Nepal has the power, India the market

T. N. Thakur is chairman of the Power Trading Corporation of India (PTC), a private-public partnership whose primary focus is to develop a commercially vibrant power market in India . Since 2006, Thakur has been actively involved in organizing the Power Summit in Kathmandu, which brings together top level government officials and private investors from Nepal , India and beyond. From its inception in 1999, the PTC has sought to provide services that address the sustainability of a power market model including intermediation for long-term supply of power from identified domestic and cross-border power projects, financial services like providing equity support to projects in the energy value chain, advisory services and forays into providing fuel linkages to power plants of various generators participating in the power market.

In the Weekly Interview, Thakur—who spoke with Purna P Bista and Thira L Bhusal of The Kathmandu Post —urged the government of Nepal to reform its power policies and invite investors for the benefit of both Nepal and India.

Excerpts: Q: How do you assess the third power summit held in Kathmandu last week?

Thakur: Until 2006, there was a lot of skepticism among the people in Nepal and India about who would benefit and who would lose out after we develop hydropower. What has been emerging out of the summit is that Nepal 's hydropower resources are its most valuable assets, and that it should tap this wealth for domestic consumption. Excess power will be consumed by India .
This is the third summit attended by government delegates and independent power producers from Nepal , India and beyond. The whole idea of holding the conference is to bring potential investors from India and Nepal closer. Basically, this is a platform where private investors and representatives of both the governments of India and Nepal meet exchange views and share knowledge to tap Nepal 's water resources.

I say that Nepal enjoys the right to consume the electricity produced in Nepal for its development. Naturally, surplus power will have to be sold to India . The revenue generated by exporting energy will be spent on other areas such as health, education and roads. You sell electricity because you need money for development.
In India , some states sell power to other states and earn good revenues. Himachal Pradesh , Sikkim , Arunachal Pradesh and Uttarkhand are examples. Bhutan also exports energy. You will be surprised to know that we are buying all the surplus power from these states, and they make a very good amount of money. Himachal Pradesh makes Indian Rs 14 billion (US 350 million) a year. It sells directly to us (PTC). Bhutan gets Indian Rs. 10 billion (US 250 dollars) a year. Smaller states in India generate revenue by providing power to power-deficit states. As a result, these states have been making rapid economic progress. For example, Himachal Pradesh is ahead of many states in education and health. We have a power market, and you have the power. So we thought and decided to hold a power summit to let the people and power producers in Nepal and India know that there is an opportunity in India .

Q: What is the current power deficit in India ?

Thakur: The peaking deficit is 15 percent and energy shortage is around 10 percent. The actual shortage will be greater than the figures I have just mentioned because they are based on the demand that comes into the market. Peaking hours are your requirement in terms of energy and your ability to supply it. The energy shortage is calculated on an overall basis, i.e., how much power is being demanded and how much is being supplied during a 24-hour period.
Our national grid has a capacity of 140,000 MW. We can supply power to any part of India The peaking hour shortage is more than 20,000 MW.

Q: How do you cope with such a huge power shortage? It must be affecting your economic development seriously.

Thakur: We have been unable to meet the peaking hour shortage. There is no power available. We have load shedding similar to what you have here. Sometimes, hydropower generators are shut down during off-peak hours and are operated during peaking hours only. Hydropower stations have the advantage of being able to generate power during peaking hours. We manage our load, but we are having energy shortages. As a result, we are ready to import or buy energy.

Q: You think that Nepal is an option to meet India 's energy demand?

Thakur: Yes, you have great potential. I hope you will exploit your hydropower in time so that it benefits both countries. We are trying to develop hydropower in Himachal Pradesh , Sikkim , Uttarkhand, Arunachal Pradesh and Jammu & Kashmir. Our Honorable Minister of State for Commerce and Power Jairam Ramesh said yesterday that we are trying to develop 50,000 MW of hydropower in the next 10 years, though we will need approximately 140,000 MW in that time.

Q: Many experts claim that developing hydropower in Nepal will be an expensive affair because of its terrain and other factors involved in power generation?

