Nepal declares energy emergency to end power crisis in two years

Nepalese government on Thursday declared energy emergency targeting to end ongoing power crisis within the next two years.

It is the third time that the Nepalese government declared energy emergency in the last eight years as previous declaration ended in disappointment. Nepal is currently facing the load shedding of 13-hours a day.

The cabinet on Thursday endorsed the "The National Energy Crisis Reduction and Electricity Development Decade plan" which aims to make available 1850MW of electricity during the dry season in the next two years.

Nepalese government believes it will end the load shedding in the country completely during the period as the peak hour power demand during the period is expected to remain at 1550MW.

The country's installed capacity of hydropower energy is currently stands at 780MW in peak hour which drops to 300 MW during the dry season. In order to meet energy demand, Nepal has been importing 280MW.

Power import from India will play a crucial part in meeting power demand of Nepal during the period as the Nepalese government aims to import 580MW of electricity from India in the first year. But, the import will be reduced to 92MW in the second year when domestic production will rise, according to Energy Emergency Plan.

As per the plan, there will be production of 200MW from solar and wind energy and storage hydropower projects will produce 930MW of electricity during the period. Currently, there is single storage type hydropower project with capacity of just 32MW. There has also not been any proper feasibility study for big-scale wind energy projects and the country lacks policy and regulatory frameworks.

"The energy emergency has been declared in order to lessen the impact the severe energy crisis has made on the general lives and economy," said Energy Minister Top Bahadur Rayamajhi at a press meet here on Thursday.

At a time when the country has been producing far less than required energy, earthquake on April 25, 2015 hit number of operating and under-construction hydropower projects. Given this context, the plan also talks about extending licences of quake-hit under construction projects and facilitating loans to them.

In order to attract foreign investor in power sector, the Nepalese government also announced of signing power purchase agreement (PPA) with hydropower developers in U.S. dollar terms until loan payback period of loans.

Signing PPA in U.S. dollar terms has been a controversial issue here because Nepal's only power utility body--Nepal Electricity Authority has been incurring huge losses from the 60 MW Khimti and 36 MW Bhote Koshi, the two projects with which it has signed PPA in U.S. dollar term.

The plan has eased lending criteria for banks to provide loans to hydropower projects in order to mobilize more domestic resource for the hydropower projects. Under the scheme, banks can now inject 50 percent of their total lending to hydropower projects. As many hydro power projects have been facing obstruction by political parties and locals on different pretentions, the plan has talked about mobilizing security forces for the security of hydro power projects with developers bearing the cost. Enditem