The Way Forward

After the success of the first Hydropower Summit in 2014, the second one-day hydro-event ‘Nepal Hydropower – The way forward’ is scheduled to be held on March 5 at Hyatt Regency, Kathmandu. The government of Nepal, World Bank Group and Asian Development Bank will jointly host the programme.
This event will be significant as it will witness the signing of a MoU between the government of Nepal, GMR and Bangladesh for power supply agreement. Moreover, it will help to determine a road map to implement already signed agreements among key stakeholders to accelerate the next steps.

The event will initiate regional-level dialogue at a political level to help articulate the road ahead for Nepal, encompassing progressive policy and regulatory framework to accelerate private investment in the hydro sector. The event seeks to bring regional consensus and a regional-level power trade buy-in.

The one-day event will have a ministerial session from Nepal, India, Bangladesh, Sri Lanka, Pakistan and Bhutan and will be focus on the vision and deliberate on cross-border energy trade and cooperation. There will also be panel discussions on promoting a transparent, stable and predictable investment regime in Nepal's hydro sector to attract developers and financiers among international, regional and local decision makers and stakeholders.

Published on March 1, THT Perspectives

Nepal Hydropower: Challenges and opportunities

Magnificent strides have been made in Nepal's hydropower sector but much more still needs to be done 

Sujata Awale

Kathmandu

Last year was a tremendous year for the hydropower sector in Nepal, which gained momentum with landmark agreements like the bilateral Power Trade Agreement (PTA), Project Development Agreements (PDAs) and regional energy cooperation pact among SAARC countries. Nepal also signed a bilateral Power Trade Agreement (PTA) with India in September, which allows both countries to import and export electricity. Furthermore, the SAARC Framework Agreement for Energy Cooperation (Electricity) endorsed at the 18th SAARC Summit in November opened the door for electricity trade between member countries and Bangladesh has also emerged as a promising market for Nepal to sell power to via India.

Implementation of agreements

“Nepal has endorsed vital agreements, however, there is still a gap on how to implement the signed agreements to trade the energy in regional countries,” said Rajendra Kishore Kshatri, Secretary of Ministry of Energy (MoE). Citing that there is a need to address contractual risk and its viability, he said, “We are formulating an ‘Electricity Act’ to address contractual risks for hydropower projects. Although the PDA will take care of the risk and other factors, we will be incorporating authority to investors to step in the projects, clauses to force majeure, termination right, application choice of law, partial government guarantee to boost the confidence of investors.”

Admitting that hydel projects are plagued with many problems, Kshatri said, “First and foremost, the attitude of the concerned people should be changed towards hydropower projects to solve these problems.” He further said that development of the country is only possible with the development of the hydropower sector and it should be prioritised.

He informed that they are planning to form a power supply agreement with Bangladesh. “There was a speculation that Nepal has to rely on the Indian market only to trade power and it can’t be competitive in terms of pricing. But now, with the agreement between Nepal and Bangladesh, it will pave the way for power trading with other regional countries too.” He said that other PTAs are also possible via India after paying wheeling charge.

Roadblocks to development

Stakeholders stated that investment risk, insufficient infrastructure development of transportation and transmission lines, unsolved land acquisition and right-of-way issues, unfavourable environment, political instability and elongated process to acquire permission and approvals for projects are stumbling blocks to further development of the hydropower sector. In this regard, Kshatri said, “It is true that we have not been able to solve the issue of right-of-way and land acquisition. To overcome these problems, there should be legislative regulatory norms.” He further added that there is a need to update policy and Acts in regard to adaptation to climate change, motivation for low impact hydel projects and work towards harmonising legal provisions with India for better business prospects.

Policy and priority

Hydropower projects being non-recourse finance, banks and financial institutions (BFIs) need to have bankable documents for risk allocation. Despite outstanding agreements, donor agencies and FDIs are still hesitant to invest in projects, as there is a lack of timely implementation of required policies.

“By spending one and a half years, we have developed bankable documents for investors in hydel projects. However, lack of implementation of policy, issues of incentives and delayed approvals make the process long and cumbersome for investors,” said Radhesh Pant, Chief Executive Officer of Nepal Investment Board. Citing that the government should fulfill obligations to create a favourable environment for investments and investors, he said, “Hydel projects automatically become the property of the government after the consensus period of 25 to 30 years. Hence, the government should regulate and supervise hydropower projects from the beginning.”

Pant said that there is a need to boost the confidence of financers with friendly policy incentives and approvals. Stating that development of South Asian countries is only possible through power and infrastructure development, he said, “SAARC countries need immense power supply and with the potential of 83,000 MW, Nepal can have a good market to supply power and achieve GDP growth.” With the regional cooperation agreements, SAARC nations can now depend upon each other for mitigating the shortage of power and related woes and expand the networks and market.