Thakur: It will be expensive and difficult, but not undoable. It is doable. We have similar terrain in Arunachal Pradesh , Sikkim or Himachal Pradesh. This kind of geology or geography you have in Nepal is similar to that of Himachal Pradesh, Jammu & Kashmir or Bhutan .
During the last power summit, I said that Nepal should set a target of producing 10,000 MW by 2020. It was my speech that made the government aware of your need for power. Many eyebrows were raised at that time whether it would be possible. They questioned my statement, but now everybody talks of how to meet the target. I am so happy that the government of Nepal has set a target of producing 10,000 MW in 10 years. So it is doable, but it is not easy because developing 10,000 MW will cost over Nepali Rs. 200 billion (US 2.75 billion dollars).

Q: How does Nepal get that kind of investment?

Thakur: Does the government have the capacity to spend so much money? From where are you going to get that kind of cash? You have to establish transmission links, build access roads and provide facilities for the locals. To find such huge sums of money, you have to look for potential investors. And the people who come from outside to invest here will have their own expectations and aspirations. That is why I have been stressing that you should have the right kind of environment, the right kind of policies and the right kind of institutions to get funding for hydropower projects.
If you could develop 10,000 MW of hydropower and sell 1,400 MW, you make revenues of Indian Rs. 14 billion (US $ 350 million) annually. If you consume 3,000 MW and sell 7000 MW, you get Indian Rs. 70 billion (US $ 1.7 billion) annually.

Q: Does Nepal have the right institutions to create the right kind of environment for the development of hydropower?

Thakur: You have to build some institutions. Today, I am very happy with the government and the politicians I have met, including the prime minister of Nepal . They have at least realized the need for developing hydropower. Prime Minister Pushpa Kamal Dahal is very forthright and businesslike. He has really given a lot of confidence to the people in India , saying that this is the right time to invest in Nepal . I met the Minister for Water Resources Bishnu Poudel and his secretary; I feel that they are eager to meet the target set by the government. I have also called on Deputy Prime Minister Bamdev Gautam and Finance Minister Dr. Baburam Bhattarai. Today, I see tremendous political will to go ahead with the plan to generate 10,000 MW.

Q: Obviously you have met many Nepali officials. What is your assessment?

Thakur: You should have the right kind of institutions here to further your hydropower projects. You have to make a number of institutional reforms and create the right kind of policies. Actually, 15 years ago we were in a similar situation. We invited investment, but private investors were unwilling to put money in India . So the government decided to develop a power market and set up the PTC at the national level. As a result, the PTC buys and supplies energy to power-deficit states as per their demand.
So, the whole thing is that people should feel confident and secure that if you invest in Nepal , the project will go ahead without any hassles and that investors will get their due return. If that sort of confidence is generated, investors will come forward. Otherwise, why would investors come to Nepal and invest when you do not have the right kind of environment and policies. Let us be frank, no investor will come here for charity. They will come here to earn money.

Q: How has Nepali leadership responded? Is it keen on institutional reforms?

Thakur: They are very keen. I have told them that we are ready to provide assistance with whatever Nepal requires to set up institutions like the PTC. We can make suggestions and provide expertise if needed. This is the way we should go. If Nepal wants to have something like the PTC, it is welcome. But we think that it should be a Nepali institution, not a copy of India 's PTC. Let the institution be Nepali and let it be a partner of India 's PTC. When you have a partnership, both partners must feel that they are benefiting.
If the smaller partner feels that it is not benefiting, then there is a problem. So let us be clear and assess thoroughly who is benefiting more. After all, India is not going to buy power at a cheaper rate. It will pay the market price. India is exploring all available options because our energy needs are growing at a rate of 9-10 percent a year. Unless you meet the energy demand, you cannot advance economic growth. By 2012, India will have more than 200,000 MW of electricity. In another five years, India will add another 100,000 MW.

THE KATHMANDU POST

Nepal, India ink 29-point deal

BY THIRA L BHUSAL
KATHMANDU, Oct 1

Major Agreements

- Establish Pancheshwor Development Authority
- Ministerial-level joint commission
- Restore Koshi embankment by March 2009
- Resolve Laxmanpur barrage inundation problem
- India to shun construction at Mahali Sagar
- Agreement to set up Joint Standing Technical Committee
- Pre-feasibility study on Naumure within 3 months

The Nepal-India joint meeting of top water resource officials concluded here today after reaching a 29-point agreement in which India reiterated it would not continue any controversial construction work along the Nepal-India border and to expedite implementation of past agreements.

