Nepal Infrastructure 
Dinesh Kumar Ghimire, who has a Bachelor of Engineering (BE) from the National Institute of Technology (former Malviya Regional Engineering College) in India and a Master’s Degree (M.Tech) in Hydro Electric System Engineering and Management from Rudgi Vishwavidyalaya, is currently in charge of the Secretary of the Ministry of Energy, Water Resources and Irrigation. In the first 3 years of his working life, he started his engineering career from United Mission Nepal’s consulting company and started his government service from the Irrigation Department in 2051. Since 2056, he has worked as Senior Divisional Engineer, Deputy Director General, Director General of the then Ministry of Water Resources and Ministry of Energy and the Power Development Department under it, and also became the Co-Secretary of the Ministry. After being promoted to secretary, he has experience of working as the secretary of the Water and Energy Commission and the National Conservatorship Center with the Ministry of Energy, Water Resources and Irrigation. He has been involved in both the operational and policy aspects of the hydropower sector for a long time. A conversation with him by Bhim Gautam for Nepal Infrastructure.com on the development of Nepal’s hydropower sector, power generation, transmission and distribution and various aspects of business:
Recently, the Power Purchase Agreement (PPA) of the hydropower project based on the flow of the river has been opened. Recently, two important agreements have been reached with India regarding international electricity trade. Do you understand how this indicates the development and promotion of the country’s energy sector?
The main objective of the ministry is that the project should be constructed in such a way that the water resources of Nepal can be used to the maximum extent for the development of the hydropower sector. The ministry has been clear from the beginning that the maximum consumption of electricity produced here should be consumed within the country. The Ministry is working in accordance with the policy that only electricity that cannot be consumed within the country and is wasted should be sold in the external market. India and Bangladesh are the nearest markets for our electricity supply. The potential of Nepal’s hydropower project production is high. Electricity is being produced by building hydropower projects according to the potential. There is ample opportunity to consume the electricity produced here within the country
.
Moreover, the electricity market within the country is vast. However, we have not yet been able to identify the internal market for electricity. Due to the lack of power transmission and distribution lines in the market of Nepal, it is not possible to reach the place where the demand is. Therefore, maximum consumption of electricity produced here is not being achieved. Since it was not possible to increase domestic consumption due to the problem of transmission and distribution system, Nepal has started exporting electricity produced here to the neighboring country India for the past few years.
In the meeting, the Indian side expressed its desire to import electricity from Nepal. Nepal’s hydropower is also necessary to make India’s electricity transmission system stable and sustainable. Currently, India’s transmission system is unstable due to the lack of hydropower. That is why the Indian officials have assured us that they will purchase the hydropower produced by Nepal.
Billions of rupees have been invested in the construction of hydropower projects in Nepal. In order to protect the investment made by the government and the private sector, we have to export our electricity to the neighboring countries. This is also a great opportunity for us. Therefore, as far as possible, the electricity produced by our hydroelectric power plants is consumed within the country and in accordance with the Ministry’s plan to facilitate the export of wasted electricity to India and Bangladesh, the issue of electricity export has always been given priority in the regular meetings with neighboring countries India.
The 10th meeting of the Energy Secretary-level Joint Steering Committee (Joint Steering Committee) of Nepal and India was held recently in Mount Abu, Rajasthan, India. In the meeting, the Indian side expressed its desire to import electricity from Nepal. Nepal’s hydropower is also necessary to make India’s electricity transmission system stable and sustainable. Currently, India’s transmission system is unstable due to the lack of hydropower. That is why the Indian officials have assured us that they will purchase the hydropower produced by Nepal.
According to the master plan for international electricity exchange, international transmission line projects are also being built now. We have agreed with India to build a new international transmission line to facilitate electricity trade between the two countries. Looking from all aspects, if Nepal produces electricity according to its potential, there will be no shortage of markets to sell. Therefore, we have to generate more electricity and increase domestic consumption by gathering investment. The ministry has adopted a policy of earning foreign exchange by exporting to neighboring countries until the environment for maximum increase in domestic electricity consumption is established.
