Nepal Purbadhar

शनिबार, साउन ५, २०८१
Saturday, July 20, 2024

शनिबार, साउन ५, २०८१
Saturday, July 20, 2024

Private sector’s investment is at high risk due to the 3 decades old Electricity Act

KATHMANDU: When the government brought the Electricity Act in 2049 after multi-party democracy, Nepal’s hydroelectric capacity was only 236 MW. However, after 3 decades of the Act, the hydropower production capacity has increased to over 2600 megawatts. Although the private sector built 236-megawatt projects before 2049, commercial production was not even one megawatt. However, after the year 2057, i.e. in the past 22 years, the number of hydropower projects invested by the private sector has increased, and the installed capacity has reached around 1900 megawatts. In the year 2055, the power purchase agreement (PPA) rate was set for the first time in the history of Nepal for the private sector. Commercial electricity production started in 2057 through private investment hydropower projects.

After that, along with the Hydropower Policy introduced in 2058, the government took the initiative to bring a new Hydropower Act. However, that initiative has not yet been fruitful. Dozens of governments changed after 2058, the 10-year armed conflict of the then CPN-Maoist, the direct rule of the king, the democratic movement, the end of the monarchy, the establishment of the republic, and many other political systems were changed. However, the process of bringing in the Hydropower Act remained where it was. It was included in the policy and program of the government to bring economic development through hydropower development. However, the electricity bill to advance is still in zero states.

A victim of neglect by the government and parliament

According to the Ministry of Energy, Water Resources and Irrigation, the Electricity Bill, which first reached the Parliament in the year 2065, was again submitted to the Parliament after the parliamentary elections held in the year 2077. It took 7 years for the electricity bill, which was drafted for the first time, to reach the parliament. It took another 12 years for the redrafted bill to reach parliament again.

On the day the parliament session ended on Asar 18, 2077, the electricity bill presented in the parliament by the then Minister of Energy, Water Resources and Irrigation, Varshman Pun, passed through the House of Representatives and reached the National Assembly and then reached the Ministry again. When it reached the House of Representatives from the National Assembly, in the event that the Electricity Bill was not passed by the Parliament, preparations were made to keep it as it was without passing it, and after the election, it would be submitted to the Parliament thinking to passed quickly.

However, due to the non-existence of the Electricity Act, the private sector could not be allowed to trade in electricity, causing confusion in the construction of hydropower projects. In this situation, Minister Bhusal withdrew saying that she could not bring an ordinance as the electricity bill was under consideration in the parliament. Immediately after the withdrawal of the bill, the ordinance to amend the Electricity Act 2049 was decided by the Cabinet meeting on October 7 (2079) and sent to the President’s Office for approval on October 11. However, after being rejected by the President’s office, that path was also closed. After the elections held on November 4, the parliament is now running. However, the draft of the electricity bill has not yet reached Parliament.

The electricity bill has been sent for the approval of the Ministry of Finance and Law to be taken to the Parliament

Dinesh Kumar Ghimire, Secretary, Ministry of Power, Water Supply and Irrigation

Dinesh Kumar Ghimire, Secretary of the Ministry of Energy, Water Resources and Irrigation, says that the draft of the Electricity Bill has now gone to the Ministry of Finance and Law for approval.

“The electricity bill has been sent for the approval of the Ministry of Finance and Law to be taken to the Parliament, after receiving the approval of the cabinet, it will be sent to the Parliament,” he says, “There has been some delay.” However, we are sending it as soon as possible without delay.

The parliamentarians did not understand the importance and meaning of the Electricity Act, it was not passed even after 3/3 of the parliament was completed. It is a vivid example of this. The government also ignored the bill and kept circulating the bill in the palace.’

Kumar Pandey, Adviser, IPPAN

Kumar Pandey, the adviser of the Independent Power Producers Association, Nepal (IPPAN), says that the lack of understanding of the importance of the Electricity Act by Parliament and the government is seriously affecting the development and expansion of the hydropower sector.

