should be provision for recruiting the chair and members of the commission through public hearing so that people will have opportunity to understand their view and extract commitments from them. Unfortunately, current draft Ordinance is oblivious towards this too.

Let us take the case of current Tariff Fixation Commission. Even when I was a board member of NEA we did request the commission for introduction of seasonal tariff in view of the fact that NEA was spilling more than 700 GWh of electricity at that time (even now the spill is in the order of 500 GWh). But one or other excuse was trotted out and the concept has yet to gain currency. Just think of it, even if only Rs 2/kWh is charged for the spill energy NEA would have garnered more than Rs 1 billion/year, reducing NEA’s red ink to that extent, stemming the outflow of hard earned dollars in the import of (e.g.) fossil fuel (LPG), curtailing pollution to that extent, etc. We have already lost spill energy of three wet seasons. But there is no way to hold anyone accountable under current dispensation (nor in the proposed new incarnation). Instead, people resort to finger pointing like by saying NEA should reduce its leakages. There is no disagreement that it is imperative for NEA to get its act together sooner for the purpose. However, it is criminal to spill seasonal energy of that magnitude and impel NEA to incur loss and force the poor country to import more fossil fuel. Coming back to your point, yes regulation work is the fulcrum on which will hinge the success of the unbundling work, otherwise the whole thing will fall flat on its face.

8. At the policy level, they claim that the new ordinances will attract private sector investors both in generation and distribution segments whereas at the bureaucratic level they say that at the distribution level private sector would be allowed to come in only if they agree to prepare the required infrastructure. The intensifying Maoist-establishment conflict is already keeping investors from coming in even in generation sector (the idle sitting World Bank’s Power Development Fund is an effective indicator toward that end). So how would the new plan rope in the private sector?

First of all, private sector does not imply business houses only. Community based entities like, cooperatives, users’ groups, non-governmental organizations, etc. are also private initiatives – with or without profit motive. If you drop by the office of Community Rural Electrification Department (CRED) of NEA you will be amazed by the groundswell of support for NEA’s efforts to involve community based entities in rural electrification. This manifests the attraction of private sector in the distribution business. This modus operandi will eliminate the tragedy of villages having electric poles erected with or without wires lacking electricity for years (even a decade) in many villages.

At the implementation level, the conflict, which, although cannot be ignored, is not having significant adverse impact. Many communities are coming forward to take the responsibility of erecting infrastructure under 80:20 program to the extent that CRED of NEA is overworked. Lack of movement on the part of PDF can be attributed to many other reasons but one main impediment is its policy requiring participating credit institution to be responsible for the money lent to the project by PDF too.

9. The immediate problem in the power sector is load shedding and Ministry of Water Resources officials themselves admit that the unbundling is not the answer to load shedding, so what is its relevance?

I don’t agree with the officials of the Ministry. Of the total leakage of about 25%, more than one-half is due to non-technical reasons like pilferage. Subsequent to unbundling the entity will be forced to be more efficient - the non-technical leakage will be the low hanging fruit in its endeavor to reduce the load shedding. I am sure you will agree with me that one mega watt of leakage plugged is equivalent to addition of one mega watt.

10. Will the unbundling concept tackle the government agencies’ non performances including technical loss, theft, irregularity (like the one we saw in Kali Gandaki A) and the procurement pelf?

Yes, to an extent. In order to survive in the competitive world the unbundled entities will have to be more efficient, effective and economic. They will need to tackle Kali Gandaki A type problem too as there will not be room for time overrun and cost overrun which were the bane of Kali Gandaki.

12. The government has been unable to cash in on the huge local private sector capital and it has squandered the income it receives through royalty from the different power plants across the country. Do you think the power sector reform will be able to address all these effectively?

Actually private sector capital is salivating to enter the sector (looking at the rush for licenses) but for lack of licenses for sites with necessary infrastructure like access road and transmission network. In one decade Rs 5 billion has been invested in the sector from local sources when people were just testing the water and political instability in this period was also not encouraging.

The issue of royalty is a different ball game. It has even generated inequities. Compare two regions: one where hydropower development is taking place and other where it is not. In the former they not only have electricity, but they also get other infrastructure like road and also receive fund to undertake further development work (even purchase vehicles for the bosses instead!) from the proceeds of royalty. But in the latter region they neither have access to electricity nor get any infrastructure built for the hydropower project. And to add insult to injury they also don’t get any money from the royalty. This will have to be addressed outside unbundling.

13. Will the new design enable us to be in a better position to deal with, say, India in power related issues?

On the contrary, it may weaken the position as the splinter NEA negotiating with India (for example with Power Trading Corporation) will be a much weakened institution (very little financial muscle) compared to what we have now. But export of energy to India is a different Pandora’s box and is even entangled with security perception of our friends in the south.

This is the full text of the interview part of which was published by Nepali Times in its issue # 285 in 10-16 February 2006.

Tuesday, March 17, 2009

हरितगृह वायू र वातावरणिय न्याय

असार १५ मा दही च्युरा खाने प्रचलन नेपाली मात्रको सांस्कृतिक परम्परा हो । यसलाई हिले चाड पनि मानिन्छ किनभने यो दिनमा हिलोमा खेलिन्छ । यथार्थमा हिलोमा त्यत्तिकै खेलिने नभएर रोपाईंको क्रममा खेलिने हो । यस दिनमा धान रोप्नु हिलोमा खेल्नु दही च्युरा खानु आदि कार्यलाई सहकाल बोलाउनेको प्रतिकात्मक रुपमा लिइन्छ । यस क्रममा दोहरी आदि गीत पनि गाईन्छ । तर यी सबै पूर्व शर्त हो त्यस दिनमा पानी पर्नु बिना वर्षात न रोपाईं हुन्छ न हिलो नंै । हिलोमा नखेलिकन दुई चार गीत नगाईकन खाएको दही च्युरा त्यत्तिको स्वादिष्ट पनि हुन्न !

जलवायू परिवर्तन
यो वर्ष असार पन्ध्रमा त के साउन पन्ध्र सम्म पनि राम्ररी पानी परेको थिएन । प्रस्तुत लेख लेख्न बस्दा साउन २२ गते बल्ल अलि राम्रो पानी पर्दैथियो । पूर्वी नेपालमा जेठको तेश्रो साता देखि पानी पर्न शुरु भएर मन्सूनले नेपाल प्रबेश गर्न पर्नेमा यो वर्ष ढिलो गरेर मात्र पानी पर् यो र यसले गर्दा कृषि उत्पादनमा ठूलै रुपमा प्रतिकूल प्रभाव पर्ने प्रबल आशंका छ । यसरी सामान्यतया पानी पर्न पर्ने बेलामा पानी नपर्ने नपर्नु पर्ने बेलामा पर्ने भनेको मौसम जलवायू परिवर्तनको लक्षण हो । यस्तो हुनुमा हरितगृह प्रभावको भूमिका रहेको मानिन्छ ।

पृथ्वीको अकाशिदो तापक्रम
मानिसको जीवनशैलीमा धेरै उर्जा खपत हुन्छ र अधिकांश उर्जाश्रोतहरुले खपत हुने क्रममा कार्बनडाई अक्साइड नाइट्रोजन अक्साइड मिथेन जस्ता प्रदूषक वायूहरु उत्पादन गर्छ जसले पृथ्वीमा हरितगृह प्रभाव पार्छ र पृथ्वीको तापक्रममा बृद्धि हुनजान्छ । यो कसरी हुन्छ भने पृथ्वीको वायुमण्डलमा बिभिन्न वायूहरु सन्तुलित रुपमा रहेको हुन्छ । तर हरितगृह वायूहरुको परिमाणात्मकरुपमा बृद्धि भएपछि यी वायूहरु सापेक्षरुपमा अधिक भारको हुने हुनाले वायूमण्डलमा धेरै माथि नगएर तलै बस्छ र सूर्यको प्रकाशबाट बृद्धिहुने तापक्रम सूर्य अस्ताएपछि घट्नुपर्नेमा ताप उम्किन नसक्नाले पृथ्वीको तापक्रम सापेक्षरुपमा घट्दैन । यसलाई नैं हरितगृह प्रभाव भनिन्छ । यही कुरा किसानले बनाउने हरितगृहमा पनि देख्न सकिन्छ जहां सूर्य अस्ताई सकेपछि पनि तामक्रम सापेक्षरुपमा घट्दैन जति खुला ठाउंमा घट्दछ ।

पग्लदो हिमाल
हरितगृह प्रभावले गर्दा पृथ्वीको तामक्रम बढेको अवस्थामा नेपालमा अवस्थित हिमालको हिउं द्रुत गतिले पग्लन्छ । हिमतालहरु पनि पग्लने क्रममा यिनको आयतन घट्न थाल्छ । यसको नतिजा भयावह पनि हुनसक्छ किनभने बिदेशी पर्यटक नेपालको हिमाली श्रृंखलाबाट आकर्षित भएर नेपाल भ्रमणमा आउनेमा हिम श्रृंखला नैं गायब भएको अवस्थामा पर्यटक आगमनमा ठूलै कमी आउन सक्छ । यसको परिणति नेपालको लागि दुर्भाग्यपूर्ण हुन्छ नैं अर्थतन्त्र तहस नहस हुन सक्ने हुनाले । नेपाल भ्रमणमा आउने पर्यटकको कारणले सिर्जित रोजगारी पनि यस्तो अवस्था ह्रास हुन जान्छ । यस अतिरिक्त दु्रतगतिमा हिम श्रृंखलाको हिउं पग्लेको अवस्थामा बाढी पहिरो आएर पनि धेरै बिनास गर्ने सम्भावना हुन्छ नै ।

