Is Nepal's Dream of Hydro- energy Export About to Come True?

If Nepal replaces the fuel imported with its own hydropower, might be a better step for the country's economy. It might be the right step for Nepal to pay heed to increase domestic consumption rather than international electricity trade.

       Nepal has a high probability of having hydro energy because it has sufficient sources of water but has not been able to utilize it for a long time. It is estimated that Nepal is capable of producing about 80,000 MW of hydroelectric power. Really, it is a golden dream that has been assumed for a long time, but the dream has not been converted into reality so far. Recently, Nepal started to sell 39 MW of electricity to India under an agreement between the two nations’ power authorities. This amount is merely symbolic for now. To this little change, a large hue and cry in the Nepali news media that Nepal’s dream become true.

 

Nepal has crossed a century since the then King Prithivi Virvikram Shah inaugurated the first hydropower plant in May 1911. It is probably counted as one of the oldest hydro projects in Asia. With the passing of time, this small Himalayan country faced different political and social changes but did not achieve its goal in the energy sector. The country had been struggling against the dark with Kerosene lamps. Later a few projects were added but not sufficient.

 

Nepal has faced a hard electricity crisis for 18 hours per day in 2017 and imported electricity from southern neighboring India through the Dhalkebar transmission exchange line. Immediately, there was no other option for the country except it. Even amid the crisis, India was also ready to assist Nepal to fulfil the basic energy demand.

 

With the completion of Upper Tamakosi Hydropower of 456MW, Nepal has entered the power surplus stage in hydro energy since August this year. After this project, the country is ready to produce 2000MW Hydro energy in total. Nepal Electricity Authority says the peak time domestic consumption is mere 1500MW.  Because some other middle and small hydro projects are under construction and few have not accessible lines to sell the country’s Nepal Electricity Authority. If the effort would be successful rightly country will be in extra-energy problem. This calculation shows a serious energy holiday in near future, and that will be a new headache for the country.

      

It is not only a matter of surplus energy when the issue comes to trade, which is inherently linked to geopolitics and national politics. India may be a major and easier market for Nepali energy but it wants to apply its Bhutan- policy in this issue. India is providing grants and loans to construct bigger hydro projects in Bhutan to buy surplus energy and get electricity at a reliable price. This export contributes about 40 per cent to Bhutan’s GDP. But the rising expense than the estimate and environmental effects are raising grave concerns there. Both countries are trying to solve the problems for now. However, Nepal has not become a cosy partner like Bhutan for India in this sector. Even though India has access to the hydro energy sector in Nepal but wants more strong and dependable access there. Recently, India and Nepal’s energy bodies signed an agreement to construct a cross border transmission line from Butwal to Gorakhpur. 

 

In spite of geographic difficulty, northern neighboring China may be another importer of energy from Nepal. It is also interested in investing in hydropower projects in Nepal, but the political instability of Nepal is the hesitation of Beijing. As a growing, industrial country, China is also facing a hard energy crisis this time. However, China and Nepal are jointly working on a 400KV cross-border energy transmission line for hydro energy trade. According to the sources of the Nepal Electricity Authority, the work delay is due to the COVID pandemic.

 

Both these giant industrial neighbours of Nepal are going to face a serious energy crisis in the near future due to the reduction in coal production. In the same situation, China committed to reducing coal production for the global environment because coal is one of the major factors of global warming. India and China have been using a large amount of coal to meet the demand for their domestic energy. The energy shortage will directly affect the big economies of China and India. Beijing is trying to find a sustainable solution to the energy crisis this time.

 

Bangladesh also wants to buy hydro energy from Nepal, but it is not possible without the permission of India because Bangladesh and Nepal do not share a joint border. On the surface, seemingly, Nepal has a good market for its hydro energy, but it is not easy in reality due to its geopolitical location and different competing interests.

 

With Beijing’s rising as a world-class economic super-power, her competitive powers are trying to encircle China. In this strategic silent war between both parties, Nepal is becoming a cockpit. The droplets of this strategic rain have been affecting Nepali politics and the economy for a long time. This international power tussle is seemingly turning into a serious phase in this decade, while simultaneously, the Himalayan country of Nepal is also the risk.

 

For a few years, in Nepal, a debate has been running in support of and against the Millennium Challenge Corporation (MCC) grant from the USA to construct a power transmission line to connect India. The agreement was signed between MCC and the Nepal government about six years ago for this grant. According to the agreement, it must be passed by the parliament of Nepal. It was time to pass from parliament, but the dilemma of debate is delaying the further process. The political atmosphere is clearly divided into support and protest. Most of the Nepalese are looking at it as a part of the Indo-Pacific Strategy propounded by Washington to keep China in its grip.  Finally, it is also the game to take on Nepali waters and hydropower.

 

Nepal's ambition to sell excess hydropower to neighbours might not be a suitable direction for now. Although Nepal has secured a good position in rapidly electrifying the world, although it is not sufficient. Nepal is expending a remarkable amount of foreign currency on fuel. If Nepal replaces the fuel imported with its own hydropower, might be a better step for the country's economy. It might be the right step for Nepal to pay heed to increase domestic consumption rather than international electricity trade.