In the recently held meeting of the Energy Secretary-level Joint Steering Committee (Joint Steering Committee) in India, it was agreed to export 800 megawatts of electricity from the Dhalkebar-Muzaffarpur international transmission line and to open the door to Nepal’s electricity supply to Bangladesh as well. Is there an environment for international electricity trade for Nepal?
We should consider the consensus reached at the energy secretary level meeting as positive. Recently, India has prepared a relaxed environment so that electricity can be exchanged from other transmission lines connected to the border with Nepal. In the past, only 600 megawatts of electricity could be exchanged through the Dhalkebar-Muzaffarpur international transmission line. This year, after upgrading the Dhalkebar substation by adding some technical equipment, we have increased the capacity by 200 MW to 800 MW. Similarly, through the various 132 KV transmission lines connected to the state of Bihar, an additional 400 megawatts have been created to export around 1,200 megawatts of electricity to the central grid system of India. It has been agreed that the Indian side will facilitate for that as well.
Likewise, there are talks of upgrading the transmission line to export 200 megawatts of electricity from Tanakpur. The agreement to use all transmission points where electricity trade between Nepal and India is possible should be considered as a positive and great achievement. And, Nepal will make full use of this opportunity. India has not only agreed to exchange electricity using all transmission power. Even in the policy arrangement with the latest international electricity trade directives, the Indian side has made a commitment to easily manage the market for Nepal’s electricity exports by adopting flexibility.
In the past, only 600 megawatts of electricity could be exchanged through the Dhalkebar-Muzaffarpur international transmission line. This year, after upgrading the Dhalkebar substation by adding some technical equipment, we have increased the capacity by 200 MW to 800 MW. Similarly, through the various 132 KV transmission lines connected to the state of Bihar, an additional 400 megawatts have been created to export around 1,200 megawatts of electricity to the central grid system of India. It has been agreed that the Indian side will facilitate for that as well.
Since the few years there is problem of wasting electricity. Will it be possible to use all the electricity that will be produced in the coming monsoon from the preparations for market management?
We have negotiated with the Indian side to make maximum use of monsoon’s electricity and made them agree to use all the transmission points for electricity exchange. Now, we hope to implement immediately by Indian side. Now we hope that it will be implemented as soon as possible from the Indian side. The faster the Indian side implements this, the faster our goal of exporting electricity will be achieved. Our main focus now is to ensure that the monsoon electricity produced by the hydropower project is not wasted. If India allows Nepal to export 400 megawatts of electricity through the transmission line connected to the state of Bihar as per the agreement, it will be very easy for Nepal to manage the monsoon electricity market. The Indian side is very positive about this. The Ministry is hopeful that they will open the transmission lines connected to Bihar to export power during monsoon. Regarding the transmission line of Tanakpur point, technical studies should also be carried out. We are committed to complete this work soon. We have created an environment to upgrade substations in Dhalkebar-Muzaffarpur as well. On the Indian side, we expect that the work of upgrading will be done within the stipulated time. Therefore, if all this happens, we will definitely not have to waste our electricity during the monsoon.
As the number of our hydropower plants is increasing, the power generation capacity is also increasing, but we are not able to increase internal consumption? What do you see as the main reasons behind this?
Now we cannot go back to the past. We have to accept that the internal consumption of electricity has not been significantly increased due to the fact that the integrated plan of electricity production, distribution and transmission has not been worked out. There may have been weaknesses in the past. However, when we come to this situation, we should not dwell on the past, now we have to move forward in a new direction. Now electricity is being produced at a rapid pace. The private sector has an important contribution in this. We are now saying that all the electricity that is being produced is not being consumed. We are saying that the electricity that is wasted or accumulated (surplus) is actually not surplus. Nepal’s current high demand for electricity is around 1700 megawatts. I think this demand is very narrow. Even today, we are unable to provide electricity through easy and large capacity transmission lines in industrial corridors. We are not able to provide regular and reliable electricity without constructing 33 and 11 KV transmission lines in some industrial corridors. If only the quality of the transmission and distribution system reaching the industry is improved, domestic consumption will automatically increase. However, due to the problem of transmission and distribution system, less electricity is being consumed in proportion to the demand.