The road ahead

“The viability of any economy is related to the viability of the power sector. And therefore, financial action should be taken,” said Raghuveer Sharma, Chief Investment Officer, Infrastructure and Natural Resources at International Finance Corporation. According to him, the many countries are willing to go beyond the traditional contractual mechanism of power purchase agreements to create a new market. “India already has a market, now they are talking about the northeastern South Asia nations that are Nepal, Bhutan, Bangladesh and India,” said Sharma, adding that investors are ready to invest in hydel projects. He said, “The market for Nepal is South Asia mainly India, Bangladesh, Sri Lanka and Pakistan. To tap these potential markets, Nepali legal policy and regulatory frameworks has to harmonise with these countries eventually from India and Bangladesh.”

Talking about the problems that keep cropping up at the local level and the recent demands by locals over the Bhotekoshi Hydropower and Khimti transmission line projects, Sharma stated, “The government should always be willing to take civil defense action to overcome these law and order issues quickly. There is a also the responsibility of both the government and developers to foresee and take action to solve these problems.” According to him, the hydro sector has taken major strides but the road ahead will require joint effort from developers and the government to deal with legal and other issues and move ahead. 

Published on March 1, THT Perspectives

Treasure of tailoring

"The mushrooming of tailoring shops at every nook and corner has increased unhealthy competition in the business"

Sujata Awale

Kathmandu

After gaining experience of tailoring from different garment factories and tailoring shops for six years, Raj Bahadur Maharjan, Proprietor of RB Tailors, commenced his own tailoring business in 1991. Started with an initial investment of Rs 80,000 at Machhindra Bahal, Lalitpur, he had only one assistant to support him then. Reminiscing the earlier days of his business, he said, “The business was tough and I had to rely on my only assistant for everything. Gradually, I learnt the craft of the trade and things got better.”

According to him, the tailor shop reached new heights only when it was shifted to Lagankhel in 1996. Citing that the business was good during 1998, he said, “There used to be only a few tailoring centres and the business reached its peak," adding that now there is tough competition in the market. "The mushrooming of tailoring shops at every nook and corner has increased unhealthy competition in the business," he said, adding that one needs to offer the best services to stand out in the market.

Specialised as a gents tailor, the shop has all custom tailoring of shirting and suiting along with readymade clothes. RB Tailors has an array of fabrics from the local market and fabrics imported from India, China, Thailand and Taiwan. Customers can order formal attire, business and wedding suits, along with Nepali costumes such as daura suruwal, waistcoat, jwari-coat et cetera that costs anything from Rs 2,500 to Rs 12,000. The tailoring charge of a shirt and pant is Rs 350 and Rs 450 respectively, while that of sewing a daura suruwal and suit is Rs 1,000 and Rs 3,500 respectively. Along with custom tailoring service, the shop also offers readymade clothes such as shirts, pants, suits, daura suruwal and trousers among others.

“The finest custom tailoring service and prompt delivery system are our unique selling proposition,” said Maharjan, adding that is why their customers frequent the shop. According to him, loyal customers' word of mouth has done magic to his business.

Festive seasons like Dashain, Tihar, the wedding season and new academic sessions are the peak time for the business. "To cash it on these occasions, we offer a shirt, tie and coat cover for free on the purchase of suit," he said, adding that the majority of customers comprise of youngsters from middle class strata.

Today, RB Tailors employs six staff and makes an annual turnover of Rs 600,000. Citing that power cuts is the main hurdle to the business, he said, “It has become a challenge for us to meet commitments to deliver products on time. So, we have to work in the wee hours following the deadline.”

“Custom tailoring is not easy and it is hard to retain good staff," said Maharjan, adding that growth and expansion is further restricted due to the unavailability of skilled manpower. He complained, "Marred by load shedding and due to the lack of skilled manpower, we are compelled sometimes not to take orders." However, he added, "I want to extend with a new outlet in the near future."

 
 Published on The Himalayan Times, Perspectives February 22, 2015

http://216.15.199.42/thehimalayantimes/Details.aspx?id=1404&boxid=29079790&dat=2/22/2015

Brihat coming with bold new projects

First phase of BCL-Bhainsepati to introduce 32 standalone houses

Himalayan News Service

Kathmandu, February 21

Brihat Investments Pvt Ltd (BIPL) is all set to introduce Brihat Community Living-Bhainsepati, by mid-March. In the first phase of BCL-Bhainsepati, the company will introduce 32 units of standalone houses on a project area of 20 ropanis. Targeted at customers of middle strata, the minimum price of the two and a half storey buildings will be priced at around Rs 10 million. The minimum built up area for the project will be 1,500 sq ft with an area of three annas. The Brihat Community Living-Ramkot, Brihat Community Living-Balkhu and Brihat Cluster Maitidevi are three ongoing projects of the company.