He argues that it is ironic that not only the Electricity Act 2049 made for small and medium hydropower projects, but also the Electricity Policy 2058 has become irrelevant now, so we have to rely on the policies of 3 decades ago.

“Since there is no law, all the development and expansion of the energy sector has stopped now, PPA is closed, and there is no procedure for solar. The state and local levels have not been able to enact laws,’ he says, ‘The parliamentarians did not understand the importance and meaning of the Electricity Act, the fact that it was not passed even after 3/3 times of the parliament was completed is a vivid example of this.

This situation has arisen because the parliament, government, and major political parties are not interested in the question of public policy making and are not efficient about it. Unfortunately, a similar situation has been observed in the current parliament. Since the electricity bill has been placed as a condition for receiving foreign aid from the World Bank, the bill is tabled while the parliament is in session. However, the tendency to ignore it after being registered in the Parliament was also seen in the past. Adviser Pandey says that instead of registering it in Parliament, it has been delayed by passing it and going into implementation.

Investment in 25,000-megawatt projects that have been approved for the private sector is at high risk

As the electricity bill was not passed by the parliament, the private sector has applied for the PPA and is waiting for the study permit; by it, 25000-megawatt hydroelectricity is at risk. Out of this, 12,000 MW hydropower projects are waiting for PPA after applying to Nepal Electricity Authority. Similarly, projects worth 11,000 megawatts are in the stage of study after taking the permit. According to the Electricity Development Department, the capacity of the projects with the private sector demand generation production permit is 8,500 megawatts and the total capacity of the projects with the study permit is equal to 11,000 megawatts. Similarly, the installed capacity of the project applied for a production license is 6,500 megawatts. Due to the lack of PPA for a long time, the construction and development of these projects in the private sector are at risk.

According to IPAN, the private sector has already invested 2.5 billion rupees in the 12,000-megawatt projects that are waiting for PPA. As the electricity authority keeps delaying the PPA, the cost of these projects is increasing. This has created a situation where the investment of founder shares investors including private sector energy producers is at high risk. The electricity development department continues to collect revenue to renew the hydropower projects for which permits have been issued every year, but the situation where the electricity authority does not do PPA has increased the fear of sinking private sector investment.

Nepal Electricity Authority has stopped the PPA of run-of-river (ROR) hydropower projects for the past 4 years due to a lack of business assurance. It has also tightened the PPA of solar energy. Although the Electricity Authority has recently decided to do PPA for the 1500 MW ROR project, it has not yet been implemented.

Due to the fact that the electricity authority has not come up with a new electricity bill, a situation has arisen where the PPA of these hydropower projects has not been done, and on the other hand, the government has not even been able to give permission to the private sector to trade in electricity. Nepal Power Exchange Limited (NAPEX), Power Trading and Energy Exchange Limited (PTEEL), Nepal Infrastructure Bank Power Trading Company (PTC) Limited, Himalayan Trading Company, and others are waiting for permission for electricity trading.

‘On the one hand, the government does not give electricity to the private sector to trade it’ 

Krishna Acharya, President, IPPAN

 IPPAN President Krishna Acharya says that the government should immediately create an environment for PPA of all hydropower projects.”The private sector has suffered a lot since the PPA has been stopped for years,” he says. “On the one hand, the government does not give electricity to the private sector to  trade it, and on the other hand, when it does not give PPA, the people’s investment in hydropower projects is at risk, it has a great impact on the economy.”

14 Energy Ministers have changed, and the electricity bill is zero

Shankar Koirala was the Secretary of the Ministry of Energy when the Electricity Bill was introduced in 2065. Energy Minister Dr. Prakasharan was there. After that, Gokarna Bista, Radha Gyawali, Late Post Bahadur Bogti, Umakant Jha, Top Bahadur Rayamazhi, Janardan Sharma, Mahendra Bahadur Shahi, Kamal Thapa, Varshman Pun, Sharad Singh Bhandari, Vishnu Paudel, Pampha Bhusal, and Rajendra Lingden came to the Ministry as Energy Ministers. After Mangsir 4, Shakti Basnet became the energy minister again.