In the agreement reached at the Joint Committee on Water Resources (JCWR) meet, India reassured Nepal that it would shun construction of new structures along the border which have been causing inundation problem in bordering areas of Nepal every year.

Nepali officials had expressed concern over the new construction work going on at Mahali Sagar in Kapilvastu district.

In reply, the Indian officials said the work has already been stopped. The JCWR then decided to make a joint field visit within one month and resolve the issue.

During talks at the Standing Committee on Inundation Problem (SCIP) held in the first week of October 2004 in Kathmandu, India had agreed not to continue any construction work at Mahali Sagar and other controversial sites until a bilateral agreement is reached.

To resolve the inundation problem caused by the India-built Laxmanpur barrage, the Indian side proposed that a structure should be constructed with a capacity to channel 40 cumec [cubic metre per second] of water to the Gandheli and Sotia canals through Kalkalwa Bund.

India is ready to implement the proposal. The Nepali side will send its comments on the proposed structure within a month. At least nine VDCs (40 square kilometres of Nepali territory) are submerged every monsoon due to the Laxmanpur barrage.
During bilateral talks at the High Level Technical Committee prior to the SCIP talks held in October 2004 in Kathmandu, the Indian representatives had agreed to give natural outlet to water blocked in Nepali territory.

The two sides have agreed to set up the Pancheshwar Development Authority at the earliest. The Authority will develop, execute and operate the Pancheshwar Multipurpose Project. Water resources secretaries of Nepal and India will co-chair the Authority.

The two governments, during the visit of Prime Minister Pushpa Kamal Dahal to India last month, had instructed the water resource ministries of both countries to expedite work on the project. For the 5,600 MW multi-purpose Pancheswar project, a treaty was signed between India and Nepal in 1996.

The Nepali side reiterated that the sill elevation of the head regulator for releasing water from the Tanakpur barrage to Nepal be lowered to 241.5 meters to ensure more water to Nepal.
The JCWR also proposed a Joint Ministerial Level Commission on Water Resources and another Joint Standing Technical Committee (JSTC) at Joint Secretary level. The JSTC will be coordinating all existing committees and sub-committees under the JCWR.

This decision was taken in the light of the top-level political agreement reached between the two governments during the prime minister's India visit to set up a three-tier mechanism, at the ministerial, secretary and technical levels. The two governments, in establishing the mechanisms, aim at pushing forward discussions on the development of water resources in a comprehensive manner including hydro-power generation, irrigation, flood control and other water-related cooperation.

The top officials, who visited the Koshi embankment breach areas on Tuesday as part of the three-day talks, committed themselves to completing the reconstruction of ravaged parts of the Koshi and turning the river back to its original course by March 2009. High level bilateral talks will be held over issues related to the Koshi embankment breach in the first week of November. The Koshi burst its embankment at West Kushaha in Sunsari on Aug. 18, displacing more than 35,000 people in Nepal and affecting around 2.5 million in Bihar state of India.

Regarding the 245 MW Naumure hydro project, the two sides agreed to jointly prepare a pre-feasibility report within three months. The Nepali side proposed to maximise the irrigation potential in the Rapti River basin and utilise a part of the flow in Kapilvastu district with the construction of necessary storage reservoirs at Naumure and Bhaluwang.

"The project will include irrigation facilities in Kapilvastu," Nepal's Water Resources Secretary Shankar Koirala told journalists upon the conclusion of the talks.

The government of Nepal assured the Indian side that it will guarantee the security of field investigations and studies for the Saptakoshi High Dam Multi-Purpose Project, said a statement issued by the Indian Embassy in Kathmandu.

The JCWR decided to extend by one year the tenure of the Joint Project Office established to study the project.

India's Secretary of Water Resources Umesh Narayan Panjiar described the talks as successful in achieving a positive outcome over long standing issues.

The next JCWR meeting is scheduled for February 2009 in Banaras, India.

THE KATHMANDU POST

Re-divert Koshi during Jan-March, expert says

BY THIRA L BHUSAL
KATHMANDU, Oct 1



Head of the technical committee constituted by the Bihar Government, Nilendu Sanyal Tuesday suggested topping water resource officials from Nepal and India to turn the Saptakoshi River back to its original course and plug the breached embankment between January and March when the water level falls.