बढ्दो समुद्री सतह
पृथ्वीको तापक्रम बढ्नाले हिम श्रृंखलाबाट हिउं दु्रत गतिले पग्लने आदि कारणले समुद्री सतहमा भारी बृद्धि हुन्छ । नेपाल एउटा भूपरिबेष्ठित मुलुक हुनाले समुद्री सतहमा बृद्धि भएर कुनै प्रत्यक्ष प्रभाव पर्ने अवस्था त छैन । तर दङ्ग भने पर्न मिल्दैन किनभने छिमेकी मुलुक जस्तै बाङ्गलादेशमा समुद्री सतह बढेको अवस्थामा त्यहांका बासिन्दा त्यस कुराबाट बच्न अग्लो भूभागमा भाग्ने क्रममा आउने ठाउं नेपाल नैं हो । यो कुरा सानो रुपमा सन् १९७१ मा देखियो जति बेला तत्कालिन पूर्वि पाकिस्तानमा चलेको युद्धबाट बच्न धेरै बाङ्गलादेशी नेपालमा आश्रयको खोजीमा आइपुगे र ती मध्ये धेरै अहिले सम्म पनि फर्केका छैनन् । ठूलो संख्यामा दक्षिणबाट उत्तर तिर आप्रवासनमा बृद्धि भएको अवस्थामा नेपाली अर्थतन्त्रले थेग्न सक्दैन र गरीब नेपाली झन गरीब हुंदै जाने छन् ।

हरितगृह वायूको स्थानिय प्रत्यक्ष प्रभाव
यहां स्मरणिय के छ भने हरितगृह वायूले पृथ्वीको तापक्रम बढाउनाको अलावा यी स्थानिय स्तरमा बिभिन्न रोगब्याधीको पनि कारकतत्व हुन्छ । यस्ता वायूबाट श्वासप्रश्वासको समस्या देखि अबूर्द रोग ९अबलअभच० सम्म लाग्दछ जसले गर्दा अनावश्यक औषधोपचार खर्चमा बृद्धि हुने मात्र नभई काममा अनुपस्थित रहने र कार्य क्षमतामा ह्रास हुने कारणले उत्पादकत्वमा ह्रास हुने सम्मको परिणाम देखा पर्छ ।

कार्बन ब्यापार
अत्यधिक हरितगृह वायूको कारण पृथ्वीको तापक्रममा हुने अभिबृद्धिको न्यूनिकरण लगायत निवारण समेतको लागि कार्बनको ब्यापार ९अबचदयल तचबमष्लन० को अवधारणाको पनि विकाश भएको छ । जस अन्तर्गत हरेक नयां काम गर्दा हरितगृह वायू निसर्जन हुने प्रकृतिको सट्टा निसर्जन नैं नगर्ने वा सापेक्षरुपमा कम निसर्जन गर्ने प्रकृतिको कामलाई प्रोत्साहित गरिन्छ । उदाहरणतः कोइला लगायतका खनिज इन्धनको प्रयोग गरेर उर्जा उत्पादन गर्दा कार्बनडाई अक्साइड नाइट्रोजन अक्साइड मिथेन जस्ता हरितगृह वायू निसर्जन हुन्छ भने जलबिद्युत आयोजनाबाट उर्जा बिजुली उत्पादन गर्दा हरितगृह वायू निसर्जन हुन्न । यस प्रकार विकाशोन्मुख मुलुकमा हरितगृह वायू उत्पादन नगर्नेलाई प्रति टनको अमेरिकि डलर ३ देखि ७ सम्म दिने संरचनाको विकाश क्योटो प्रोटोकल अन्तर्गत भएको छ ।

प्रश्न उठ्न सक्छ पैसा कसले किन दिन्छ त माथि उल्लिखित प्रोटोकलमा निहित सहमति अनुसार विकशित मुलुकहरुले निश्चित परिमाण भन्दा बढी हरितगृह वायू निसृत गर्न सक्दैनन् । सामान्यतया आर्थिक विकाश दरमा अभिबृद्धि गर्ने कुनै पनि कार्य थप उर्जा बिना सम्भव हुन्न र नविकरणिय तथा स्वच्छ उर्जाको प्रयोग गरे देखि बाहेक थप उर्जा गर्दा थप हरितगृह वायू निसृत हुन्छ जसमा प्रोटोकलले हदबन्दी लगाई सकेकेा छ । यस्तो हदबन्दी भित्र बसेर आफ्नो मुलुकमा थप आर्थिक कृयाकलाप गर्न विकसित मुलुकहरुले विकासोन्मुख मुलुकमा हरितगृह वायू उत्पादन नगरेको परिमाणमा आफूले हरितगृह वायू उत्पादन गर्ने छूट पाउंछ यदि निसृत नभए कुराको प्रमाण विकसित मुलुकले विकासोन्मुख मुलुकबाट किन्ने हो भने । यसरी हरितगृह वायू उत्पादन नगरेबापतको प्रमाण खरिद गर्ने कार्यलाईनैं कार्बन ब्यापार मानिन्छ ।

चक्रपथमा ट्रलीबस
कार्बन ब्यापारको उदाहरण दिन पर्दा काठमाडौं उपत्यकामा बिद्यमान चक्रपथमा धुंवा ओकल्ने बसहरु चलेकोमा शुरु गर्दा ५० वटा ट्रलीबस र हरेक ५ वर्षको अन्तरालमा २५ वटाको दरले थपेर १२५ पुर् याएमा २० वर्षको अवधिमा झण्डै १ लाख ३० हजार टन हरितगृह वायू निसर्जन नहुने देखिन्छ । यसरी निसृत नहुने हरितगृत वायूले पृथ्वीको तापक्रम बृद्धि नगर्न योगदान गर्दछ । यस पंक्तिकारले गरेको उक्त अनुसन्धानात्मक अध्ययनमा १ लिटर डिजेल प्रयोग गर्दा २।६८ किलो कार्बनडाईअक्साइड ०।०३२ किलो नाइट्रोजनअक्साइड र ०।००४ किलो मिथेन निसृत हुने आधार प्रयोग गरिएको थियो । यी दरहरु सं।रा।सं।sाे जलवायू सम्बन्धी संयन्त्रले इन्टरनेटमा प्रकाशित अनुरुप छ । यसरी चक्रपथमा ट्रली बस प्रयोग गर्दा हरित गृह वायू निसर्जनमा आउने कमीलाई कार्बन ब्यापारको अवकारणा अन्तर्गत बिक्री गरिएमा चक्र पथमा ट्रली बस व्यबसायले जनतालाई परिवहन सेवा पुर् याएर आम्दानी गर्नाको अलावा हरित गृह वायू निसर्जन नगरे बापतको प्रमाण बिक्री गरेर पनि आम्दानी गर्ने देखिन्छ ।

वातावरणिय न्याय
विश्वमा जति हरितगृह वायू निसृत हुन्छ त्यसको एक चौथाई संयुक्त राज्य अमेरिका एउटै देशले निसृत गरेको छ र नेपाल जस्तो विकाशोन्मुख मुलुकले निसृत गर्ने हरितगृह वायूको परिमाण नगन्य पनि छैन । तर जसले जति निसृत गरेपनि नगरेपनि पृथ्वीमा पर्ने प्रतिकूल प्रभावबाट प्रभावित भने सबै समान रुपमा हुन्छन् । यो कुरा न्यायपूर्ण मान्न सकिने अवस्था छैन । त्यस माथि पनि नेपालमा जलश्रोत प्रचूर मात्रामा भएको तर हरितगृह वायू निसृत हुने कोइला लगायतका खनिज इन्धन बिद्यामान नभएको परिप्रेक्ष्यमा वातावरणिय दृष्टिकोणले नेपाल जस्तो मुलुक दोहरो ठगिने अवस्था छ । यस पृष्ठभूमिमा कार्बन ब्यापारको अवधारणाले केही हद सम्म वातावरणिय दृष्टिकोणले न्याय पुग्न सक्ने देखिन्छ ।

निष्कर्श
स्वच्छ तथा नविकरणिय उर्जा श्रोतको प्रयोग नगरी अत्यधिक रुपमा पर्यावरणमा हरितगृह वायू निसर्जन हुने गरी खनिज लगायतका उर्जा श्रोत प्रयोग गर्दा वातावरणमा धेरै नैं नकरात्मक प्रभाव पर्दछ । यसबाट जनसाधारणलाई वातावरिणय हिसाबले अन्याय परिराखेको हुन्छ । आफ्नै प्रयासमा हरितगृह वायू निसर्जन नगर्ने अग्रसरता लिनु वान्छनिय छ । तर पृथ्वीको बढ्दो तापक्रमबाट आत्तिएर विश्वको अधिकांश मुलुकहरु क्योटोमा जुन सहमतिमा पुगिएको छ त्यसलाई सकारात्मक रुपमा लिएमा नेपाल जस्तो विकासोन्मुख मुलुकलाई थप लाभ हुने देखिन्छ ।

दान स्वरुप पाईने बैदेशिक सहायतामा धेरै शर्त बन्देजहरु थपिएर आएका हुन्छन् जसलाई पालना गर्दा कतिपय अवस्थामा मुलुकलाई लाभ भन्दा हानी धेरै भएका उदाहरणहरु यथेष्ट छन् । यस बिपरित नेपालमा विकाशको काम हरितगृह वायू निसर्जन नहुने किसिमले गरेमा नेपालमा विकाश मात्र नभएर हरितगृह वायू निसर्जन नगरेबापत सोको प्रमाण बिक्री गरेर आउने रकममा कुनै शर्त बन्देज नहुने हुनाले सापेक्ष रुपमा बढी लाभादायक हुने देखिन्छ ।

Published in the bulletin of Forum for Justice in August 2005

Monday, March 16, 2009

Mad cow disease, no wonder!

January 9, 2004

Dear Editor
Newsweek

There are some funny and quite a few unfunny jokes as to what causes mad cow disease, BSE (bovine spongiform encephalopathy) but in my humble opinion even the scientific community is barking up the wrong tree to diagnose the cause behind this.

In the animal world some are, by nature, vegetarian who are not made to eat meat while some carnivore that eat meat but no grass and vegetables (unlike human beings who are vegetarian, non-vegetarian and carnivore as well). Cow and other cattle fall in the second category. In our part of the world cows are never fed meat and other animal products at all. These animals are not supposed and don't eat meat. But in the western world even cows are fed meat, bones etc. Tampering with nature like this is the root cause behind BSE. I hope people learn lesson from this and soon enough.

