ENERGY-NEPAL: Wanted Small Power Projects

By IPS Correspondents Reprint | | Print |

Suman Pradhan

KATHMANDU, May 8 1998 (IPS) - Nepal’s Water Ministry has suddenly become the champion of small hydropower and irrigation projects after years of confrontation with environmentalists over multi- million dollar dam projects.

Behind the shift from big to small projects is the new Water Resources Minister, Shailaja Acharya, who also doubles as the deputy prime minister and is the first woman to be appointed minister in Nepal.

“I am a believer in the small is beautiful philosophy,” she declared immediately after being appointed minister last month, alongside colleagues who consider large water projects the ideal solution to crushing poverty in Nepal.

Acharya took over promising to encourage small power producers, rural electrification and small farmers who need cheap electricity and irrigation — all of it music to the ears of anti-big dam lobbies in the country.

“What is happening in the ministry today is no less short of a revolution,” says Rajendra Dahal, a well-known journalist who has reported on water issues for the last 15 years. “If the minister follows through with her plans, then it would be a complete break with the past.”

Looking forward to the prospect is Chandramani Adhikari, president of INHURED International, an NGO which successfully spearheaded the campaign against the controversial World Bank- backed Arun-III hydropower project in the early nineties.

“The minister has given an impression of being serious about the small project approach,” he observed. “We wish her success. But we also want to make it clear that she needs to put that philosophy in practice for tangible results.”

Last week, there were indications that Minister Acharya had already begun doing just that. Introducing sweeping new changes, she slashed bureaucratic red-tape for investors seeking to construct plants of less than 10 MW capacity, doing away with the a mandatory government license for construction.

That was followed up swiftly with instructions to the government power monopoly, Nepal Electricity Authority (NEA), to immediately buy power from small independent power producers who operate hydropower plants of less than one MW capacity.

In addition, a directive was issued from the minister to all top officials in the Ministry and NEA to come up with a plan “within seven days” on how to reduce power tariffs which are a high nine cents per unit in Nepal.

“All these decision in Nepal’s power sector were long overdue,” editorialised the largest selling English newspaper ‘The Kathmandu Post’. “The Water Resources Minister has made a laudable beginning. But can she or will she be allowed to keep up the tempo?” it asked.

But for now, at least, the contrasts with Acharya’s predecessors could not be more striking. Since the early days of multi-party democracy in 1990, successive governments and water ministers have relentlessly pushed large hydroelectric projects.

Nepal’s mighty Himalayan rivers have an estimated combined potential of 83,000 MW of hydropower, of which only 283 MW have been harnessed. Significantly, despite the rich water resources, only 13 percent of Nepal’s households have access to electricity.

Experts say that much of this has to do with poor government planning, like the case of Arun-III which was shelved after the World Bank pulled out in August 1995 because of opposition from environmentalists.

But no lessons were learnt from the Arun-III fiasco. Shortly thereafter, the government of the day signed an agreement with India, Nepal’s southern neighbour, to develop the huge 6,480 mw Pancheshwar Project on the border river Mahakali.

The government had also held discussions with U.S-based transnational Enron Corp about the 10,800 mw Karnali-Chisapani project — which is presently in cold storage after Enron pulled out last month citing unfavourable market trends.

Both these mega projects are hugely controversial here with environmentalists who oppose the ecological cost of big development projects, and independent economists who argue Nepal’s underdevelopment would be worsened.

“Nepal’s economic structures at present are just not equipped to handle mega-projects such as Karnali-Chisapani,” says Dr Himesh Dhungel, an energy consultant working for a Fortune 500 energy company in the United States.

“The best approach for now would be to go for smaller

projects to develop capacity, and at the same time restructure the economy so that at some point in the future, such large projects become feasible,” he advises.

Acharya herself, though arguing for the small-is-beautiful approach, has vehemently denied that she is against large projects, as is being projected here in the local press. “I prefer small projects, but that does not mean I will not back big ones if it is in the nation’s interest,” she clarified recently.

That, say observers, could be her way of confusing her detractors, many of whom are in the government. The powerful political and business interests that big water projects in Nepal would be the first to cheer her fall.