During a briefing to Nepali and Indian Water Resource Secretaries, Indian envoy Rakesh Sood and other senior officials who visited the breached embankment site at Western Kushaha and adjoining areas, Sanyal suggested that every structure should be kept in a ready position beforehand but the river should be diverted back only between January and March.

Sanyal, a retired Engineer-in-Chief of the Water Resources Department of Bihar, was part of the team of engineers during the Koshi Barrage construction 47 years ago.

After arriving in the capital from an inspection of the site, Joint Secretary at the Ministry of Water Resources Shital Babu Regmi said that visiting officials from both countries listened carefully to what Sanyal had to say as he has thorough knowledge about the nature of Koshi.
Water discharge level in the Koshi during the three month period would be around 10,000 to 11,000 cusecs.

The Bihar government assigned the octogenarian Sanyal to manage the work on restoring the Koshi and plug the breach in the embankment.

The Koshi burst its embankment on August 18 and displaced more than 35,000 people in Nepal besides affecting around 2.5 million people in Bihar state of neighbouring India.

Water Resource Secretaries from Nepal and India Shankar Prasad Koirala and Umesh Narayan Panjiyar, Indian Ambassador to Nepal Rakesh Sood and joint secretaries among other experts and engineers from both sides had gone to Sunsari to inspect the embankment breached by Koshi.

Senior government officials from both countries reached the site as a part of three-day secretary-level bilateral talks, which started on Monday. The issue of the Koshi was one of the major agenda items during the talks.

THE KATHMANDU POST

Koshi study project extension agreed

NEPAL-INDIA WATER TALKS

BY THIRA L BHUSAL
KATHMANDU, Sept 30

Top officials of Nepal and India in bilateral talks here today have agreed to extend the study period for the Nepal-India Joint Project for Saptakoshi, Sunkoshi Investigation.

The joint project office was established on Aug. 17, 2004 in Biratnagar to carry out field investigations and prepare a detailed project report. The project was given 30 months to carry out its study, at the time of its establishment.

The latest deadline for the study was extended till Dec. 2008 as the project failed to make progress as planned due to hindrances from locals. In the four years since its establishment, only about 30 percent project work has been completed.

The two sides in the talks also agreed to conduct a feasibility study of the 245 MW Naumure Hydro Electric Project on the Rapti River.

India has announced it is ready to build the project on its own. This was reiterated during Prime Minister Pushpa Kamal Dahal's five-day India visit starting Sept. 14.

Though dates and other details are yet to be finalized, both sides have agreed to extend the study period of the Sapta Koshi Sun Koshi Investigation project and to conduct the feasibility study for Naumure Hydro Project, said a highly-placed government source at the Ministry of Water Resources.

The two countries are close to agreement on resolving all inundation issues through a powerful technical committee to be formed for the purpose. "However, the proposal is yet to be finalised as the Nepali side has some reservations about it," the source said.

Inundation along the Nepal-India border at Laxamanpur barrage, Mahalisagar, Rasiawal Khurdalotan and the Gandak river in Nawalparasi district are items on the agenda.
Secretary of the Ministry of Water Resources Shankar Prasad Koirala is the head of the Nepali team and India's Secretary of Water Resources Umesh Narayan Panjiar is leading the Indian delegation.

Representatives from both countries are scheduled to visit the Sapta Koshi areas on Tuesday. The issue of recurring Koshi floods figured prominently during discussions. Talks will take place in Kathmandu on Wednesday.

THE KATHMANDU POST

West Seti test case for hydro target

BY THIRA L BHUSAL
KATHMANDU, Sept 27

The government has taken the 750-MW West Seti Hydroelectric Project (WSHP) as a test case for its ability of achieving the target of generating 10,000 MW of hydro-electricity in the next 10 years.

If the West Seti project fails, the government's policy of speeding up hydro-electricity generation and attaining the set target will be in trouble, Secretary at the Ministry of Water Resources (MoWR) Shankar Koirala said at an interaction on WSHP, Friday.