With best regards,

Sincerely,

Ratna Sansar Shrestha

An unpublished letter to the editor of Newsweek.

Sunday, March 15, 2009

Clean Energy and Infrastructure Development Bank

Currently Nepal is facing a market failure condition in its economy; high liquidity in the system leading to very low interest rates on deposits offered by the financial institutions while very few of them have experience with or are willing to finance long term infrastructure projects that are invariably capital intensive. Projects needing financing for longer term have been facing problems securing finances. There are three development (investment) banks mandated for long term financing while a number of commercial banks are also financing long term projects. However the term of the debt offered by and the capital base of these banks is limited. Commercial banks are not mandated to offer loan for terms longer than 7 years, besides longer-term loan also result in mismatch of portfolio as their deposit base is of shorter term.

In this backdrop Winrock International in Nepal (WI-N) has encouraged and assisted a group of financial institutions and other corporate groups to design, structure, and promote a dedicated bank to finance "clean energy and infrastructure" ventures in Nepal. The Clean Energy and Infrastructure Development Bank (CEIDB), will lend money to entrepreneurs to develop clean energy (hydro, solar, wing, biomass, biogas, and municipal waste) generation projects and clean energy driven infrastructure projects such as electric-powered trolley buses, cable cars, trains and the like. The Bank is designed to mobilize capital for environmentally and commercially responsible sustainable development investments in Nepal.

WI-N has identified a pipeline of 28 small-scale hydropower projects, exceeding 75 MW in total installed capacity, for investment by CEIDB. Investment opportunities have also been identified in other renewable energy projects such as solar and biogas that are fast becoming popular to meet energy needs of hotels, residences, and small-scale industries in rural areas of the country. Business opportunities are also emerging in the transport sector where there is a demand for clean efficient transportation projects such as cable cars and trolleys to service particular high-value niche markets such as tourism and religious pilgrimages. Besides, there is a substantial market for decentralized and distributed energy services in the country.

Winrock has provided incubation services to this Bank ranging from financing/commissioning the feasibility study, structuring the Bank, garnering support from prospective promoters (banks, finance companies, insurance companies, other contract saving institutions, and other corporate groups) to promote the proposed Bank, arranged to prepare charter documents, contacted foreign investors to query their interest in investing in the proposed Bank (10% of the total equity is earmarked for investment by foreign investors) and successfully arranged to tap GEF fund through UNEP to support initiating incorporation and financing of the Bank.

During the initial years the proposed Bank will have a paid up capital equivalent to about US $ 6.7 million (Rs 500 million) out of which 10% has been earmarked for foreign investors Sixty percent of the amount (about US $ 4 million) has already been committed for subscription by the promoters comprising of provident funds, insurance companies, banks and finance companies and other corporate groups.

By the sixth year the Bank’s borrowings and deposits are expected to touch US $ 36 million and US $ 60 million mark respectively while by then its lending and investment portfolio is expected to exceed US $ 100 million.

In addition to assisting in the development of the CEIDB, Winrock will serve as the Technical Secretariat of the Bank during its first two years of operation. During this period Winrock will perform services for the Bank such as deal pipeline development, review/evaluation of projects for the purpose of lending/investing in such projects, performance of due diligence, preparation of necessary documents for lending under “project finance” mechanism. Moreover Winrock will transfer the skills from the Technical Secretariat to the Bank's professional staff such that the Bank's staff can function independently after Winrock exits as the Technical Secretariat.

Published in HRW Journal of December 2001

Friday, March 13, 2009

Arun III Project: Nepal’s Electricity Crisis and it’s Role in Current Load Shedding and the Potential Role 10 Years Hence

Abstract

It, has become fashionable to blame “cancellation” of Arun III project, by the World Bank in 1995, in reference to current electricity crisis, inferring that had it been implemented consumers in Nepal would not have been facing current load shedding problem. Now is time for a dispassionate and detached analysis of the two scenarios, the Arun III route and the route sans Arun III. The analysis of alternative scenarios demonstrates that the implementation of Arun III 201 MW project in 1995 would have not eliminated load shedding from 2000 onwards; in fact the power deficit would have been of a higher magnitude. Now, Arun III planning is for a new incarnation with a capacity of 402 MW, expected to be completed within next 10 years. But as the output of this project has been slated for export, it, too, will not alleviate load shedding problem of Nepal.

Key words: Arun III project, load shedding, Nepal

Nepal is facing severe electricity crisis due to supply constraint and it has already been forecast that the load shedding is here to stay in the increasing magnitude. During this year’s wet season Nepal faced the problem of flood which resulted in loss of life and limb as well as property in the hilly areas and Terai in Western Nepal. Besides, the breach of Koshi embankment played a havoc in East Nepal where people got drowned (and unfortunately killed, too) and displaced, homes washed away, and farmers’ investment of time, energy and resources in the cultivation of their land washed out (in some areas even fertile land was converted to sandy “beach”). Moreover, communication network and infrastructure including road network was brought to disarray. Industries in the area also suffered due to break down of transportation system; either because of failure to access raw materials and other supplies or because of inability to supply finished product to its customers (most of the industries suffered on both counts).

In the past, Nepal Electricity Authority (NEA) used to trot out the excuse of no water in rivers whenever it came up with a new load shedding schedule or made changes in them resulting in the increased hours of load shedding. However, this rainy season, even in the abundance of water (or flood!), NEA imposed a load shedding of 2 hours each day, two days a week, till third week of August 2008. With effect from 27th August, 2008 the load shedding hours was increased to 16.5 hours/week which kept on increasing ad nauseaum. The Chief of Load Dispatch Center of NEA announced in a program in Butwal on 11th November 2008 that there will be load shedding at the rate of 10 hours/day in Marga (November-December), which will go up to 12 hours/day in Paush (December-January) and it will peak at 14 hours/day during Magh (January-February) this year[1].

Many a pages have been written wherein the root cause of Nepal’s electricity crisis has been ascribed to the cancellation of Arun III by the World Bank in 1995, scheduled to be completed in 2005. Besides the journalists of many hues, a number of luminaries have also “invested” time and energy to write on this topic, including a special chapter dedicated to this subject, forming a part of the book by a renowned economist, who has occupied the position of finance minister of Nepal a number of times over last two decades and was the first Vice Chair of National Planning Commission of democratic Nepal in 1991[2]. It is high time to examine/analyze if there is any truth in it. Irrespective of whether there is an iota of truth in this logic or not, it is also time to draw lessons from this phenomenon so that Nepal is able to learn from this episode and undertake projects for implementation in future prudently. In other words, a dispassionate and detached analysis is called for to test if the argument attributing current load shedding problem to the cancellation of Arun III project by the World Bank is rooted to ground reality or not and find out what lessons could be learnt from this episode. This entails conducting an autopsy of this logic, as it will also be able to throw ample light on the intellect and mindset of the hydrocracy (intelligentsia, politicos and bureaucracy involved in water resource sector) in Nepal.

A Decade’s Achievement since 1995
Let’s begin by taking stock of the situation with regard to the implementation of hydropower projects in a decade since 1995, subsequent to the cancellation of Arun III:

Table 1: Achievement through till 2005
It could be seen from the above table that Nepal Electricity Authority (NEA) succeeded in adding 165 Megawatt (MW) by 2005 and average annual generation of 982.5 Giga Watt/hour (GWh) at the cost of US $ 425.7 million – at the average cost of $ 2,580 per kilowatt (kW) – in 5.17 years in an average. Similarly, private sector independent power producers (IPPs) too added 128.68 MW with average annual generation of 810.86 GWh at the cost of $ 304.11 – at the average cost of $ 2,363.23 per kW – in 3.63 years in an average. Therefore, post aborted Arun III, Nepal succeeded in adding generation capacity by 293.68 MW in total, with a total average annual generation of 1,793.36 GWh at the total cost of $ 729.81 million which works out to the average cost of $ 2,485 per kW, completed in 4.05 years in an average.

Anticipated Achievement under Arun III
Had the World Bank insisted on continuing with Arun III, NEA would not have been allowed to build both Kali Gandaki A (144 MW) and Modi (14.8 MW) projects, nor would IPPs (including Chilime Hydropower Co. Ltd. – a subsidiary of NEA) have been allowed to build projects with more than 10 MW capacity due to the covenant imposed by the World Bank in the loan documentation of Arun III, restricting Nepal from implementing projects of capacity bigger than 10 MW. The covenant stipulated that “NEA … would seek IDA’s specific consent before undertaking any investment projects that would increase generation capacity by more than 10 MW capacity or transmission projects costing more than $ 3 million. In granting such a consent, IDA would need to be satisfied that the project is economically and technically justified and part of the LCGEP, that NEA has the financial and managerial capacity to undertake the project without delaying implementation of the Arun III or the rest of its ongoing program, that the project is consistent with HMG’s public expenditure program and macroeconomic framework…”[3] [Financially too Kali Gandaki A would not have been built had Nepal gone Arun III route as fund earmarked by the ADB for Arun III was used for the former after cancellation of the latter.]

In this manner, if the country had started implementing Arun III at that time, the achievement, constricted by the covenant imposed by the World Bank, during that particular decade would have been as detailed in the following table:

Table 2: Anticipated Achievement through till 2005

It is now obvious that if Nepal had taken the Arun III route, only 220 MW capacity would have been added to the system in the decade ending in 2005, including Arun III, with an average annual generation of 1,845.86 GWh at the total cost of $ 1,130.77 million, with the average cost working out to $ 5,143 per kW, to be completed in 5.17 years in an average.

Net Result
Forced by the World Bank to abandon Arun III, NEA added 165 Megawatt (MW) at the cost of $ 425.7 million – a decrease of 36 MW in the incremental capacity at a saving of $ 656 million. This indeed is a substantial saving for sacrificing 36 MW.