“We are working on designs for the project and as soon as we finalise it, we will launch the project,” informed Nischal Man Singh Pradhan, Chief Operating Officer at BIPL. Citing that demand and inquiries have soared, he said, “Compared to the corresponding period last year, we are witnessing double the inquiries and bookings for the projects these days.” According to him, of late, along with end-users, investors are also booking houses.

The ongoing project — BCL-Ramkot is spread over 32 ropanis of land that consists of 76 individual houses. According to the company, they have completed construction of 85 per cent of the project. “We have sold 51 units till date and 25 families have already shifted in,” said Pradhan, adding that they provide facilities such as swimming pool, gym hall, temple, garden among others. The price of the individual houses start from Rs 10.4 million depending upon built up area and size. The company offers 13 different types of house models. The company also provides slight customisation options for the convenience of customers.

The smallest size house will have at least three bedrooms, three bathrooms, kitchen, dining, living and laundry room. "Design is another main efficient aspect of all our housing projects," he claimed, adding that their design ensures maximum utilisation of the area.

The unique selling propositions of the projects are — a range of eco-friendly products and concepts such as solar electricity for streetlights, rainwater recharging for water conservation, proper garbage disposal system, use of UV protection stickers and use of concrete lightweight blocks instead of bricks for reduction of carbon monoxide emission and conservation of soil.

Spread over 105 annas, BCL-Balkhu is another ongoing project of the company. There will be 24 individual houses that are priced at Rs 12.19 million to Rs 19.5 million depending on the different sizes. “We have received bookings for 60 per cent of the houses in this project,” said Pradhan, adding that construction is in progress. The company targets to handover the project in mid-August.

Brihat Cluster Maitidevi is a small project consisting of seven individual homes. “We have introduced this project targeting city dwellers who do not want to shift from the core areas,” explained Pradhan, adding that they have already sold five units. The two and a half storey building with three bedrooms are priced at Rs 14.4 million to Rs 19 million.



Projects in the pipeline

BCL-Bhainsepati: 32 individual houses

BCL-Ramkot: 76 individual houses

BCL-Balkhu: 24 individual houses

Brihat Cluster Maitidevi: 10 cluster houses 

 Links: http://epaper.thehimalayantimes.com/epaperpdf/21022015/21022015-md-hr-14.pdf

PACOSAN-II commits to an open defecation free Pakistan

ISLAMABAD: Pakistan Conference on Sanitation (PACOSAN–II)  renewed its commitment to Human right on Sanitation adopted by the United Nations and endorsed by SAARC nations to work progressively to achieve an open defecation free and hygienic South Asia through accessible, affordable, appropriate, acceptable and environmentally safe sanitation and hygiene services that all people can use and maintain with dignity, safety comfort. Pacosan II unanimously agrees and commits to an open defecation free Pakistan by 2025 and to progressively move towards sustainable environmental sanitation.

The Ministry of Climate Change in collaboration with key development partners, government ministries, departments and international non-governmental organisations, including Unicef, Plan International and WaterAid (UK), held the conference on February 17 and 18.

Pakistan is the first country in South Asia to hold a minister-level national conference on sanitation. The first national conference was held on May 28–29, 2009 in Islamabad. From Nepal — Ram Chandra Devkota-Joint Secretary of MoUD , Rabin Lal Shrestha of WaterAid, Dr Sumitra Amatya of SWMTC, Lajana Manandhar of FANSA national convenor Nepal and Guna Raj Shrestha of WSSCC Nepal Coordinator had participated the meeting. — Compiled by Sujata Awale

Declaration of PACOSAN II

Power crisis cutting into economy

Ratna Sagar Shrestha/ THT

The cost of power for domestic industries has sky rocketed due to constant power cuts


Sujata Awale

Kathmandu

The valley is once again suffering from a severe power crisis of up to 11 hours per day. Long hours of power cuts have not only hampered city dwellers but are hampering the whole economy. The cost of production for domestic industries has sky rocketed rendering them incapable of competing against with imported products in terms of price. Dependency on trading business has also increased which is not a good sign for the economy. Due to acute power cuts, industrialists state that existing industries are facing a hard time and it is impossible to start new ventures. While load shedding has affected the whole economic chain, the government is yet to prioritise the construction of domestic and international hydel projects on line.

