Hydro Hope Rekindled

Nepal has no option but to tap into its immense hydro potential if we are to significantly improve our living standards and graduate to the status of a developing country. But, despite this lucrative endowment, hydropower development started making significant strides only recently as the private sector ramped up its involvement in the sector. Our installed capacity of hydropower projects has steadily increased to around 2,800 MW from around 557 MW in 2005, according to the NEA. As the country's population and economy continues to grow, and the market of electric vehicles (EVs) booms, Nepali government has projected annual electricity demand to grow by around 12 per cent for the next few years.

As things stand, this momentum is sure to gather further pace in the months ahead. One effort towards this direction happened on Friday, when Finance Minister Barsaman Pun and three vice presidents of the World Bank during their virtual meeting discussed how to advance the Upper Arun Hydel Project (UADP) and the Dudhkoshi Reservior Project (DRP). When Minister Pun was the Minister of Energy, Water Resources and irrigation earlier, the construction process of the 1,061 MW UADP to be built in Bhotkhola Rural Municipality of Sankhuwasabha as a game changer project had advanced. With this welcome development, the hope has been rekindled. This project is considered an attractive project as it produces electricity even in the winter when the water flow shrinks and the generated electricity plummets, forcing us to import electricity from India. 

The discussion also dwelled on advancing the plan to build a reservoir on the Dudhkoshi River and generate 635 MW in the districts of Khotang and Okhaldhunga. Under the leadership of the Asian Development Bank (ADB), the project is going to be built with the investment of the WB, Citizen Investment Trust and the general public. Because it is a storage type project, the DRP is capable to address the power deficit we have been facing during the dry season when the river flow ebbs. We have found a way out to export surplus electricity and earns billions of rupees in wet season but lack one when the generation takes a nosedive. Such projects are crucial if we are to change our fortune through cross-border electricity trade. 

When these projects of scale take off, construction of highways, buildings and other infrastructure gets a boost. This is turn will prop up the demand for construction materials such as cement, iron, sand, steel wares, among many others, potentially lifting the construction industry from the doldrums it is reeling from. This good news comes at a time when the construction of transmission lines, the conduit of electricity, is underway through MCC projects. 

Meanwhile, skyrocketing prices of petroleum products, which has been a drain on our foreign exchange reserves, and high import cost of coal-generated electricity from India necessitates that we pursue our hydro goal more aggressively. This serves the interest of both India and Nepal as they work towards becoming a net zero carbon emitter by 2050 in line with the Paris Agreement. To this end, the former is making an all-out effort to increase its share of renewable energy. This is reflected in the deal it inked last year to purchase 10,000 MW from Nepal. The future of hydropower has never been more promising!