From Exporting Billions to Power Shortages: Nepal’s Energy Paradox Explained

Winter is here, and while you might be dreaming of cozy evenings with hot tea and warm blankets in front of a heater, there’s a twist to this season’s story: Nepal is facing a power supply crunch. Ongoing technical problems with key hydropower projects and restricted imports from India are setting the stage for tough times ahead.?

Let’s dive into the details and explore what this means for everyone.

The Power Puzzle: Why the Shortfall?

Nepal Electricity Authority (NEA) has a big problem this winter. There’s a?200 MW shortfall in electricity supply, and here’s why:

1. Hydropower Projects in Trouble: Two major hydropower projects—the 456 MW Upper Tamakoshi and 144 MW Kaligandaki are still recovering from severe damage caused by the relentless rains and floods in September. These projects are supposed to be our energy lifelines, but they’re struggling to get back on their feet.
2. Limited Help from India: NEA requested 200 MW of electricity from India, but India has only committed to supplying 75 MW. Why? India’s hydropower generation also dips in winter due to reduced water flow in rivers. Even offering a high price of?INR 10 (Rs 16) per unit couldn’t sway them.
3. Seasonal Dependence: Most of Nepal’s power comes from hydropower, which heavily depends on water levels. Winter’s lower water flow means less electricity.

A Tale of Two Seasons: From Exporter to Importer

Here’s an interesting twist: In the first five months of the current fiscal year (FY 2024/25), Nepal exported electricity worth?Rs 13.4 billion to India. The NEA sold 1.76 billion units of surplus electricity during the monsoon season at an average rate of?Rs 7.39 per unit, earning?INR 8.15 billion from states like Haryana and Bihar.

The highest export was in Shrawan (mid-July to mid-August), with power worth?Rs 4.15 billion sold. However, exports started dwindling after the September floods damaged key infrastructure, including the Upper Tamakoshi project. By Mangsir (mid-November to mid-December), exports had plummeted to just?Rs 281.4 million.

Now, with the onset of winter and reduced water flow, Nepal has switched gears from being an exporter to an importer of electricity. This shift highlights the seasonal nature of Nepal’s hydropower reliance and the challenges it brings.

Who Will Face the Blackout Blues?

Here’s the big question:?Who’s going to bear the brunt of this shortfall?

• Industries or the Public? The NEA has hinted that industries might have to face power cuts during peak hours (5 PM to 7 PM). Why? Two reasons:Industries often default on their electricity payments.Industries pay just?Rs 4.75 per unit, while households pay?Rs 11 per unit and are more consistent with payments.

NEA’s spokesperson, Chandan Kumar Ghosh, emphasized the rationale behind this decision, stating, "On one hand, we have the general public who pay around Rs 11 per unit consumed and make regular payments. On the other hand, industries pay Rs 4.75 per unit and often fail to make timely payments. In such a scenario, it makes sense to prioritize those who are consistent with their dues."

The Industrialists’ Dilemma

Naturally, industrialists aren’t thrilled. They argue that power outages disrupt production cycles, especially since other raw materials are more readily available in winter. But here’s a reality check:?electricity is also a raw material, and it’s in limited supply during winter.

Ghosh suggests a shift in strategy: Industries should ramp up production in summer when electricity is abundant. To nudge them in this direction, he proposed a seasonal tariff system:

• Higher rates in winter to discourage excessive usage.
• Lower rates in summer to incentivize production during that time.

Connecting the Dots: What Does This Mean?

If you’re a regular consumer, here’s what to expect:

• Evening Power Cuts: Peak hours might see blackouts, especially if industries don’t cooperate.
• Higher Electricity Bills? If seasonal tariffs are introduced, winter bills could climb.
• Less Industrial Output: Power cuts for industries could slow down production, affecting goods and services.

For industries, this is a wake-up call to rethink their reliance on uninterrupted winter power.

Nepal’s Energy Balancing Act

This isn’t the first time Nepal has faced such a challenge. In the last fiscal year, Nepal exported electricity worth?Rs 17.6 billion while importing electricity worth?Rs 16.93 billion, making the country a?net electricity exporter by a margin of?Rs 130 million. This achievement underscores the potential of Nepal’s hydropower sector but also reveals its vulnerability to seasonal fluctuations.

With a target of?Rs 30 billion in electricity export revenue for the current fiscal year, setbacks like the damage to the Upper Tamakoshi project and reduced winter production could hamper these ambitions. However, maintenance efforts are in full swing, with the Upper Tamakoshi project expected to resume operations by December 25.

What Needs to Be Done?

Nepal’s power woes aren’t new, but there are steps we can take to avoid these annual crises:

1. Diversify Energy Sources: Relying solely on hydropower is risky. It’s time to invest in solar, wind, and other renewable sources.
2. Policy Overhaul: Seasonal tariffs could be a game-changer, but they need to be carefully planned and communicated.
3. Faster Recovery for Damaged Projects: The NEA must expedite repairs on the Upper Tamakoshi and Kaligandaki projects.
4. Better Cross-Border Agreements: Strengthening ties with India for more consistent power supply could help in the long run.

What Can You Do?

As a consumer, you can play your part too:

• Save Electricity: Simple steps like turning off unused appliances can make a difference.
• Plan Ahead: If you’re an industry owner, consider shifting production to summer months.
• Voice Your Concerns: Push for policies that ensure a balanced approach to power distribution.

Final Thoughts

Nepal’s energy challenges are complex, but they’re not insurmountable. With better planning, smarter policies, and collective effort, we can ensure that winter doesn’t mean sitting in the dark.?Let’s turn this power crisis into an opportunity to rethink and rebuild a stronger, more resilient energy system.

So, what do you think? Should industries bear the brunt, or is there a better solution? Let us know in the comments below!