High demand low supply

Owing to less energy production, high demand and problems in ongoing hydel projects, Nepal Electricity Authority (NEA) is importing power from India to mitigate the crisis. As of now NEA is importing around 235 MW electricity from India, which is 55 MW more as compared to the same period last year.

NEA had extended an hour of load shedding a few weeks ago stating that the Mid Marsyandi Hydropower Project was scheduled for maintenance. “We have completed the maintenance work and now the hydropower is functional,” said Bhuwan Chettri, Chief of the Load Dispatch Centre at NEA, adding that the project contributes 36 MW power to the national grid in the dry season. “We are planning to import more power from India to decrease the load shedding hours. However, the process is pending due to conductor upgradation on the Indian side,” informed Chettri.

Electricity demand this year has swelled by 10 per cent as compared to last year. The current demand for electricity is around 18.6 million units per day and there is a good chance this demand will grow. Citing that the demand for power has increased unexpectedly this year, he said, “The current demand is what we expect in the months of mid-February and mid-March usually, but the urgency this year could also be because of the shortage of LP Gas in the country.” He further said that the load shedding hours may extend in days to come if demand increases. To meet the current demand, the country needs to generate 1,250 MW of electricity. However, NEA can supply only around 400 MW through domestic hydroelectric projects and by importing 235 MW.

SAARC miracle

It is a well known fact that the valley did not suffer from power cuts during the SAARC Summit held in November, 2014. This fact does not sit well with Kathmanduites given the long hours of power cuts immediately after the conclusion of the Summit.

When asked about the reason behind this miracle, Chettri commented, “We had totally disconnected the power of industrial areas and had increased load shedding hours in other parts of the country to maintain smooth supply in the valley during SAARC Summit. Therefore, there were no power cuts during the period.”

No priority, no power

“The power cuts will not come to an end anytime soon as we don’t have capacity to meet soaring demand,” said Khadga Bahadur Bisht, President of Independent Power Producers Association of Nepal. Citing that there is no proper planning from the government side, he said, “As Mid Marsyandi Hydropower Project was shut for maintenance during the peak dry season when the power crisis was up, people had to suffer felongated load shedding.”

Bisht stated that the only solution is to import from India during the dry season. He said, “We face severe power cuts since the last seven years and the problem will remain same if the government doesn’t take any initiative and proceed with developing new hydel projects.” He further stated that the government should expedite the process of giving approvals for new domestic and foreign hydel projects. He opined that the government should solve the issues regarding project development agreements, power trade agreements and construction of transmission line connections to solve load shedding problems in future. “Otherwise the problem will hover around in future too and the country will be in a worse state than now,” he warned.

Wasted energy

While the country is reeling under severe power crisis, generated power is wasted due to lack of transmission line connection. Mai Hydropower (22 MW) promoted by Sanima Hydropower Pvt Ltd (SHPL) has completed the construction of the project and is ready to generate power since December 26, 2014. However, the transmission line of Kabeli Corridor 132 kV transmission line from Damak to Godak is yet to be completed. As the main transmission line project could not be completed, NEA has worked on an alternative way to connect the project with the 33 kV Godak to Puwa transmission line for the dry season.

“It has been a month since we completed our project and are ready to generate power. However, we could not go for generation as NEA could not complete the transmission line on time,” said Dr Subarna Das Shrestha, CEO of SHPL. According to him, they got an alternative transmission line to transmit eight MW power produced in the dry season. “If the 132 kV transmission line from Damak to Godak project is not completed within few months, our power will be wasted,” he said.

“The work of alternative transmission lines have been completed but due to technical problems at the project site, the power production has been halted,” informed Chettri. He said that NEA is working on the 132 kV line and that they target to complete it by mid-July. Reportedly, of late, only 26 towers have been erected out of 95 towers.

Impact on industries

The industrial sector is in the dark due to load shedding. Industrialists complain about difficult working environment and going at la huge oss. “Power is the back bone of industries. No work can be done without power,” said Pradeep Jung Pandey, President of the Federation of Nepal Chambers of Commerce and Industries. “To mitigate this power crisis, we use diesel generators which increases our cost of production by five times,” he complained, adding that generator produced power costs Rs 35 per unit. Citing that most of the load shedding hours are during working hours, he said, “As industries cannot run full-fledged due to prolonged load shedding, unemployment problems increase. Moreover, with the increase in cost of production, Nepali products have not been able to compete with other imported products.”

Pandey is of the opinion that without proper supply of power, the country cannot have GDP growth. Stating that the government should proirtise hydropower and industrial sector, he opined, “Political will should be there to solve this power crisis. Timely policymaking and implementation should take place. And the government should create a favourable environment for investment in hydel projects.”