The government of Nepal and West Seti Hydro Limited signed the initial agreement on the project in 1994 but the project has been delayed because of the conflict and political uncertainty in the country. The final agreement before construction work begins is expected to be signed early in 2009. The government and the Asian Development Bank (ADB) are negotiating some clauses of the final agreement.

Finance Minister Dr Baburam Bhattarai, while presenting the annual budget on September 20, set out a target of producing 10,000 MW of hydro-electricity in next 10 years.
Minister for Water Resources Bishnu Poudel has affirmed the government's commitment to the project. "The government will not back out from the project," he said.
"Backtracking from the project would be a serious matter because it has already taken embryonic shape and we do not want to abort it," Poudel said.

SMEC Developments Pvt Ltd, a member of the SMEC Group of Australia, is the promoter of the $1.6 billion project and has a 26 percent share in it. The Nepal government has a 15 percent share, to be financed with a loan from the ADB. Chinese and Indian companies will have 15 percent share each and the remaining 14 percent will be owned by Nepali investors including locals at the project site.

Ninety percent of the 750 MW generated will be sold to India while Nepal will get the remaining 10 percent free of cost.

At the interaction between critics of the project and promoters on Friday locals from the affected area complained against 'promoter apathy', the lack of transparency and of people's participation in the decision making process.

MoWR Secretary Koirala suggested the promoters ensure local participation in the decision making and other activities as far as possible.
People from several VDCs in Doti, Dadeldhura, Baitadi and Bajhang districts in the Far-Western Region will be affected by the project reservoir.

The SMEC has said it plans to rehabilitate about 1,383 affected families from the proposed reservoir area in the Terai. Around 186 families living in the vicinity of the proposed power house and transmission line need to be relocated. The promoters have said they will adopt internationally accepted practices for the rehabilitation.

Over 3,400 people will get employment for the five and half years of the construction period and at least 200 people will have permanent jobs during the project's operation.
Critics of the deal have also criticised the government for awarding the project with less benefit accruing to Nepal in comparison with the 402-MW Arun-III and 300-MW Upper Karnali where promoters agreed to provide 22 and 12 percent free electricity respectively to Nepal.
"We should not think of it in the present context because this agreement signed in 1997 when we had had no benchmark to follow," Koirala said. "It was an important achievement at the time.

"Review needed: Secretary

Secretary Koirala, however, said it was time to review the agreement in view of the changed context over the last 12 years. He said the government would give utmost priority to national, regional and local interests at the time of revision.

The project has said that a higher tariff would be set given the changed context. Earlier, it was agreed that power would be sold to India at the rate of 4.95 US cents per kilowatt-hour.
The project will be built under the build, own, operate and transfer (BOOT) model and will be handed over to the government of Nepal after 25 years of operation by SMEC. Nepal will earn over Rs 2 billion as royalty during the 25-year period, according to the promoters.

Water resource analyst Ratna Sansar Shrestha, making a presentation on the project, claimed that most of the benefits will go to India like flood control and dry season augmented flow while Nepal will face the costs of the project like restrictive use of water in upstream areas.

THE KATHMANDU POST

No speedy end to load-shedding: NEA

Consumers blamed

BY THIRA L BHUSAL
KATHMANDU, Sept 17

In recent years, load-shedding has become a part of daily life in Nepal. However, daily power cuts for long hours during the monsoon never happened in previous years.

To the utter consternation of consumers, Sher Singh Bhat, director at Nepal Electrity Authority (NEA) System Operations Department says, "There is no solution to this problem in the near future."

NEA has been enforcing up to 37 hours of load-shedding a week since September 10. It states that the new load-shedding schedule had to be enforced as five towers of the Kataiya-Duhabi 132 KV transmission line collapsed due to the Koshi flood. The condition of two other towers, hit by the floods on August 18, is very vulnerable.

The Kataiya-Duhabi transmission line is key to power supply between Nepal and India. Nepal used to import 60 megawatt of electricity through the cross-border transmission line of the Kataiya-Duhabi grid. NEA argues that decreasing water level at Kulekhani reservoir is yet another reason behind prolonged load-shedding. The water level at Kulekhani is 25 meters lower than compared to this season last year.

Director Bhat says, "The water level at the Kulekhani reservoir this monsoon has reached an all time low." He says the water level in the Kulekhani reservoir can't be expected to rise now that winter is approaching.