Although the average annual generation would have been higher by 52.5 GWh had Arun III been implemented, but by abandoning Arun III, Nepal not only succeeded in adding incremental capacity of 73.8 MW but also succeeded in saving $ 400 million in total (by the concerted efforts of NEA and the private sector). Compared to an average cost of $ 5,142.6 per kW, it actually cost only $ 2,485 per kW in an average for the capacity added during the decade. In terms of time too, Nepal gained as it took only 4.05 years in an average to add 293.68 MW compared to 5.17 years that would have taken to implement 219.88 MW.

Load Shedding Scenario
It is common knowledge that the load shedding is a function of the system capacity and electricity demand of respective years. For this purpose following tables compare the two scenarios comprising the system capacity and peak demand of the respective years, (a) based on actual commissioning of various projects and (b) anticipated commissioning of Arun III and other projects of up to 10 MW capacity in 2005. Table 3a below depicts the actual power surplus/deficit scenario during the period based on actual commissioning of various projects during that decade (year of commissioning of respective projects based on Table 1) and peak demand of those years:

Table 3a: Peak Demand and System Capacity
based on actual commissioning of power projects in MW

From the perusal of the above table it can be seen that Nepal had an actual power deficit of 13.26 MW in 1999 and after commissioning of various projects, beginning with Khimti in 2000, the load shedding problem did get buried in the pages of history through till 2005. Actually the problem from 2000 till 2005 was one of “spill” (and the failure to encash such spill).

The Table 3b below analyzes the power surplus/deficit in the alternative scenario if Nepal had undertaken to implement previous incarnation of Arun III. It is a comparison of actual peak load in the respective years (same as in Table 3a) and actual commissioning of various projects less than 10 MW capacity as covenanted by the World Bank (same as in Table 3a except for exclusion of projects bigger than 10 MW) and anticipated commissioning of Arun III in 2005:

Table 3b: Peak Demand and System Capacity
based on implementation of Arun III scenario in MW

Above Table makes it abundantly clear that had Nepal chosen the Arun III route, the power deficit of 13.26 MW in 1999 would have snowballed up to 184.72 MW in 2004 and it would only have been reduced to 24.51 MW with the commissioning of Arun III in 2005 (assuming that it would have been commissioned in time).

By choosing a scenario sans Arun III, Nepal succeeded in avoiding an electricity crisis from 2000 through till 2005 and due to this route the magnitude of load shedding post 2005 is also relatively lower than had Nepal chosen to implement Arun III. In other words, until the completion of Arun III in 2005 Nepal would have continued to pass through severe and ever increasing load shedding problem, obtaining since late 90s, as only about 19 MW additional capacity would have been added to the system prior to 2005 (pending commissioning of Arun III) by a couple of projects of less than 10 MW capacity (e.g. 6.2 MW Puwa by NEA and some odd projects by IPPs totaling 12.683 MW).

Bitter Ground Reality
In order to get a correct picture of the alternative scenario, it also must be noted that there is no history of the public sector, donor funded, infrastructure projects in Nepal completing construction/erection as per the original schedule. Middle Marsyangdi project, slated to be completed in December 2004, is still under construction and is reportedly to be commissioned by December 2008. NEA officialdom defensively says that this particular project is a bad example to draw inference from. Therefore, one could attempt to draw interference from the much acclaimed Chilime project (which succeeded to garner a number of awards and laudatory comments) which did incur a time overrun of more than 5 years and cost overrun of Rs 800 million (included in the total cost of completion of Rs 2.33 billion) and it even had to change the horse (i.e. the civil contractor) in the middle of the race. It will be interesting to study the time overrun incurred by various projects since the days of Kulekhani I depicted in the table below:

Table 4

With such a track record, Nepal would have been reeling under load shedding of a higher magnitude begun in late 90s, awaiting completion of Arun III which would have realistically succeeded to be commissioned around 2009 only. Specifically the power deficit of 24.51 MW in 2005 would have been 225.51 MW instead and higher by the same quantum in the following years till commissioning of previous incarnation of Arun III.

Potential Impact on NEA, Electricity Users and the Macro Economy
The impact of implementation of previous incarnation of Arun III would have been two fold; firstly due to unavailability of power during the period from 2000 through 2005 as per the analysis above and secondly due to higher cost per installed capacity.

The primary impact of implementation of Arun III would have been felt by NEA in terms of lost revenue due to power deficit (Table 3b) from 2000 through 2005. Cumulative power deficit from 2000 through 2005 would have been 552.74 MW (computation based on Table 3b) which is equivalent to 1,597.86 GWh at 33% plant factor (generally achieved by NEA in an average). The monetary value of such revenue loss, that NEA would have suffered, amounts to Rs 10.4 billion at Rs 6.53/kWh (average revenue rate of NEA for 2005[7]).

Secondarily, and more importantly, the macro economy also would have suffered due to power shortage while Arun III was under implementation. A study on “Economic Impact of Poor Power Quality on Industry – Nepal,” conducted on the auspices of USAID-SARI/Energy Program has examined the cost of electricity supply interruptions both in terms of outages as well as loss of quality of power. Momentary interruptions, unplanned and planned outages, voltage fluctuations, and supply harmonics were considered. The conclusion relevant for the purpose of this article is with regard to planned outages. The industry-wide average cost of planned interruption is calculated to be $ 0.14 per kWh[8] as depicted by the following table:

Table 5: Economic Cost of Planned Interruptions

From this it is clear that due to the electricity deficit of 1,597.86 GWh during the period under consideration, the cost to the economy of Nepal would have amounted to a whopping Rs 15.66 billion due to the planned interruptions (at the rate of US 14 ¢ equivalent to Rs 9.80). The study referred to here has used the cost of operating standby electricity generation to arrive at the cost of planned generation as the main component of it. However, as even just the fuel cost of the stand by generator exceeds Rs 15/kWh, this estimated cost is basically cost to the industry which is on the lower side. If one was to compute the cost to the economy, the cost of the chain impact on the economy in terms of lost employment, loss of purchasing power resulting in loss of demand for goods, consequential loss of revenue by the Government of Nepal (GoN) etc. due to unavailable power will have to be taken into consideration. Therefore, the loss to the macro economy would have been exponentially higher.

The second set of adverse impact is related to the cost of implementation. With an estimated cost per kW of installed capacity of $ 5,143 it would have exerted upward pressure on NEA’s retail tariff. Moreover, the increase in retail tariff would also have been necessitated by the key covenants agreed by the Government of Nepal (GoN) with Asian Development Bank (ADB) under Seventh Power Project of ADB which requires NEA to ensure 6% return on assets (later revised to “revalued assets”), 23% self investment ratio and debt service coverage ratio of 1.2[9]. Failing to revise the retail tariff upward would have forced NEA to incur massive loss. One needs to remember that, as NEA is fully owned by GoN, the loss suffered by NEA is tantamount to the loss suffered by GoN and, hence the adverse impact on the macro economy as well.

Besides, going the Arun III route with an estimated cost per kW of installed capacity of $ 5,143, the actual cost of implementation would have been a lot higher (perhaps it could have been, hopefully, capped at $ 8,000 per kW) as most of the donor funded projects have the trend of not only incurring time overrun, but cost overrun too, exerting further upward pressure on NEA’s retail tariff by a higher magnitude or, with no tariff increase the loss to be suffered by NEA would too have been at a higher plane and consequential adverse impact on Nepal’s economy would have been higher too.

New Incarnation of Arun III
GoN has executed a Memorandum of Understanding (MoU) with Satluj Jal Vidyut Nigam Ltd. (SJVNL) on March 12, 2008 for the implementation of Arun III hydropower project. The salient features of this project are as follows[10]:

· Type : Pondage run – of – river
· Installed Capacity : 402 MW ( 6 x 67 MW )
· Design Discharge : 320 m3/sec
· Gross Head : 303.8 m
· Dam Height : 68 m
· Powerhouse Type : Underground
· Annual Energy : 2891 GWh
· Project Cost : $ 859 million at 1995 price level

According to the MoU, this project is being developed as an export-oriented project. Besides the capacity and energy royalty stipulated in the Hydropower Development Policy, 2001, SJVNL has also agreed to provide 21.9% power (88 MW) free of cost to GoN.

Interestingly, SJVNL estimates Arun III to cost $ 859 million (at 1995 price level) for 402 MW which works out to $ 2,137 per kW. It is educative to note that the aborted Arun III was going to cost $ 5,383 per kW as its estimated cost was $ 1,082 million for 201 MW. In other words, SJVNL cost estimate of $ 859 million for 402 MW is lower by $ 223 million compared to its previous incarnation with just 201 MW capacity (a tragicomic situation of lower capacity project costing more than higher capacity one). This impels one to conclude that Nepal was lucky to have 201 MW capacity Arun III project cancelled in 1995 as it has spared Nepal from another blunder in hydropower development. The new incarnation is going to be built at a reasonable cost of $ 2,137 per kW but, unfortunately for consumers in Nepal, the cheaper electricity is slated to be exported.

The apologists of previous incarnation of Arun III have been doing their best to justify the high per kW cost of $ 5,383 per kW by saying that the amount includes infrastructure development costs like construction of access road and construction/erection of transmission line. Since 1995 there has been no construction of access road and transmission line of any significance in the project area and, therefore, SJVNL is going to have to build the infrastructure and the cost estimate must include the cost of building such infrastructure.

Mitigation of Nepal’s Load Shedding on Commissioning of Arun III
From the content of the MoU, it is clear that this project is being developed by SJVNL as an export oriented project and, therefore, out of 402 MW only 88 MW will be available for utilization in Nepal and this project will be able to mitigate Nepal’s electricity crisis to that extent only by when Nepal’s demand would have risen significantly. According to the analysis conducted by the author of this article, Nepal will be facing severe load shedding even after 10 years by when GoN plans to add 10,000 MW to the system, including implementation of Arun III[11] if GoN fails to comprehend the problem and get its act together SOON. Otherwise, even after commissioning of new incarnation of Arun III, Nepal will still be facing electricity crisis.

