How Nepal got the electricity flowing
path to progress
Hours-long daily blackouts ended suddenly last October after an engineer approached the problem differently – and got the government's backing to solve it.
Kathmandu, Nepal—For years, Hemkumari Chaulagain dreamed of getting a good night’s sleep. She didn’t mind rising early to receive predawn deliveries at her small shop in Kathmandu, Nepal. What wore her down was powering up the water pump each night to ensure the water storage tank atop her home stayed filled.
The exact hour that she did this depended on the rolling blackout schedule enforced by the Nepal Electricity Authority (NEA), the country’s power distribution monopoly.
“Sometimes I needed to wake up at midnight, at other times at 2 in the morning. For a decade, I didn’t sleep properly,” says Mrs. Chaulagain, whose tiny convenience store is tucked into the capital’s Bishalnagar neighborhood.
Last winter, her family had only 12 hours a day with electricity. But because she and her husband had invested $500 – two months’ worth of his salary as a police officer – in an inverter, or power backup device, they had power to light their house and even watch television during blackout hours. Still, it wasn’t enough for the water pump motor.
Then suddenly, in October, the power came on in full.
Chaulagain has slept seven hours a night since then. She’s delighted, but also at a loss – like many others – to explain what happened. No official word was forthcoming.
“They were hiding electricity until now,” she surmises.
Far-fetched though it may sound, her guess is not far from the truth. All it took was the right engineer – and a government desperate to show its people progress – to uncover and dismantle a web of corruption that was stealing power from households for nearly a decade and distributing it round the clock to some industries.
This Himalayan nation, sandwiched between India and China, has water resources that can generate about 80 times the electricity it needs today, according to a generally agreed estimate that Nepal’s total potential is 83,000 megawatts.
In the century since construction of the Pharping Hydropower Station – the nation’s first and South Asia’s second – Nepal has been able to harness just 900 MW of that potential for reasons ranging from political instability to cost. As a result, Nepalis have long accepted that rationing is unavoidable.
But NEA insiders say that’s not the case. According to them, those at the helm of the state-run monopoly exaggerated for years a largely manageable power crisis. Their aim was to create a market for inverter importers and the alternative energy lobby, which in return lined the pockets of their benefactors.
“To my knowledge, this has happened at least for the past seven years,” says a senior NEA official who asked to remain unnamed because of the subject’s sensitivity.
The monsoon report
He says that during every monsoon season a forecast was prepared that exaggerated demand and suppressed supply figures. A deliberately inflated energy shortfall was publicized for the following winter.
Explaining the shortfall to the public was easy: During a 10-year armed Maoist insurgency that ended in 2006, generation did not keep pace with rising demand because violence scared away investors.
Trusting a forecast that the media publicized without rigorous examination, many consumers braced for winter by purchasing expensive power backup systems, including inverters and solar panels. According to one estimate, about one-third of the NEA’s 3 million customers installed systems at their homes and offices in the past decade.
The drain on supply is significant: Not only does the use of inverters increase the load when electricity is available, as people are using electronic devices and charging the inverters at the same time, but 30 percent of the energy is also lost between the time an inverter is charged and the time it powers light electronic devices during blackouts.
Meanwhile, the senior NEA official says, the utility secretly supplied excess power, which was sometimes as much as 40 MW or 4.5 percent of the nation’s total generation, to some industries on a 24-hour basis, giving them undue advantage over competitors who had to power their factories during blackout hours using diesel. Electricity generated by diesel units is three times as costly as the electricity the NEA sells.
“For each megawatt of power illegally supplied to an industry, the beneficiary was saving up to 10 million rupees ($91,000) a month in energy cost. Multiply that by 40, and you will understand how much money these people had at their disposal to pay monthly retainers to NEA officials,” the official adds.
New power broker
But when a new power broker took the helm, things changed dramatically.
Last September, the government of Prime Minister Pushpa Kamal Dahal, known as Prachanda, who took office the previous month, appointed Kul Man Ghising as the NEA’s managing director.
Mr. Prachanda, who is also chairman of the Communist Party of Nepal (Maoist-Center) and was a guerrilla leader in the Maoist insurgency, served as prime minister for nine months after his party’s stunning win in 2008. But having failed to deliver on all their insurgency-era utopian promises and been hit hard in 2013 elections, the Maoists now want to improve living standards ahead of general elections scheduled for early 2018.
With the NEA catering to nearly half of the nation’s 28 million people, it was a perfect target.
Prachanda gave Mr. Ghising full authority to try to solve a problem that sharply constrains a country trying to boost living standards and deal with numerous other challenges, including the aftermath of a devastating earthquake in 2015.
Ghising, an electrical engineer with strong demand-management skills, took just weeks to end blackouts in the capital and 10 adjoining districts. Earlier this month, he ended blackouts in Pokhara, the nation’s second-largest city, as well as half a dozen adjoining districts.
“Ghising took back electricity that some industries were enjoying illegally and distributed it equitably to consumers,” says Bikash Thapa, one of the best-known energy journalists in Nepal. “It helped that he understands the country’s energy scenario inside out. It also helped that the current prime minister and Energy minister are desperate for results, and Ghising is someone who understands the energy sector very well.