Now we cannot go back to the past. We have to accept that the internal consumption of electricity has not been significantly increased due to the fact that the integrated plan of electricity production, distribution and transmission has not been worked out. There may have been weaknesses in the past. However, when we come to this situation, we should not dwell on the past, now we have to move forward in a new direction.
In the past, there was a similar problem in the Hongsi Shivam cement industry. Industries have not been getting quality electricity for years. Now he is given electricity as per the demand from the national transmission system. The consumption of the industry has increased after the access to electricity from the main line. Industries in other places are also facing similar problems. In those industries, there is no supply of electricity according to the demand. By increasing the structure of the distribution system, it has not been possible to provide electricity as per the demand. As a result, it has not been possible to increase electricity consumption in the country as desired. Since it will take some time to increase electricity consumption in the country, taking into consideration the current situation, a way is being sought to export the electricity produced here to foreign countries.
Is the private sector asking for a license to trade domestically and internationally? However, it has not yet been received. Where is the knot stuck to allow the private sector to do electricity business?
We are in favor of allowing the private sector to trade of electricity. We prepared the draft of the new electricity bill and took it to the previous parliament. We drafted the Electricity Act Bill to allow the private sector to trade domestically and internationally. The draft of the proposed Electricity Bill was discussed in the National Assembly and reached a conclusion, and it was tabled in the previous House of Representatives Parliament as well. However, unfortunately, it could not be passed by the House of Representatives. Appreciating the private sector’s eagerness, attachment and contribution to the production of electricity business, the ministry tried to move forward through an ordinance even though it would take time to pass the electricity bill from the parliament. The ordinance could not be passed due to various reasons. Even now, we are preparing to submit the Electricity Act again to the Parliament after taking the opinion/consultation of the Ministry of Finance and the Ministry of Law. We are designing an orientation program for many MPs regarding the electricity bill. We hope that this bill will be passed and become a law soon. We want the Electricity Act to be passed by Parliament as soon as possible.
For two decades, the electricity bill has been going back and forth to the parliament? As a result, even now, the electricity sector is running according to the Electricity Act, 2049. Why was there so much difficulty in passing the important legislation from the Parliament?
This is a political matter. It is a matter of Parliament. I don’t want to comment much on it. We will do the process of the bureaucracy. It is not appropriate for me to speak on the subject of the Bill that has gone before the Sovereign Parliament. We are doing the work of debating and discussing with various concerned bodies on how to pass the bill that went to the sovereign parliament as soon as possible. The Ministry has been working to explain the importance and legitimacy of the Electricity Act to the Honorable Members of Parliament. We are trying to explain the importance and necessity of the Act. In the previous Parliament, there was a long discussion regarding the Electricity Bill. Now the Electricity Act is also required for activities such as giving permission to the electricity business and the private sector.
This has given rise to the belief that it will be passed soon. Currently, since the Federal Electricity Act is not enacted, even the provincial and local levels are not able to enact laws. Looking at the current urgency, we hope that the Electricity Act will be passed by the Parliament soon. If the union itself is not able to make laws, then other governments will not be able to make them either. Now that it is on the table in the parliament, we hope that it will be passed quickly according to the principle of necessity. In the previous Parliament, there was a long discussion regarding the Electricity Bill. Now the Electricity Act is also required for activities such as giving permission to the electricity business and the private sector. This has given rise to the belief that it will be passed soon. Currently, since the Federal Electricity Act is not enacted, even the provincial and local levels are not able to enact laws. Looking at the current urgency, we hope that the Electricity Act will be passed by the Parliament soon.