Maintenance of the collapsed towers will take months--another piece of bad news. Bhat says it will take at least three months to reinstate all the towers.

With the arrival of winter, the run-of-the river projects will generate less electricity due to decreasing water flows in the rivers. All the hydro-electric projects in the country except Kulekhani are run-of-river type.

NEA enforced load shedding of up to 48 hours a week last winter, and worse days can be expected with the 37-hour weekly load shedding already in place.

'Consumers force us to prolong load shedding'

Director Bhat says NEA is compelled to prolong load-shedding hours.
"People use electrical appliances all at once during regular power supply-- increasing power consumption exponentially. And load-shedding hours are extended to meet the higher power consumption," he says.

NEA enforced a 16-hour load shedding schedule when demand during peak hours reached 700-MW. Its total capacity during such times was 480 to 500 MWs. But NEA re-scheduled its power cuts to 37 hours just two weeks later while its total capacity remained the same. Asked why NEA stretched the power-cut schedule though its capacity remained intact, Bhat explained, "If the load shedding schedule starts at 7 pm, for instance, consumers use their electrical gadgets including rice cookers, heaters and irons just before that. The peak hour then shifts from seven back to six and NEA has no other option than to start load shedding from 6 pm."

He said NEA can't tackle this situation and this sometimes causes unscheduled power outage.
Maintenance of turbines at Marsyangdi and Kulekhani is also contributing to power cuts. Bhat says repairs at Marsyangdi will be complete in around 20 days. With the repair of turbines at Marsyangdi, 23 MWs will be added to the national grid. NEA's failure to control power leakage is yet another major reason behind power shortage. NEA lost 25.15 percent of its total capacity due to power leakage in 2007/08.

THE KATHMANDU POST

Koshi rendered many landless in hours

BY THIRA L BHUSAL
SUNSARI, Sept 5

It had been raining incessantly since morning. Kalicharan Yadav, his seven-year-old daughter, and his sister-in-law were sitting on the roadside at Laukahi sharing a piece of plastic paper to cover their heads under the rain.

A dejected Kalicharan was constantly looking down the road when his daughter showed him a boat in the distance toward the southern part bordering Bihar. It appeared to be approaching the road. Kalicharan and his family desperately wanted to know the condition of the remnants of his building from the boatman as they had abandoned the building to escape the flood since quite some days.

When the raging Koshi River breached its embankment at West Kushaha on August 18 and diverted eastward, it submerged the entire land around his building, and the water level reached up to their necks. Kalicharan then decided to flee his home along with his children, wife and other family members.

With over five bigha land, Kalicharan owned a concrete building until a few days back. He reared cattle and grew crops in his village bordering Bihar.

"I don't know how many years will it take to transform my paddy land into cultivable land because Koshi is flowing with a powerful current over it," Kalicharan said gloomily, adding, "I just pray that at least some parts of my building are intact."

On that fateful day of August 18, when the Koshi began its devastation, this owner of five bigha paddy land, became landless and penniless within hours.

Mohammad Salim Miya of Shripur-8 and Mohammad Safid Miya of Kushaha-3 are taking refuge at Bhagwati Secondary School at Inaruwa. The school is being used as a camp to house thousands of people displaced by the Koshi havoc.

Salim is father of three children and Safid is father of six. Salim's wife Ajam Khatun is eight months pregnant and Safid's wife is nine months pregnant.

Salim has five bigha land and a concrete building. Safid owns one bigha land and a house roofed with corrugated sheets. Unfortunately, the Koshi washed away their buildings, properties and valuables.

Similar is the plight of Mahammad Majrood, husband of five-month pregnant Hasina Khatun.
Staying inside the same room at the school, they had common stories. Everything of ours is ruined, they said. "These children's future has become uncertain, but more than this we have a very hard time fulfilling their demands and explaining the present situation."
When the Koshi breached its embankment their first priority was to save the lives of children and themselves, they said.

Most of the over 50 thousand people displaced by Koshi devastation share the same plight.
People displaced from villages inundated by Koshi are mostly farmers or daily-wage workers from madhesi communities. Majority of them are dalits who are both Hindu and Muslim.
The inundated villages are fertile lands suitable mainly for rice, sugarcane, jute, and for keeping fisheries.