“Most importantly,” he adds, “Ghising’s integrity made the difference.”
Honesty and resistance
“All I am doing is managing demand and supply with maximum efficiency and complete honesty,” Ghising says. “Now, no one is getting electricity that belongs to someone else.”
There was resistance, to be sure, but Ghising benefited from Prachanda’s full political backing. Last month, the Energy Ministry, led by Janardan Sharma from Prachanda’s Maoist party, sacked three NEA board members on charges of not cooperating with Ghising in his campaign to solve the country’s energy crisis.
While that sent a strong message to those openly working to block Ghising’s initiatives, others at the NEA welcomed Ghising’s initiatives, largely buoyed by the sudden positive change in the public image of an institution whose employees had long been seen as inefficient and incompetent.
Ghising, who has been associated with the NEA for 23 years, has boosted the power supply by optimizing power-plant operations. He says the plants are now generating about 25 percent more power than they did last winter, which has translated to about 100 MW of additional power.
He has also discontinued the practice of providing uninterrupted power to select industries. This has freed up another 250 MW of power during peak hours.
“Today, no industry gets electricity from 4:30 p.m. to 8:30 p.m., when national demand soars to its maximum. On the flip side, this means all industries are getting power for 20 hours a day,” Ghising says.
The sudden disappearance of blackouts has also saved another 50 MW of power, since consumers in major cities are not backing up their inverters anymore.
“Inverter load in the nation stood at 100 MW in the past. By ending blackouts in Kathmandu and Pokhara, this has at least halved,” Ghising says.
All these efforts have added 400 MW of power during peak hours, when national demand surges to 1,350 MW. With 600 MW being currently generated by hydropower projects and 330 MW being imported from India, the deficit of about 400 MW has been almost met.
“The situation was so hopeless in the past that people forgot small things do add up and result in change,” Ghising says.
Districts in eastern Nepal are currently getting round-the-clock power, while districts in western Nepal are facing as many as two hours of blackouts on alternate days.
But that is only because Nepal’s power system is not fully integrated. Several power systems are operating in the nation in isolation, making it impossible for excess energy in one system to be transferred to another.
The right backing
Pashupati Murarka, chairman of the Federation of Nepalese Chamber of Commerce and Industries, says industrialists fully support Ghising’s efforts.
“There is a level playing field now, with no industry being favored by NEA at the expense of another. What happened in the past should not happen again,” Mr. Murarka says.
He added that in the beginning, there was apprehension that the NEA would enforce onerous power cuts for industries in order to make electricity available to households.
“But that didn’t happen. Instead of eight or nine hours of power cuts in the past, the industries are facing just four hours of power cuts now. We are very happy,” Murarka says.
Understandably, businesses dealing in inverters and solar panels aren’t as happy.
“Sales of inverters dropped by 98 percent since blackouts ended in October,” says Anoor Tuladhar, who retails inverters in the Putalisadak neighborhood of Kathmandu. “The few who are still buying inverters are hospitals, hotels, and party palaces. They need the units for emergency use.”
On the other hand, small businesses that cannot function without electricity are jubilant.
Roshan Chaudhary, manager of an iron grill factory in Bishalnagar, says his operating cost has gone down in recent months.
“Until October, we were using a diesel generator that consumed 10 liters of diesel a day. We no longer need it. Production has increased, and we have added four workers in the past two months,” Mr. Chaudhary says.
A blackout-free Nepal?
Ghising, who has become a national hero, is aiming for what was unthinkable until a few months ago: a blackout-free Nepal.
“It is possible and it is going to happen very soon,” he says.
Nepal relies on hydropower plants to meet its energy needs, apart from the 330 MW imported from India. In total, its hydropower plants produce 900 MW of energy in monsoon season when there is enough water in the rivers feeding the turbines. All but one – the 92-MW Kulekhani – are run-of-river-type plants that suffer from a significant generation drop in winter when water levels in the rivers recede.
“Our challenge is to manage the shortfall in the remaining two months [January and February] of the dry season. Thereafter, we will have excess energy in our system,” Ghising says. “Several plants under construction will come into operation before next winter. So it is absolutely reasonable to expect that the nation will be completely free of blackouts after two months.”
Ghising is also eyeing an ambitious plan to turn around the NEA, which employs more than 10,000 people, from a loss-
making monopoly, which in itself is an anomaly, to a profit-making entity.
Last year, the utility suffered a loss of 12 billion rupees ($110 million), and its cumulative loss stands at 37 billion rupees. Then there is the issue of pilfering. Of the roughly 26 percent of system loss the utility reported last year, about 15 percent results from illegal hooking in by individuals.
“Recovering just 1 percent of pilferage will mean half a billion rupees added revenue for NEA,” Ghising says, adding, “With tariff revision and reduction of expenses, it is very possible to turn the utility’s balance sheet to green in two years.”
Keep inverter for now
For the Chaulagains, the challenge of the moment is what to do with the power backup system they bought. Like most Nepalis puzzled by the sudden energy bonanza, they are cautious, and will let the device occupy a corner of their narrow corridor for rainy days.
“Who knows how long this will last? If the blackouts return, we will need it,” Mrs. Chaulagain says, echoing the sense of disbelief the nation has yet to overcome.