The electricity users in Nepal, suffering from the vagaries of the load shedding, are wondering why the new incarnation of Arun III is being developed as an export oriented project when Nepal is facing severe electricity crisis. There are certain projects on the anvil which are located in Far Western and Mid-Western Development regions of Nepal – too far from the load centers – and, therefore, evacuating electricity from there to the load centers (Central Development and Eastern Development regions of Nepal) is deemed unviable mainly due to high technical loss. Technically this is not a correct logic as the power from these areas could easily be evacuated using 400 kV transmission network. But the incremental cost of erecting high voltage transmission system might not be justified by the value of technical loss that will be reduced, mainly from the perspective of cost benefit analysis.

The above logic does not apply in the case of Arun III as it is located right at the hub of the load center, which is relatively highly industrialized and the industries in these regions are not operating at its full capacity due to lack of power. The industries in the area need additional 200 MW right now and by the time this project will be commissioned 400 MW will be consumed easily. Moreover, it is illogical for NEA to plan to mitigate future load shedding by importing power from India which will cost almost treble of the cost of electricity from Arun III. It would have been logical to use cheap electricity from this project in Nepal and export only the part that Nepal will not be able to use.

Lessons for Future
Ø Merely because the new incarnation of Arun III (402 MW) is estimated to cost $ 859 million, it cannot be said that the old incarnation (201 MW) should cost half of the new incarnation as the cost does not increase or decrease in a linear fashion. However, the cost estimate of $ 1,082 million for 201 MW is, obviously, inordinately high. It reflects very poorly on the competence and capability of those preparing the cost estimate of the previous incarnation. GoN and NEA should design a training program to build the capability of the technocrats involved in estimating cost as such and impart such training to them from time to time.

Ø The concerned authorities, in coordination with the academia, need to develop a norm as to the range of cost for hydropower implementation and for this purpose reference could be taken from other countries in the region that have experience in developing hydropower projects like India, China, Sri Lanka, etc.

Ø Luckily that Nepal didn’t get to implement a hydropower plant whose estimated cost per kW was more than $ 5,000 while average cost of hydropower projects implemented so far in Nepal is in the range of $ 2,500 per kW. Nepal needs to formulate a policy to choose to implement projects estimated to cost at the reasonable level, especially in view of the upward pressure on retail tariff or negative pressure on NEA’s bottom-line and the country’s macro economy.

Ø Due to the World Bank covenanted restriction on undertaking any project of capacity higher than 10 MW to implement previous incarnation of Arun III, Nepal would have been reeling under load shedding problem from 2000 through 2005. By avoiding such load shedding Nepal succeeded in avoiding adverse impact on NEA, its consumers, GoN and the macro economy of the country. GoN should develop policies for comprehensive options assessment to prudently choose cost effective projects that could be built in time at reasonable cost.

Ø In view of the track record of public sector infrastructure projects, cost overrun is a norm rather than exception. Therefore, the chances of the actual cost per kW of previous incarnation of Arun III increasing from over $ 5,000 to around $ 8,000 level was highly likely and NEA would have been overburdened by such increased cost at commissioning and would have incurred huge losses or would have been impelled to pass such cost through to consumers requiring exorbitant retail tariff. Nepal needs to develop a mechanism to curtail cost overrun.

Ø Further, in view of the track record of public sector infrastructure projects, time overrun is a norm rather than exception. By not implementing previous incarnation of Arun III Nepal succeeded in avoiding prolonged load shedding problem of a higher magnitude. Structure and content of contracts and the implementation thereof, needs to be improved upon to avoid potential cost and time overrun (also in the backdrop of massive cost and time overrun in the case of Middle Marsyangdi). Capability of concerned staff to design and execute/manage construction and supply contracts needs to be improved to preclude time and cost overrun.

Ø Priority should be given for the use of electricity in Nepal which will help industrialize Nepal (which triggers the forward linkaged benefits like employment generation, increase in purchasing power of the people and consequential increase in revenue for GoN) and only excess and spill energy should be exported, especially when electricity generated by a project like this is highly cost effective.

Conclusion
By canceling Arun III in 1995, the then President James Wolfenshon of the World Bank saved Nepal from the vagaries of the failed financial engineering of this project. Besides, because of this action, the magnitude of load shedding now is less severe than it would have been if it was decided to implement the old incarnation of Arun III – load shedding of late 90s would have continued through till now and the years to come and current load shedding would have been of higher magnitude. Further, the consumers would have been burdened with exorbitantly high tariff, due to the high cost per kW of installed capacity with the implementation of Arun III, or NEA would have been incurring losses of higher magnitude. Moreover, the cost on the macro economy due to power deficit too would have been higher. Therefore, this is one positive example of bad financial engineering that got nipped in the bud. But, for the average intelligentsia of Nepal, this is beyond comprehension and, they are going around moaning about the non-implementation of failed financial engineering manifest in the old incarnation of Arun III, even now.

Moreover, the new version of Arun III project, although with double installed capacity and less than half average cost per kW (and therefore requiring lower tariff) will not be contributing to the mitigation of load shedding problem in Nepal substantially as it is being undertaken as a dedicated export oriented project. In sum, the cancellation of earlier incarnation of Arun III didn’t contribute to the load shedding and nor the new version of Arun III is likely to solve electricity crisis when it is commissioned.

[1] Source: Kantipur of November 13, 2008.
[2] Mahat, Dr Ram Sharan, 2005: In Defence of Democracy, Adroit Publishers.
[3] Source: World Bank, 1994: Staff Appraisal Report: Aurn-3 Hydroelectric Project
[4] Source: Fiscal Year 2007/08 – A Year in Review, Nepal Electricity Authority.
[5] Source: Fiscal Year 2007/08 – A Year in Review, Nepal Electricity Authority.
[6] Source: Fiscal Year 2007/08 – A Year in Review, Nepal Electricity Authority.
[7] Soruce: Annual Report of NEA for 2005.
[8] Source: www.sari-energy.org
[9] Source: ADB (2001): Project Completion Report on Seventh Power Project
[10] Source: http://sjvn.nic.in/
[11] Shrestha, Ratna Sansar 2008: “The compulsion to live in the darkness even after 10,000 MW”. Gorkhapatra of November 8, 2008.

Published in Hydro Nepal Issue # 4 January 2009

Thursday, March 12, 2009

Knocks of the big brother

August 2001

The Editor
Nepali Times

I am not writing this letter to pick up the gauntlet thrown by Pratyoush Onta (# 55). However, the campaign being launched to stop FDI in "sensitive sector of Fourth Estate" has impelled me to write a few words:

1. If one is to assume that a paper established with FDI in Nepal will adulterate people's bichar adversely, then quite a lot of bichar of many an intellectuals have been getting adulterated since time immemorial (as far back as this scribe is able to recall), cause many dailies and weeklies from across the border have been avidly subscribed, bought and read by the intelligentsia of Nepal and others too. Conversely, if one is to infer that no significant impact has been made, then FDI in Nepal will also not succeed in doing any harm to the bichar.

2. One does not need to be a bright person to see that Indian investment is already having a field day in Nepal through many a gullible and greedy persons who are amenable to act as dummy for Indian investors for, of course, a price. I would like to think that this has not made a dent in indigenous bichar.

3, If FDI was to succeed in mauling Nepali bichar then people will stop investing in RAW, ISI, CIA, et al. Besides, these agencies will have a very easy job in achieving its goals by simply having their operatives write in newspapers.

I hope somebody will take up Onta on his challenge.

With best regards,

Ratna Sansar Shrestha

Published as a letter to editor in Nepali Times on August 17, 2001

Wednesday, March 11, 2009

बिद्युतिय संकट (लोड सेिडंग) बौद्धिक संकटको परिणति हो ?

जलबिद्युतको प्रशस्त सम्भाब्यता भएको नेपालमा प्रबिधिको समस्या छैन, जनशक्तीको अभाव छैन, लगानिको लागि कोषको कमी छैन, तैपनि अहिले ४ घण्टा बिजुली आएर ८ देखि १२ घण्टा सम्म अंध्यारोमा बस्न पर्नाले उपभोक्ता आक्रांत छन् र सरकार, राजनीतिकर्मी, नेपाल बिद्युत प्राधिकरण, नीति निर्माता, योजनाबिद्हरुसंग आक्रोसित छन् । यस्तोमा नेपाली उपभोक्ता अंध्यारोमा जीवन यापन गर्न किन अभिशप्त छन भन्ने जिज्ञाशा जनसाधारणको छ ।

यस सम्बन्धमा गहन विष्लेशन गरेर यो पंक्तिकार निष्कर्शमा पुगेकोछ कि नेपालले यस्तो समस्या भोग्न बाध्य हुनुमा कारकतत्व बौद्धिक संकट हो । बौद्धिक संकटका तत्वहरुमा आगो लागे पछि इनार खन्ने प्रबृत्ति, दूर दृष्टिपूर्ण सोच (vision) को अभाव, सतही बुझाई, लहलहैमा लाग्ने बानी, हाइड्रो-डलरको भ्रान्ती, पेट्रोलियम पदार्थ जस्तै जलबिद्युत निकासी गरेर धनी हुने सपना र गलत मान्यताहरु प्रमुख हुन् ।