There is a discussion about whether India will buy electricity from Nepal, both positively and negatively. India is also increasing investment in renewable energy. In such a situation, what is the basis for him to buy our electricity?
India has been rapidly increasing investment in renewable energy during the last 8-10 years. India has progressed very aggressively in the construction of solar and wind energy projects. India is coming to a state of balancing the system with renewable energy. Its renewable energy sources are solar and wind energy. In this situation, keeping the system stable and sustainable means hydropower. Therefore, India is currently running out of hydropower. Now India is in favor of balancing the broadcasting system. India is striving to provide 50 percent of the available installed capacity in the system from renewable energy sources by 2030. India has projected to add about 1,000 gigawatt hours to its power transmission system during this period. By that time, it will have to manage 500 gigawatt hours of electricity from renewable energy sources. India has already produced a lot of electricity from solar and wind energy sources. On the other hand, India is still generating more electricity from coal. India also needs electricity from hydropower projects to replace coal-fired power. For this reason, India is interested in purchasing electricity from Nepal for the time being. It is said that there is a potential of about 73 thousand megawatts of hydropower generation in India. Out of which he has produced about 46,000 megawatts so far. Soon, the goal of supplying half of the renewable energy sources to the system by constructing the remaining 27,000 megawatt projects will not be met. Therefore, India has to import electricity produced in Bhutan and Nepal to keep the system stable. From this we are also assured that India will easily buy electricity from Nepal.
India is striving to provide 50 percent of the available installed capacity in the system from renewable energy sources by 2030. India has projected to add about 1,000 gigawatt hours to its power transmission system during this period. By that time, he will have to manage 500 gigawatt hours of electricity from renewable energy sources.
There is no wheeling charge for international electricity trade with Nepal, there is no other law, why is there a delay in this?
When doing electricity trade with India, we need to understand the provisions of its international electricity trade guidelines. We will do electricity business based on his guidelines. A draft of our electricity trade guidelines has also been prepared. If the ordinance is approved, we have done our homework to involve the private sector in electricity business. We have also prepared a draft of the guidelines for granting permission for electricity trade and the guidelines. After the Electricity Act comes, we will also issue the guidelines. We will immediately involve the private sector in the electricity business by issuing guidelines after the Electricity Act. The ministry is also positive in favor of open access to electricity trade. Only then will the wheeling charge be settled. Making a grid code is also necessary. The Electricity Regulation Act has also assigned responsibility to the Electricity Regulation Commission. When trading electricity with India, necessary decisions have to be made by looking at the national scenario. However, we think that we are weak in the responsibility of regulating international electricity trade. The national grid code should have been completed by today, but it has not happened. The guideline of the Wheeling charge had to be decided. However, that did not happen. It is expected that the Electricity Regulatory Commission will do this work soon.
Is there a problem everywhere in the construction of electricity distribution and transmission lines? As a result, there is a problem in bringing the completed projects into the electricity system and expanding the internal and external markets of electricity. What is the Ministry doing to solve the problem and speed up construction?
Lack of resources is one of the main reasons why the construction of the transmission and distribution system cannot proceed as per the requirement. There is a situation where a lot of investment needs to be made in distribution and transmission. However, there is no source for investment. Both the Nepal Electricity Authority and the government need to invest. There is a situation where we have to work with limited resources and means. After ensuring the budget and according to the availability, work has to be done. The budget of the state should be used in a productive manner. Building this electricity transmission line is a matter that is connected with many agencies. There should be coordination and cooperation between inter-governmental bodies. Preparations are being made to proceed with the necessary process after discussing with all the agencies. Because of this, the transmission and distribution line projects have not been able to proceed as planned. Even now, there is a problem in coordination due to the laws of their area. We are going to solve it.
The Ministry of Energy has been busy building the Budhigandaki Reservoir Project. When there is a lack of resources in the construction of transmission and distribution lines, how can we manage investment resources for such a large project of 1200 megawatts?