Economic turmoil

The dependency of trading business and imported products has been increasing by the year. “Nepal’s economy is stagnant at the moment,” said Chiranjivi Nepal, Economic Advisor of Prime Minister. He further stated, “Our economy is dependent on trading business each year which is unhealthy for the economy. The trade deficit has increased and we are depending on other countries for almost everything.”

As per the latest report of Nepal Rastra Bank, Nepal has already imported Rs 350 billion worth of products during the last six months of the fiscal year 2014-15 and the country witnessed Rs 300 billion trade deficit. Last year, the country had Rs 618 billion trade deficit which exceeded the allocated budget of Rs 617 billion.

According to him, “Electricity is vital for the development of internal economy. Despite having 83,000 MW potential for hydropower projects, the country could not make the most of it.” Stating that solar power and diesel plants are not feasible in the country, he said, “Solar does not have long life cycle and we have to import all instruments from aboard while diesel plants are expensive. The only option is to develop the hydropower sector.” He said that strong political will is lacking to boost the sector. “Political leaders have to crack down on the hydropower issue and commit to increase power production for the prosperity of the country,” he said.

  Published on February 15, 2015 on THT Perspectives
http://epaper.thehimalayantimes.com/Details.aspx?id=1259&boxid=29017508&dat=2/15/2015

High demand low production

Sujata Awale

Kathmandu

As industrialists cannot meet the increasing demand for milk every year, the milk industry depends upon import. Despite having 10 per cent growth in demand each year, the production of milk could not meet demand. According to data of Nepal Dairy Association (NDA), the country produces 1.5 million tonnes milk per year, which is still not enough. To mitigate the demand, industrialists import 300,000 to 400,000 litres of milk daily.

“The domestic production of milk is only enough for five months while for the remaining seven months we have to import from other countries,” said Megh Raj Bhandari, Immediate Past President of NDA. Citing that lack of production is the main challenge in the industry, he said, “There is 10 per cent growth in demand, but we only have four per cent growth in production each year.”

As per the Census report 2011, more than 80 per cent of the population depends upon agriculture while 57 per cent of the population is engaged in cattle farming in the country. The milk industry has contributed about nine per cent to gross development product (GDP) and 450,000 families are directly employed.

The milk industry's demand and production is indirectly proportionate in Nepal. The peak season for milk production starts from mid-October to mid- May when the demand goes low. On the other hand, demand goes up while milk production dips. “To mitigate this uneven scenario, we, industrialists, have no choice rather than to impor raw and powder milk from India and other third countries,” said Bhandari. “If only we could attract youth to the agriculture sector, with grooming 40,000 livestock, the situation will be corrected and 13,000 families will get employment,” he added. He stressed on the need to provide easy and affordable agricultural loans to increase the participation of youth in the milk production sector.

The government recently increased the price by Rs eight per litre on December 31, 2014 citing that farmers are not gaining much profit from the sector as they face high production cost. Of the revised price, the government allocated 69 per cent share to farmers and 31 per cent to industrialists.

“The price increment in milk is our compulsion as the production cost including daily wages, machinery, packaging, and fodder has increased by 50 per cent,” said Sumit Kedia, President of NDA. He futher said, “As we are facing a problem with production of milk, the government should plan to attract the younger generation with easy loans and subsidy.” Moreover, he said that as 60 per cent of farmers are relying on fodder, the government should conduct awareness campaigns for feeding green grass to livestock. He informed that the number of cows and buffaloes are high whereas milk production is comparatively low. According to him, local cows give only six litres per day while in other countries cows give 25 to 30 litres milk each day.

Kedia stressed on the immediate need to provide trainings and awareness about quality assurance to milk production and upgrade technology for better quality assurance. Besides these, power cuts and lack of skilled manpower are also hassles for the industry.

According to NDA, DDC the state owned milk producer enjoys 40 per cent of market share while the private sector enjoys 60 per cent market share. Pokhara, Butwal and Kathmandu are major markets where milk consumption is high.

Raj Govind Rajkarnikar, Manager of Quality Control Department at DDC, said, “The market is growing, however due to low production from farmers, we have to rely on imports.” According to him, the valley alone has 250,000 litres of milk consumption per day and DDC produces 140,000 litres of milk. According to him, there are more than 100 dairies in the valley alone. Citing that still the private sector could not gain public trust, he said, “DDC being a government owned company, we retain quality check however, many companies play foul to gain profit without having concerns about quality.” He further said that there should be a timely quality control mechanism.

Published on February 15, THT Perspectives