आगो लागे पछि इनार खन्न थाल्ने प्रबृत्ति
पिउन खाना पकाउन लगायत सरसफाईको लागि पानी अत्यावश्यक हुन्छ भने आगोलागेमा निभाउन पनि पानी नभई हुन्न । तर आगो लाग्न थालेपछि मात्र इनार खन्ने हो भने आगोले ध्वस्त पार्दा सम्म पनि पानी उपलब्ध हुन्न । कहिले आगो लाग्छ भन्ने पहिल्यै थाहा हुन्न तर उपभोक्ताहरुको लागि कहिले कति बिजुली आवश्यक हुन्छ भन्ने कुरा अघिबाटै थाहा हुन्छ । प्राधिकरणद्वारा यस वर्ष भाद्रमा प्रकाशित वार्षिक प्रतिबेदनमा सन् २०२५/२६ सम्म नेपालमा के कति बिजुली आवश्यक हुन्छ भन्ने प्रक्षेपण पनि समाबिष्ट छ । यस्तो प्रक्षेपण बिसौं वर्ष अगाडी देखि नैं भएको छ र सम्बद्ध सबैलाई कुन वर्ष कति बिजुली आवश्यक हुन्छ भन्ने जानकारी हुन्छ । तर पनि सम्बद्ध सबै ढिलो हुन्जेल सम्म उदासिन रहेर अहिले आएर राष्ट्रिय बिद्युत संकट घोषणा गरिएकोछ र लाग्छ कि बिद्युत संकट घोषणा गर्नासाथै समस्या आफ्सेआफ समाधान हुन्छ भन्ने धारणा लिएकाछन् घोषणा गर्नुको अलावा केहि गर्नु पर्दैन ।

घोषित ३५ बुंदे "राष्ट्रिय बिद्युत संकट निरुपण कार्य योजना" पनि सरकारले समयबद्धरुपमा कार्यान्वयन गरेन । तत्काल समस्या समाधानको लागि माघ १ गते देखि "सीएफएल घर दैलो अभियान" (एउटा किन्नेलाई एउटा सित्तैमा दिने) संचालन गर्ने भनेकोमा फागुन महिना आधा-आधी सिकंदा सम्म पनि शुरु भएकोछैन । सायद अझ भिषण आगो लागे पछि मात्र इनार खनिने होला ! यस्तो प्रबृत्ति भएरै वर्तमान संकट आएकोमा कुनै शंका छैन । अन्यथा कहिले कति बिजुली आवश्यक हुन्छ भने जानकारी हुंदा हुंदै पनि अहिले आएर यस्तो विकराल परिस्थिति श्रृजना हुन आवश्यक थिएन ।

दूर दृष्टिपूर्ण सोच (vision) को अभाव
यस्तो लाग्छ बिद्युत क्षेत्रको लागि जिम्मेवार पदाधिकारीहरु आफ्नो नाकको सामुन्ने भन्दा पर चिन्तन गर्दैनन् । प्राधिकरणले आगामि ५ वर्ष सम्म कायम रहेर त्यस पछि लोड सेिडंगको समस्या पूर्णतः निरुपण हुन्छ भनेर सार्वजनिक रुपमै पटक पटक दोहर् याएकोछ । गत भाद्रमा प्रकाशित वार्षिक प्रतिबेदनमा पनि यो कुरा ठोकुवा गरिएकोछ, जसको आधार स्वरुप प्राधिकरणद्वारा माथिल्लो तामाकोशी, चमेलिया, कुलेखानी तेश्रो, राहुघाट, माथिल्लो त्रिशुली र माथिल्लो मोदी समेत निर्माण भएर ५ सय २५ मेगावाट उत्पादन हुने र सान्जेन, मध्य भोटेकोशी, रसुवागढी, काबेली र माथिल्लो मस्र्यादी समेत २ सय ८१ मेगावाट निजी क्षेत्रले निर्माण गर्ने सार्वजनिक गरेकोछ ।

यसरी हाल बिद्यमान जडित क्षमता ६ सय ८७ मेगावाटमा ८ सय ६ मेगावाट थपिएर कूल जडित क्षमता २०१३/१४ मा १४ सय ९३ मेगावाट पुग्ने र सो वर्ष उच्चतम मांग १२ सय ७१ मेगावाट हुनाले मांग भन्दा जडित क्षमता बढी हुने देखिन्छ । तर उच्चतम मांग हिउंदमा हुन्छ जति बेला सुक्खायाम हुनाले जडित क्षमताको आधा पनि बिजुली उत्पादन हुंदैन । तसर्थ ५ वर्ष पछि पनि न्यूनतम ४/५ सय मेगावाट अपूग हुने र लोड सेिडंग अवश्यंभावी देखापर्छ । अचम्म लाग्ने कुरा त के हो भने प्राधिकरण जस्तो संस्थाले यस्तो तथ्यलाई पूर्णतः उपेक्षा गरेर कसरी ५ वर्ष पछि लोड सेिडंगको अन्त्य हुने ढोल पिटेको हो । यति हिसाब बुझने दूरदर्शिताको अभावमा बिद्युत संकट र बौद्धिक संकटको गठजोड सबल देखिन्छ ।
४/५ सय मेगावाट मात्र अपूग भई तद्अनुरुप लोड सेिडंग हुने अवस्था तब मात्र श्रृजना हुन्छ जब माथि उल्लिखित आयोजनाहरु समयबद्ध तरीकाले बन्छन् । तर, विषेश गरेर प्राधिकरणले कार्यान्वयन गरेका आयोजनाहरु समयबद्ध तरीकाले सम्पन्न भएको इतिहांस नभएको पृष्ठभूमिमा र प्राधिकरणको हालको कृयाकलाप नियाल्दा नयां आयोजनाहरु पनि यथासमयमा सम्पन्न हुने लक्षण देखिन्न । तसर्थ समयबद्धरुपमा सम्पन्न भएमा पनि लोड सेिडंग अवश्यंभावी देखिन्छ भने बिगत पुनराबृत्ति भएर ढिलो सम्पन्न हुने हो भने त ७/८ सय मेगावाट नैं अपुग भएर अझ ठूलो संकट हुने सम्भावना प्रबल देखापर्छ । यो पंक्तिकार आशा गर्न चाहन्छ कि उपरोक्त हिसाब तथा आकलन बेठीक होस् ।

सतही बुझाइ
बढ्दो लोड सेिडंगसंगै एउटा तप्का मरेको छोराको आंखै ठूलो भन्ने आहान चरितार्थ गर्दै १९९५ मा विश्व बैंकले रद्द गरेको अरुण तेश्रो २ सय १ मेगावाट आयोजनाको स्मरण गर्दै भन्छन् कि अरुण तेश्रो बनेको भए अहिले लोड सेिडंग हुने नैं थिएन । यिनले अरुण तेश्रो आयोजना कार्यान्वयन गर्न विश्व बैंकको के कस्ता अनुचित शर्तहरु स्वीकार गरिएको थियो भन्ने कुरा बिस्रन्छन् । प्रमुख शर्त थियो यो आयोजना सम्पन्न नभए सम्म १० मेगावाट भन्दा ठूला आयोजना निर्माण निषेध । तसर्थ नेपालले अरुणको बाटो अबलम्बन गरेको भए काली गण्डकी, मोदी, मध्य मस्र्याङ्गदी, चिलिमे, खिम्ती, भोटेकोशी जस्ता आयोजना बनाउन निषिद्ध हुनाले १९९५ सम्ममा २ सय २० मेगावाट मात्र थप हुनेमा अरुण रद्द भएकोले २ सय ९३ मेगावाट थप भएर १९९९ मा लोड सेिडंग भए पनि २००० देखि २००५ सम्म उपभोक्ताले लोड सेिडंगको मार खेप्न परेन । अरुण रद्द भएकोले एडिबिले अरुणको लागि छुट्याएको पैसा नैं काली गण्डकीको लागि उपलब्ध गराएकोले पनि अरुण बनेको भए काली गण्डकी १४४ मेगावाट बन्ने थिएन । नत्र १९९९ मा १३ मेगावाट अपूग भएर प्रारम्भ भएको लोड सेिडंग उत्तरोत्तर रुपमा बृद्धि भएर २००४ मा १ सय ८४ मेगावाट पुग्ने थियो र २००५ मा अरुण तयार भएपछि अपूग बिजुलीको परिमाण घटेर २४ मेगावाट भई लोड सेिडंगले चािहं निरन्तरता नैं पाउने थियो ।

अझ तत्कालिन एक जलश्रोत राज्य मन्त्रीले त्यस बखत अरुण निर्माण गरेको भए आगामि २० वर्ष लोड सेिडंग हुन्नथ्यो भनेकोले थाहा हुन्छ कत्ति सतही रहेछ यिनको बुझाई, अनि नेपाली उपभोक्ता लोड सेिडंगमा बस्न परेकोमा आश्चर्य लाग्न छोड्दछ । यस बिपरित जुन प्रकारले प्राधिकरणले आयोजनाहरु निर्माण सम्पन्न गरेकोछ तद्अनुरुप अरुण आयोजना सम्पन्न हुने भए १९९५ मा शुरु गरेपनि निर्माण भने अहिले सम्म नै जारी रहने थियो ।

अरुण तेश्रोको नयां अवतार ४ सय २ मेगावाट भारतीय कम्पनीलाई सुम्पंदै अर्का मन्त्रीलॆ पूर्वााचल झलमल्ल हुने घोषणा गरे । ८८ मेगावाट सित्तैमा बिजुली लिने गरेर सुम्पिएको यो आयोजना सम्पन्न हुंदा नेपाली भूभाग उज्यालो हुने तर्क पनि सतहि बुझाई हो किनभने अहिले नैं त्यस क्षेत्रमा २ सय मेगावाट बिजुली अपुग छ र यो आयोजना पूरा हुने बेलामा आवश्यकता ४ सय मेगावाट हुने हुंदा उज्यालोको सम्भावना पटक्कै छैन, लोड सेिडंगको समस्या अरु भिषण हुने देखिन्छ । अरुणको बिजुली भारतमा उपयोग भएर नेपालमा लोड सेिडंग घट्छ भन्ने बुझाई पनि बौद्धिक संकटको अर्को पाटो हो ।

लहलहैमा लाग्ने बानी
भारतीय बिद्युत दलाल कम्पनीका एक पदाधिकारीको मुखारबृन्दबाट पटनामा १० हजार मेगावाट उत्पादन गरेमा नेपालले बिद्यमान कानून अन्तर्गत रोयल्टी बापत रु २ सय ५० अर्ब पाउंछ भनेको सुनेर राष्ट्रिय योजना आयोगका निर्वतमान उपाध्यक्ष रोमािचत भएर प्रधानमन्त्री प्रचण्ड उपस्थित औपचारिक कार्यक्रममा समेतमा सोहि कुरा दोहर् याए ।