There are ways of innovative fining modality to manage resources. The projects in our basket cannot be built only with government investment. The Ministry of Finance should look into how to ‘finance generation’. We also have to adopt various measures. They provide investment capital while constructing a hydropower project. There are many models including ISIF. Suitable models can be used to make Budhi Gandaki. Investment can be made through crowd funding. There are many funds in providend fund and civil investment fund. Those funds should be secured and proceeded using the ‘financing instrument’.
Now the Authority is working on power generation, transmission and distribution. It has been more than two decades since the issue of fragmentation of the authority was raised. How is the ministry trying to distribute the authority’s responsibilities?
The issue of restructuring or unbundling the Electricity Authority has been going on since 2058. We have already mentioned this in the hydropower policy that came in 2058. After that, this issue has been mentioned in the draft Electricity Act.
However, due to a procedural system, we are not able to break the monopoly of the electricity authority till date. We are still stuck with it. Now the authority itself has reached the conclusion that the electricity authority should be restructured and unbundled. The corporate business plan has already been approved by the meeting of the Board of Directors of the Electricity Authority. Preparations are being made to establish it as a separate organization for broadcasting and production within the next few years. It is mentioned in the corporate development plan that the distribution office will be promoted on a provincial model.
We have already mentioned this in the hydropower policy that came in 2058. After that, this issue has been mentioned in the draft Electricity Act. However, due to a procedural system, we are not able to break the monopoly of the electricity authority till date.
The Kulekhani Reservoir project was built during the Panchayat period. As a cascade, Kulekhani became the second and third project. However, other than these new reservoir projects could not be built. Why?
So far, the reason why the new reservoir hydropower project could not be constructed after Kulekhani is known to everyone. The characteristic of reservoir projects is that they are not economically feasible due to high cost.
Since it is not economically feasible, the private sector does not come for investment. In this situation, the government has to build by itself by giving it to foreigners or by collecting resources by itself. In the past, many foreign companies came to build reservoir projects. However, they did not build the project after it was seen that the profit would be less. Therefore, the state should be involved in making the reservoir project. The state is also trying to build a reservoir project. The state will have to acquire the land of the reservoir project, give compensation, solve the expenses of environmental management, etc. Rehabilitation, large natural resources should be managed.
Dudhkoshi, Budhigandaki are also very attractive reservoir projects near the load center. A huge amount has already been spent on land acquisition and compensation for the Budhigandaki project. The government has already decided to proceed with the company model by managing internal resources.
Another important aspect in the reservoir project is investment. Reservoir projects are not being built in Nepal due to lack of sufficient investment sources. Some projects are under construction. However, that is not enough. Dudhkoshi, Budhigandaki are also very attractive reservoir projects near the load center. A huge amount has already been spent on land acquisition and compensation for the Budhigandaki project. The government has already decided to proceed with the company model by managing internal resources. The Nalgad Reservoir project in the west is also attractive. That project is also in ‘ready to go’ condition. It is necessary to build one reservoir project in the east, one in the middle and one in the west so as to have a geographical balance. Now it is not too far to build the reservoir project. We are also in the process of financial management to advance it. We are trying to move forward in the company model by slightly restructuring the Budhi Gandaki company. The Prime Minister has also been giving priority to advancing Budhi Gandaki. A study is being done on how the Nalgarh project is financially feasible. Now we are making a blueprint for it in the proposed Electricity Act.
The government is planning to go into energy mix. However, it does not seem to have gone much into the use of resources other than hydropower. What kind of initiative is the ministry taking in green hydrogen production along with renewable energy such as solar and wind?
What we need to understand is that 98 percent of the current available in the transmission system is hydropower. Since Nepal is a country with abundant hydropower potential, it is natural that the share of hydropower in the transmission system is high. However, in the recent policies of the government, it is mentioned that instead of relying only on hydropower, electricity should be produced from other sources of renewable energy and added to the system. We have accepted this matter. As the effects of climate change have already started to be seen, there is a need to move towards the retention of mixed energy. This year it is raining regularly in the month of Chait. It has indicated that due to the effects and effects of climate change, the option of hydropower projects has come to be looked at.
