Hydropower in the sixteenth plan

Beginning 1956, Nepal has had 15 periodic plans, or five-year plans. The 16th plan (Fiscal Year 2024/25-2028/29) is set to commence, with the slogan of good governance, social justice and prosperity. It has set a priority of achieving prosperity for the great majority of people.

Nepal has neither had good governance nor social justice for decades. In the absence of good governance, corruption, bribery and smuggling are rife from the center to the local level. Social, political and economic inequality is rising. Prosperity has become a hollow buzzword, a slogan to impress a layman.

The 16th five-year plan has given utmost priority to develop hydropower. Nepal possesses hydropower potential of about 45,000 megawatts, which surpasses the domestic need. In other words, Nepal stands at a good position to export electricity. Export market of electricity is large, viable and positive. Considering the wider scope of export to neighboring countries, the upcoming periodic plan has set a target of producing electricity to the extent of 11,769 megawatts in five years. Half of this will be exported to India, Bangladesh and China. However, there are no ready-made transmission lines for export electricity to China or India or Bangladesh. Nepal aims to conduct a bilateral trade treaty with India, China and Bangladesh to export electricity on a large scale. Subsequently, it also sets a plan to construct and expand in-country and inter-country transmission lines. Currently Nepal has an electricity output of  2,855 megawatts, of which only a tiny part is exported to India seasonally. There is a larger possibility to export electricity to Bangladesh, provided India grants the permission to use its transmission line.

In the previous fiscal year, 98 percent of the total population had access to electricity. The 16th five-year plan aims to cover the rest of the population with electricity. Similarly, the plan has set a target of reducing electricity loss from 13.46 percent to 10.80 percent. Within the plan period the per capita electricity consumption will increase from a mere 380 KWh to 700 KWh. This sector aims to create job opportunities for 0.4m people. Currently it provides employment to less than 0.1m people. 

In order to realize its hydropower ambitions, Nepal requires a huge amount of money. For this, the government plans to mobilize internal and external capital, both from the public and the private sector. Private sector producers can construct hydropower projects in partnership with foreign investors. They can also export electricity to India and elsewhere on their own initiative. Similarly, the government will grant permits for particular projects to develop for foreign investors under the model of build, own, operate and transfer (BOOT) system.

This shows that internal as well as external capital would be poured to develop this sector to meet the target of generating electricity in the plan period of five years. It definitely helps to create jobs for those who are unemployed, and provides opportunity for both unskilled and skilled manpower. Electricity is essential to increase production capacity of other economic and social sectors such as manufacturing, agriculture, tourism, health, education and the rest of the sectors of the Nepali economy. Along with this, investment in equal footing for all of these sectors to develop side by side is essential. However, hydropower is a capital intensive sector. It requires a huge amount of money to develop. This sector would attract more internal and foreign investment to meet the growing demand of electricity in both the domestic and foreign markets. Resources in hand could be diverted for the development of the hydropower sector. But if this approach is continued over a long period of time, there is a risk of the economy losing its balance. Overemphasis given to allocating resources to develop this sector could harm the overall economy. The rest of the sectors of the economy will suffer and paralyze badly in the absence of due attention and adequate investment. Production and productivity will diminish. Supply chain will be broken. Supply of essential goods will depend on the import and in turn import depends on the income generated through electricity export. It would create the gravest effect that the Nepalese economy has never seen. So it is crucial to aim for a uniform growth of all key sectors, rather than pouring all the resources and capital into one sector.