१० हजार मेगावाटबाट क्षमता रोयल्टी बापत रु १ सय प्रति किलोवाटको दरले रु १ अर्ब र ५० प्रतिशत क्षमतामा उत्पादन भएमा ४३ अर्ब ८० करोड युनिट बिजुली उत्पादन भई बिक्री दर रु ५ भएमा २ प्रतिशतले रु ४ अर्ब ३८ करोड उर्जा रोयल्टी भई रु ५ अर्ब ३८ करोड मात्र रोयल्टी स्वरुप प्राप्त हुन्छ । नेपाली योजनाबिद् यसरी लहलहैमा लागेको परिप्रेक्ष्यमा नेपालमा योजना कस्ता बन्छन् भन्ने स्पष्ट मात्र नभएर बिद्युत संकट भएकोमा समेत छक्क पर्न आवश्यक हुन्न ।

हाइड्रो डलरको भ्रमको खेती
महाकाली सन्धीको बिरोध मत्थर पार्न पाचेश्वर आयोजनाबाटै नेपालले खर्बौं कमाई गर्ने चर्चा गरिएको जनसाधारणलाई स्मरणै छ, जुन पश्चिमबाट सूर्य उदाउने जत्तिकै सत्य ठहरिसक्यो । तथापि १० हजार मेगावाटबाट नेपालमा हाइड्रो डलरको बाढी नैं आउने भ्रमको खेती भईरहेकोछ । यथार्थ के हो भने जलबिद्युत आयोजना पूंजी प्रधान हुनाले बिक्रीबाट प्राप्त हुने रकमको २ प्रतिशत जति मात्र संचालन तथा मर्मत सम्भारमा खर्च हुन्छ जसको २० खण्डको एक खण्ड मात्र नेपालमा र नेपालीलाई पारिश्रमिकमा खर्च हुन्छ भने बांकी सरसामान पैठारी गर्न तथा बिदेशीलाई पारिश्रमिक आदिमा खर्च हुन्छ । कूल रकमको ९५ प्रतिशत ऋणको सांवा ब्याज तथा लगानिकर्तालाई लाभांश स्वरुप नेपाल बाहिरिन्छ, यी आयोजनाहरु बिदेशी लगानिमा निर्माण हुने परिवेशमा । अनि झण्डै ३ प्रतिशतको हाराहारीमा रोयल्टी आदि स्वरुप नेपाललाई राजश्व प्राप्त हुन्छ । आयकर लाग्ने भएमा बिक्रीबाट प्राप्त हुने रकमको ७ प्रतिशत थप प्राप्त भएर जम्मा १० प्रतिशत मात्र नेपाल प्रवेश गर्छ ।

अर्थात १० हजार मेगावाट प्रति युनिट रु ५ मा निकासी गरिएमा बिक्री मूल्य रु २ सय १९ अर्ब हुने र नेपाल भित्रिने भनेको सांढे ६ अर्ब रुपिया र आयकर लाग्ने भए २१ अर्ब मात्र हो । स्मरणिय छ पश्चिम सेती जस्तो उच्च गुणस्तरको बिजुली पनि सांढे ३ रुपियामा निकासी गर्ने बन्दोबस्त भएको हुनाले यो परिमाणको बिजुलीले प्रति युनिट रु ५ प्राप्त गर्ने सम्भावना समेत न्यून छ । तर पनि नेपालका निर्णयकर्ताहरुले यो सपनालाई पछुउने गर्दा देश भित्र बिजुलीको आवश्यकताको उपेक्षा भएकोछ ।

खनिज इन्धन जस्तै जलबिद्युत निकासी गरेर नेपाल धनी हुने सपना
पेट्रोलियम पदार्थको खानी भएका देशहरु धनी भए जस्तै नेपालले जलबिद्युत निकासी गरेर धनी हुनसक्छ भन्ने पनि व्यापकरुपमा सुनिन्छ । तर यो आकलन पनि सत्य नभएको यस पंक्तिकारको विष्लेशनले देखाउंछ । माथि उल्लेख गरिए झैं जलबिद्युतमा ३ प्रतिशतको हाराहारीमा रोयल्टी लाग्ने व्यवस्था गरेको र आयकर पनि २० प्रतिशत मात्र लाग्ने (पश्चिम सेती आयोजनामा नलाग्ने) हुनाले नेपालले कति आर्जन गर्छ भन्ने माथि उल्लेख भई सक्यो भने यूरोपेली मुलुक नर्वेले कूल बिक्री आयको लगभग ८० प्रतिशत विभिन्न कर दैदस्तूर बापत असूल गर्ने हुनाले पेट्रोल निर्यात गरेर धनी भए जस्तै नेपालले बिजुली निर्यात गरेर धनी बन्ने अवस्था छैन र नेपालले यसरी ८० प्रतिशतको हाराहारीमा कर दैदस्तूर लगाउने पनि सम्भावना छैन । तैपनि सपना बेच्नेहरु नेपालबाट भारत बिजुली निकासी गरेर नेपालमा लोड सेिडंगलाई निरन्तरता दिएर नेपाल धनी बन्ने सपनाको खेतीमा लागेकोले बौद्धिक संकट देखिएकोछ र बिद्युतिय संकट पनि भएकोछ ।

गलत मान्यताहरु
माथि उल्लिखित तप्का के पनि भन्छन् भने आर्थिकरुपमा सम्भाब्य ४३ हजार मेगावाटको लागि नेपालमा बजार छैन । यो पूर्णतः गलत मान्यता हो किनभने २००७ मा नेपालमा प्रति व्यक्ति बिजुली खपत ७० युनिट भन्दा कम थियो जति बेला यूरोपका समृद्धशाली देशमा २० हजार युनिट भन्दा बढी खपत भयो र ४३ हजार मेगावाट निर्माण भएर ५० प्रतिशत क्षमतामा उत्पदान भएमा हालको जनसंख्यालाई प्रति व्यक्ति सांढे ७ हजार युनिट मात्र उपलब्ध हुन्छ । यस्तो गलत मान्यताले प्रेरित निर्यातमूखी नीतिले गर्दा आज नेपाली जनता अंध्यारोमा बस्न बिबस छन् ।

निष्कर्श
माथि उल्लेख गरे झैं वस्तुतः नेपालका नीति निर्माता, राजनीतिकर्मी तथा योजनाबिद्हरुमा बिद्यमान बौद्धिक संकटले गर्दा देशमा बिद्युत संकट भएको देखापर्दछ । तर निश्चय नैं यो कुरा सबैमा लागू हुंदैन । अवश्य पनि अपबाद छन्, कम छन् तर केहि गर्न पाउंदैनन्, भ्याउंदैनन् एक्ला बृहस्पतिको स्थितिमा पुग्ने गर्नाले । सामान्यतया विष्लेशकहरु आफ्नो विष्लेशन यर्थार्थपरक भएको दाबी गर्छन्, तर यस बिपरित यो पंक्तिकार विश्वास गर्न चाहन्छ कि आफ्नो विष्लेशन सम्पूर्णतः गलत होस् र कुनै पनि प्रकारले बौद्धिक संकटको कारणले देशले बिद्युत संकट सामना गरिरहेको कुरा असत्य ठहरोस् ।

२०६५ फाल्गुण २८ गतेको गोरखापत्रमा प्रकाशित

Monday, March 9, 2009

A Case Study of Khumbu Bijuli Company

The Khumbu region in Northeast Nepal is the homeland of Sherpas, renown all over the world. The area is visited by more than 15,000 tourists every year. A substantial number of them as mountaineers, quite a few of them being fascinated by Sherpa lifestyle and most of the others to trek in the area. Sherpa people are hardy lot and are able to easily adjust to the hardships of high altitude and alpine climatic conditions. Quite a few of them have taken up the profession of assisting mountaineers in their campaigns to scale various Himalayan peaks. This has turned out to be a highly lucrative vocation for the people from the region. They also benefit from the high altitude tourism as lodge owners, porters, tour operators, etc.

All of this happened only after the Sherpaland was opened for tourism in 1950’s. Certain negative impacts from all these activities have also occurred on the environs of the area, which was inevitable anyhow. These are, inter alia, new constructions, pressure on forest resource for such construction and increased demand for fuel wood to satisfy the needs of the tourists, causing intolerable environmental stress due to the eradication of the forests in the region. It is estimated that approximately 800 tons of fuel-wood is consumed during a tourist season each year. To satisfy the needs of the local populace and tourists more and more trees inside and outside the boundaries of the National Park were cut down. This made it imperative to utilize renewable sources of energy to avoid further depletion of the forest cover.

In other words, the disastrous fuel wood situation around Namche Bazar due to increased demand through tourism and the local’s lack of financial means to substitute wood with kerosene became the rationale behind the construction of a power plant to generate electricity by using locally available water resource. The objective was to provide electricity to the residents, transients and the travel industrialists in order to reduce fuel wood consumption. Availability of electric power also affords additional facilities and amenities to the tourists. This not only attracts more tourists to the area but also encourages the tourists to spend more while they are visiting the area.

Thame Small Hydropower Plant
These factors galvanized the Austrian government into signing an agreement with His Majesty’s Government of Nepal in 1988 to build a hydropower plant in Thame Valley (in Solukhumbu District) with the financial and technical assistance of the former. This plant utilizes the water from Thame Khola River, a tributary of local Bhote Koshi River that has its confluence with Dudh Koshi River in its downstream area. Construction of the power plant with a capacity of 600 kW (nominal) commenced in 1989. There is a “balance pondage” at the headwork with a capacity of 2,000 m3 and it uses “net head” of 205 meters. This plant uses Pelton turbine and uses a 13-km long 11 kV transmission line of which only 6-km is over ground.

