Re: article on electricity import from India

July 6, 2009

Mr Sher Singh Bhat

Chief

Load Dispatch Center, NEA

Dear Sher Singhjee

I am glad that my following email has at least elicited a response from you.

You may be saying the right thing. However, even for "a person" like me, I need to follow and also believe what is published in the mainstream media until and unless contradicted by the concerned - NEA in this instance. What you have said about the rate and Q40 basis should have been made public for the discerning readers. Moreover, my point was Nepal becoming self reliant and also the advantage of the Nepal receiving the power plant free of cost after the end of license period.

My point was NEA should offer Rs 5.20 (equivalent to INR 3.25) to IPPs in Nepal instead of India and, further, it is beneficial for Nepal even to offer more for the power plants to be built in Nepal as GoN becomes the owner afterwards. You have also pointed out about high cost due to Q40. I agree with you that this is a bad policy on the part of NEA. NEA should have announced ToD and seasonal tariff instead, such that IPPs decide about the Q40 or otherwise and they take the risk, instead of NEA being burdened with it.

Thank you for your advice to better analyze "everything Nepali". I will take that in proper spirit as I am the one that have been steadfastly analyzing this aspect for last several decades.

However, most importantly, my focus was on trying to stay away from a scenario under which India will be in a position embargo "trade" with Nepal and "blockade" transit and use electricity similarly.

With best regards,

Sincerely,

Ratna Sansar Shrestha

From: Sher Singh Bhat [mailto:sneeti@wlink.com.np]
Sent: Sunday, July 05, 2009 7:33 AM
To: Ratna Sansar ShresthaSubject:
Re: article on electricity import from India

Dear Ratna Sansarji

Your article is based on what was published in a paper written by some one who didnot have actual information or who was so biased to fool Nepalese readers just to create an excitement through News. I suggest yoy not followw such aarticles without proper information. A person like you, if comments and criticizes government on the basis of an article which was not based on proper information and later you know that you have wasted your time and pen for some thing which was not true, imagine your own position.

The analysis, the rate of import and all other parameters are fabricated and far beyond the truth. The proposed rate was INR 3.25 which could be further negotiable. As you know that dry season energy of Nepalese 25 MW developers becomes NRS 8.89 after escalation and these power plants are mostly on Q40 basis, how would you compare this Nepalese production with INR 3.25 i.e. 5.20 which is a firm power throghout the year/
Nepalese water, Nepalese money, Nepalese manpower, Nepalese mind and all such sentimental things are offered Rs 8.89 and still they are crying, lobbying for more but you are criticizing for imported Rs 5.20 per unit. Stiching cost of shirt in Nepal is Rs 200.00 but in Rs 250.00 you get achinese shirt including cloth. Why doesn't everybody stiches a shirt here in Nepal?

I have always benn saying through my various presentations that latest economic theory of " Prosperity of Nation" is the "theory of competitive advantage". Hydropower is our comparative advantage not competitive advantage. In this twenty first century, comparative davantage is worthless until it is made competitive. Is our end product i.e. hydropower, competitive? Our developers always ask concessions and more price. Why don't they become competitive to this RS 5.20? Would you agree to buy Nepalese electricity with all the concessions and protectionism at Rs 8.89 per unit against imported electricity at Rs 5.20? Who is then benefitted from these concessions?

I would advise you to better analyse why this "everything Nepali" product with all that government concession is almost double to what is import price? Where are these hidden costs?

Thanks

Bhat