Now, the time has come for us to look at the option of hydroelectricity, the construction of river flow, semi-reservoir and reservoir projects, and in addition to that, we have to go to electricity generation from solar and wind energy sources. Even though we have a lot of available water sources, the electricity generated from it and the electricity needed to produce green hydrogen, there is a need to use clean energy to produce ammonia and green hydrogen. If green hydrogen and ammonia can be produced and exported, the country’s trade deficit can be reduced.
We are always saying that there is a huge potential for hydropower generation. On the other hand, we are also talking about the impact of climate change. What kind of effects and effects do you see Nepal experiencing in hydropower projects due to climate change?
The impact and effect of climate change is not something that will be seen tomorrow. However, some people are spreading the illusion that the effects of climate change will appear immediately. To address this problem, there is a need to develop long-term policies and programs. At present, if the global temperature increase is not reduced, the snow melts in the mountains, floods and landslides occur, the flow of water in the rivers increases and decreases suddenly, and when the temperature increases, there may be a problem of no snow in the mountain areas. It causes the problem of dryness. It is not known whether climate change will cause short-term, medium-term or long-term problems. Therefore, to solve the problem, it is necessary to advance all three types of plans. When constructing a hydropower project, climate adaptation design should also be made timely. It is also necessary to modify the load management of electricity according to climate change. If there is a problem in the hydropower project due to climate change by inter-organizational resource management, attention should be paid to the quality of electricity by using other sources.
Private sector participation in hydropower production is increasing. How have you seen it?
Private power producers are truly to be thanked for their contribution to hydropower generation. Currently, the installed capacity of our transmission system is more than 2500 megawatts. If the mini-grid electricity produced from solar energy sources and the electricity of small hydropower projects are also connected, the connected capacity has reached around 2630 megawatts. Currently, the private sector is contributing 1400 megawatts of electricity, including solar, out of the electricity available in the grid. Today, the private sector’s power in the transmission grid is more than the state’s. I appreciate the role of the private sector in hydropower development. I also thank the energy producers for this role. In addition, the private sector has successfully built hydropower projects up to 100 megawatts, starting from 1 megawatt, 2 megawatt, and 4 megawatts in the period of 30 years from 2049 to 2079. The 86 MW project has recently been connected to the transmission system.
This shows that the investment capacity of private energy producers is also increasing with the passage of time. Therefore, now I request the private sector to come forward for investment not only in run-of-river hydropower projects but also in semi-reservoir and reservoir projects as per the needs of the state. The state is also ready to maintain separate PPI rates for semi-reservoir and reservoir projects. The ministry requests to invest in big projects according to their capacity and efficiency. Since the private sector has been successful in electricity production, now we are trying to open the way for domestic and international electricity trade.
In the period of 30 years from 2049 to 2079, the private sector started with 1 megawatt, 2 megawatt, 4 megawatt, and today one developer has successfully constructed a hydropower project up to 100 megawatt. The 86 MW project has recently been connected to the transmission system. This shows that the investment capacity of private energy producers is also increasing with the passage of time. Therefore, now I request the private sector to come forward for investment not only in run-of-river hydropower projects but also in semi-reservoir and reservoir projects as per the needs of the state.
Now the cost of hydropower projects is increasing. What do you think the need to do to control rising costs?
Recently, due to various reasons, the cost of hydropower projects built by both the state and the private sector is increasing. Therefore, both agencies need to reduce the unnecessary costs and expenses of constructing hydropower projects. Costs can be reduced to some extent by using resources and manpower within the country as much as possible. The hydropower developer also has to reduce unnecessary expenses as much as possible and make the electricity market cheap and competitive by building hydropower projects.