After becoming the Minister of Energy, most of them announce that they will introduce the Electricity Act, but the bill has not yet become law. If we analyze the 22 years after the hydropower policy, there have been only 2 dozen energy ministers. Even after presenting the bill in the parliament, 14 ministers have changed. However, the electricity bill is still in a zero state. This situation has arisen because the priorities of energy ministers are the distribution of permits, budget, and implementation of plans rather than policies. However, they are not unaware of the problems faced in the development of the energy sector due to the absence of the Electricity Bill.

‘Everyone is aware of the problems that have arisen due to the non-completion of the Electricity Bill, but no one has acted diligently, that is why the entire energy sector is suffering’

Shailendra Guragain, Former President, IPPAN

Shailendra Guragai, the former president of IPAN, says that the development of the hydropower sector, which has great potential, has been overshadowed by the new Electricity Act.”Everyone is aware of the problems that have arisen due to the non-completion of the Electricity Bill, but no one has acted diligently, and this is the reason why the entire energy sector is suffering,” he says. Currently, the Electricity Authority has the monopoly of generation, distribution, transmission, and business. Since the government did not make clear legal arrangements, the private sector has not been able to get involved in other sectors except electricity generation.

Until the end of the monopoly, there are many problems and risks in the energy sector. Even though the electricity bill has been introduced in the current parliament, it will reach the parliamentary committees of the House of Representatives and the National Assembly and there will be a long debate, so the bill will not be passed immediately.

‘The development of the entire energy sector has been hindered due to the lack of a new electricity law, it is necessary to move it forward as soon as possible’

Semant Dahal,Legal Expert on Energy

Semant Dahal, Legal Expert on Energy, says that since the electricity business cannot be opened for the private sector, the entire energy sector is affected and it should be taken to parliament and passed immediately. “The development of the energy sector as a whole has been hindered due to the lack of a new electricity act, it is necessary to move it forward as soon as possible,” he says.

The Electricity Authority has predicted that electricity equivalent to about 1,000 megawatts will be wasted in the coming monsoon. If the wasted electricity cannot be sold in the Indian market, then the direct financial loss will be to the private sector.

Even though 500 megawatts of electricity was wasted last year during the monsoon, more than 3 dozen private sector hydropower plants were unable to operate at full capacity, and the promoters have been saying that they have lost more than 2 billion rupees in income.

If 1,000 megawatts of electricity is wasted in the monsoon next year, the risk of losing income is twice as high as last year.

In order to remove the risk of large investments in the private sector, we need to create an environment for selling electricity in India, the private sector is ready for that, but getting permission is a challenge’

Guru Prasad Neupane, Hydropower Promoter

Leading hydropower promoter Guruprasad Neupane complains that his hydropower plant worth more than 20 million rupees was wasted when the electricity authority did not purchase it during the monsoon last year.

“The authority did not buy our electricity of monsoon-like other projects”, he says, “If this situation continues, the investment of trillions of private sector will sink,” he says, “In order to eliminate the risk of large investments in the private sector, an environment should be created to sell electricity in India, the private sector is for that.” It is ready, but it has become very hard to get permission.’

Energy Ministers after the introduction of the Electricity Bill in Parliament

Dr. Prakash Saran Mahatis

Gokarna Bishta

Radha Gyawali

Late Post Bahadur Bogti

Umakant Jha

Top Bahadur Rayamazhi

Jarnadhan Sharma

Mahendra Bahadur Shahi

Kamal Thapa

Barsaman Pun

Sharad Singh Bhandari

Vishnu Paudel

Pampha Bhusal

Rajendra Lingden

Shakti Basnet (Present)

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