This plant started generation and distribution of electric energy from February 1995 and since that date this plant is serving eight villages in the Khumbu area viz. Namche, Khumjung, Khunde, Thame, Phurte, Thamo, Syangboche and Thame Teng. A private limited liability company named Khumbu Bijuli[1] Company (KBC) was established in May 1994 to give the plant a corporate vehicle. An Austrian NGO named Öko Himal, Society for Ecological Cooperation Alps – Himalaya, based in Salzburg, Austria has been assisting KBC for last 5 years in its management and also channeling fund from Austrian government for efficient operation and management of this company as well as the plant. Beginning with April 1999 Öko Himal has arranged to have corporate management advisory services provided by Winrock International through its renewable energy program through to end of 1999 on a trail basis. This arrangement is expected to assist corporate and institutional development of KBC besides endeavoring to make KBC financially self-reliant.

Conventionally, a plant like this, constructed/erected with foreign grant in Nepal, is generally handed over to Nepal Electricity Authority (NEA) – the only electric utility in Nepal – by HMGN for its operation. However, a non-conventional approach was taken in this case at the advice of Austrian government. Ownership of NEA in this plant was limited to 15% and rest, 85 % of the outstanding sharers in KBC, was equally distributed amongst three users’ groups from the area in accordance with an Agreement between His Majesty’s Government of Nepal and Federal Government of Austria, signed on 23rd May 1994. The three users’ groups are Namche Users’ Group, Khumjung-Khunde Users’ Group and Thame Users’ Group. For this purpose these three users’ groups were established and share certificates in KBC have been handed over to them. There are 645 users altogether that are members of these three users’ groups.

Cost and Capitalization
The Austrian government has spent around 90 million ATS (equivalent to approximately US Dollar 6.5 million) to date on this project. However, only about Rs 138 million (equivalent approximately to US $ 2 million) have been capitalized in the Company’s books of account as the fixed assets of the company. This has resulted in understatement of Austrian government’s contribution for this plant in the company’s books of account.

However, such state of affairs eases the burden of depreciation on KBC and this may enable it to show profit on paper sooner than if it had to capitalize the full investment on the plant and charge depreciation thereon. But this is not something an institution that is required to be self-sustainable should rejoice. Because by charging depreciation an enterprise can ensure that adequate fund becomes available for the replacement of the plant at the end of its economic life. Conversely, charging smaller amount of depreciation or being able to charge smaller amount of depreciation means the institution will have siphoned off lesser amount for future replacement of the plant.

Anomaly
The ownership structure of this company has created an anomalous situation as far as the “Shareholders” and “Users” of this company are concerned. Shareholders being owners of a specific company would like to see that the company is making adequate level of profit. In order to attain this objective they (shareholder/owners of an enterprise) would happily do needful to raise more revenue. On the other hand, it is not surprising that users tend to be reluctant in the matter of changing electricity tariff upwards to garner more funds for running the institution.

It is slightly different in the case of KBC. On one plane both the users and shareholders of this company are one and same. But the shareholders of this company are not the owners of this company in its truest sense as they are not entitled to share in the profit of the company, even if the company is able to make some profit. Because the Agreement signed between the two governments of Nepal and Austria specifically stipulates that “the profits of the Company shall be reinvested in the Company for the replacements and the System expansion.” Therefore, the shareholders of this company look at themselves more as users than owners. Primarily due to this reason this company has not succeeded so far to collect revenue from its users commensurate with the investment and the operating cost. The point that needs to be noted here is that the revenue is not commensurate even to the “capitalized” investment (US $ 2 million) plus the operating cost; a far cry from its revenue being commensurate to the actual investment (over US $ 5 million) plus the operating cost.

Users’ Groups
It is definitely an innovative approach to have the local users’ groups own a hydropower plant. At times the sense of belonging does help. But at the moment the three users’ groups owning 85% of this company are in effect dysfunctional. After having come into legal existence more than 5 years ago these are yet to start functioning as an entity legally extant. In fact it could become debatable whether these legal entities do exist today or not. These groups were registered by local administration of Solukhumbu District as “non-government organization” which are subject to annual renewal. None of these groups have so far renewed their registration even once.

A properly elected Executive Committee should have replaced the Ad Hoc Executive Committee formed at the time of registration, within 6 months of the registration; such elected Executive Committee having a tenure of 3 years. Going by this these groups should have had two elections by now, but even one has not been held so far. Nor have these groups conducted their Annual General Meetings. This is basically a case of system failure caused by the indifference of individual members of these groups. These groups even do not have any resource to conduct such meetings, nor have any staff to help complete the renewal of registration formalities.

A healthy empowerment of the local users can take place if the annual financial statement of KBC is provided to each Users’ Groups and these groups in turn table such report in its own annual general meetings. This kind of interaction has not taken place even once so far in any of the users’ groups.

Challenge
An institution can be run in a number of ways. (1) One can run a business enterprise as long as it is able to and then abandon it when it becomes unviable. (2) A sensible way to run a plant as such, without making profit, will be to run it such that it is sustainable from the standpoint of operation. (3) It would have been more sensible if the plant is operationally sustainable as well as it is also able to have created a nest egg of fund adequate for the replacement of the plant at the end of its economic life. (4) However, successful business people, of course, will manage an enterprise in such a way that it is both operationally sustainable while ensuring that adequate fund becomes available for the replacement of the plant at the end of its economic life and in the meantime each year the entrepreneur is also able to draw a tidy profit.

Currently KBC is not even functioning in the second way. In 1998 KBC earned total revenue of Rs 3.4 million while the total annual cost of its day to day operation amounted to around Rs 2 million without including the cost of regular repairs and maintenance. In 1998 alone Austrian government spent 3.5 million ATS which is equivalent to about Rs 18 million. In other words the current level of revenue is not able to operationally sustain the plant

The challenge that KBC is facing at the moment is to be able to at least run the plant in such manner that it is operationally sustainable. In other words it should be able to generate necessary fund for regular repairs and maintenance of the plant without having to rely on Austrian government’s largesse to defray these costs throughout the life of the plant.

Sustainability
To put it simply the question KBC is struggling with at the moment is the sustainability of Thame Small Hydropower Plant. Till the end of preceding fiscal year the weighted average rate of the tariff it charged its users was Rs 2.08 (equivalent to US $ 0.03) per kWh. Whereas weighted average rate of the tariff charged by NEA is slightly under Rs 5 (equivalent to US $ 0.07) kWh. Subsequent to some vacillation on the part of Board and Management of KBC the tariff has been slightly increased with effect from the beginning of current fiscal year (July 16, 1999) in order to have KBC move on the path of self-sustainability. However, even subsequent to this increase weighted average rate of the tariff comes to merely Rs 2.86 (equivalent to US $ 0.04) kWh.

These rates can be put on its perspective by comparing KBC rates with some other isolated power plants whose load factor is comparably low. The power plants constructed with financial and technical assistance of UNDP under its Rural Energy Development Project charge Rs 1 per watt or Rs 1,000 per kW. Whereas a KBC consumer subscribing 1,260 watt is required to pay only Rs 600 per month from the beginning of current fiscal year. Another micro power plant on the way to Namche charges Rs 250 per month for 18 watts.

Another way to appraise the sustainability is to compare anticipated revenue for current fiscal year with budgeted expenditure. With the change in the tariff KBC is expected to earn revenue of Rs 4.9 million during current fiscal year whereas its operational expense is forecast to amount to Rs 3.2 million and even if the plant is expected to have an economic life of 25 years the depreciation will amount to Rs 5.5 million. This shows that KBC has a long way to go in terms of being sustainable at the rates of tariff it charges to its users. For the near future KBC cannot even hope to be able to break-even in paper. Because the depreciation of Rs 5.5 is worked out on the basis of understated value of Thame power plant.

Capacity Utilization
Another impediment in this plant becoming self-sustaining is the fact that this plant is highly underutilized. However, this feature is unique to isolated power plants of this kind. Although its installed capacity is 600 kW, the highest load of 418 kW was recorded in February and November 1998. In this perspective it also must be noted that this load would last only during peak hours of the evening and early morning. Otherwise, even in these months the nighttime and day time (off peak) load were quite low.

Holy Cow
Prior to concluding, it must be noted here that the users’ groups who own 85% of the outstanding shares of KBC would never have been in a position to invest the required amount to own such a large chunk of Thame Small Hydropower Plant, if not for financial and technical grant of the Federal Government of Austria. So the plant is an Austrian gift to the populace of the Khumbu region. However, this factor is also making the users complacent in the matter of seeing to it that the plant is successfully operated for a long time to come, putting aside the worry about being able to replace the plant at the end of its economic life.

An analogy that comes to mind is that of a gifted holy cow. The people in the region can milk it till it is able to without spending necessary amount for its feed, medical care, etc. for a very short period of time. Or they can choose to spend reasonable amount so that they can milk the cow for a long time to come. Initially the recent small increase in the tariff was resented and resisted by the users. However, eventually they got around to agreeing to the argument and KBC was able to implement the changes. The acid test will take place when KBC will be impelled to implement another phase of the tariff increase without which KBC will not be able to operate the plant without having to be spoon fed by external agencies.

Inference
In order for KBC to attain both corporate and institutional development while achieving operational sustainability as well as being prepared to replace the plant at the end of economic life, its Board of Directors and Management needs to become capable of having vision and being able to lead the Company with firm hand in the appropriate direction. As the three users’ groups from the Khumbu area hold 85% of KBC’s outstanding shares, there are three representatives from these groups in its Board of Directors. NEA deputes the fourth member to the Board, comprising four members. Only this member (Director) – coming from Kathmandu – has exposure to certain level of managerial practice and experience. The three other Directors representing the users’ groups from Khumbu area are in need of adequate capacity building to know what is good for KBC in particular and the users’ groups in general. Öko Himal has introduced a measure for empowerment of KBC’s Board, its Management and its constituent three users’ groups.



[1] Bijuli in Nepali means electricity.

Paper presented in HydroEnergia 99 Conference in October 1999, in Vienna, Austria.