Feb 22, 2016- Nepal’s recent fuel crisis originated from the unofficial Indian blockade. The country’s subsequent attempt to cement closer ties with China brought more domestic and foreign policy riddles to the country. Recent turn of events pose a number of questions. How would the KP Oli government have dealt with the Madhesi protestors had the blockade not been there? Would PM Oli have visited China before India? What different measures would the Madhesi protestors have adopted to show their dissent over the recently promulgated constitution, if the country was completely energy sufficient? There are no easy answers to all these questions, but they are all entangled in Nepal’s sole dependence on India for petroleum imports and its long-standing inability to exploit domestic energy potential.
While the Madhesi issues primarily stemmed from the dissatisfaction over the proposed federal division of the states and power-sharing in the country’s new constitution, Nepal’s crisis grew deeper when India sided with the protesters by tightening the fuel supplies. India is by far the largest trading partner of Nepal accounting for 64 percent of its foreign trade. The Indian Oil Corporation (IOC) is the sole supplier of petroleum products to Nepal. As it started cutting off supplies to Nepal, the fuel crisis started to hurt the economy severely, giving rise to black marketeering, a sudden hike in commodity prices and eventually a decline in development activities. Various sectors of the economy as well as reconstruction efforts suffered under the crisis.
Help from the north
Despite Deputy Prime Minister Kamal Thapa’s trips to New Delhi to persuade it to lift the blockade, IOC continued to slash supplies. As the Nepal government was heavily criticised for failing to abate the crisis, it was left to seek every potential alternative and assistance from every possible direction. Despite the abundant potential of home-grown generation with arguably over 40,000 MW of hydropower potential from its water resources alone, Nepal’s energy situation is quite depressing. Around 30 percent of the population still does not have access to electricity and even those with access suffer from as much as 15 hours of power cuts a day. On the other hand, supply side constraints and policy inconsistencies are putting stress on hydropower projects under construction. The message is clear: Nepal lacked the ability to deal with the recent fuel crisis without external assistance.
China came to Nepal’s rescue, providing 1,000 metric tones of oil in grant as a symbolic gesture to cope with the gloomy fuel situation. Nepal on its part was more willing to explore possibilities of obtaining fuel from China on a long-term basis and keen to enter an oil trade agreement to import as much as one third of its fuel supplies. Many applauded the move as an attempt to end the Indian dominance on petroleum supplies to Nepal. And, that stirred new foreign policy debates in both Nepal and India. Certain section of Indian parliamentarians, media and foreign policy experts in New Delhi accused the Indian government of pushing Nepal closer to China while unnecessarily trying to micromanage Nepal’s internal affairs.
However, the difficult mountainous trade routes, logistic hurdles and high cost of trade made it hard to bring in fuel from China. On the other hand, the Nepal government’s distress was visible, as it was also worried that a new deal with China might worsen its ties with India, which could impose a tighter blockade.
The likes and dislikes of Nepal’s southern neighbour are often speculated to be the fulcrum of the stability of every government in Nepal. Evidently, more than dealing with the Madhesi leaders at home, the Nepal government was busy sending its envoys and using its diplomatic channels to woo New Delhi. China may also have been a little sceptical of Nepal’s aberrant diplomatic exercises and political inconsistencies and assumed that Nepal would eventually return to the status quo. Nepal energy’s crisis turned out to be a new triangular foreign policy conundrum between Nepal, India and China.
When viewed in light of Nepal’s long-time fuel dependence on India, the recent crisis, however, is less surprising. It is reminiscent of a similar episode of 14 months of Indian blockade of Nepal in 1989. Nepal had a relatively moderate growth rate of over 7 percent in 1988, which later dropped to about 4.3 percent in 1989. But Nepal had relatively smaller fuel dependence in 1989 than it has today. That gave a bit of a breathing space to the then Prime Minister Marich Man Singh Shrestha to negotiate bilateral issues with India and was probably the very reason Nepal somehow managed to survive a blockade for over a year. A lot has changed in between. There has been an increase in Nepali population by 10 million and a four-fold rise in per capita petroleum consumption-from 0.01 kg to 0.04 kg of oil equivalent—since 1989.
With the recent 80 MW power import deal with India and plans to import an additional 580 MW by next year, this huge energy dependence will continue to constrain Nepal’s ability to negotiate any bilateral issues with India and could further limit its capacity to maintain a balanced relationship between China and India. The bleak energy situation at home and the dependence on India would neither allow Prime Minister Oli to comfortably negotiate past treaties and agreements with the southern neighbour, nor discuss other bilateral issues, let alone question the recent blockade. Like most of the previous visits of Nepal’s prime ministers, it will be another ‘friendly visit’, which the Nepal government will invariably claim as having set a new milestone in the history of Nepal-India relations.
A Twist in the Pipeline: the article was originally published in The Kathmandu Post on 22.02.2016
The Kathmandu Valley has not experienced load-shedding since the Tihar festival. Nepal Electricity Authority (NEA) has reasoned that a higher volume of import of power (300 MW) from India, closure of industries during the festival season (resulting in a saving of 300 MW) and control of leakages of power, among others, have contributed to ending the regular power outage in the valley.
The country has been suffering from load-shedding for years. In the past, successive governments drew up plans for ending load-shedding within a certain timeframe by enhancing the generation of hydropower. There were talks about generating 10,000 MW of hydropower in 10 years and 25,000 MW in 20 years. However, the plans failed as even no groundwork was prepared to implement them.
The Oli-led government formulated a load-shedding-eliminating strategy for ending load-shedding within one or two years by declaring an energy crisis. But the initiative of the NEA in ending load-shedding in the Valley is not as per the strategy formulated by the Oli-led government. And it would be foolish to give credit to ex-premier KP Sharma Oli for an end to load-shedding in the valley although some people may be under the impression that it has been possible to bid adieu to load-shedding in the valley in line with the strategy adopted by the Oli-led government.
Due to the load-shedding problem besetting the country for years, people are forced to arrange for alternative power. As such, the business of emergency lights, invertors, generators and the like has flourished in the country. Such equipment is imported from abroad. This means an outflow of hard-earned currency from the country.
On the other hand, factories and industries are compelled to use generators for smooth operation. Generators consume a lot of fuel. The country has to spend billions of rupees on the import of POL products. If there were no load-shedding, a big chunk of money could be saved by slashing the import of petroleum fuel.
Power leakages are a major problem in the country. As per NEA sources, about 30 MW of power is lost through leakages. The NEA is aware of where power leakages take place to a large extent. Areas that indulge in power pilferage have also to suffer from additional load-shedding in proportion to the amount of power leakages. The higher the leakages, the higher the additional load-shedding.
The current initiative taken by the NEA goes on to show that load-shedding can be gradually eliminated across the country if the government and the NEA act honestly. It seems giving way to big business houses from venal motives is the main contributing factor in resorting to load-shedding in the country. Further, inaction on the part of the government and the NEA in taking action against power pilferers and tariff defaulters is another reason for almost perpetuating load-shedding in the country.
A few years ago, a scam involving high-ranking officials of the NEA in the procurement of substandard transformers surfaced. Such substandard transformers cannot bear high loads and tend to explode, causing damage to them. The NEA has to spend hugely on the repair and maintenance of such defective transformers. It is also reported that there are irregularities in the NEA and so it is imperative to bring the management of the NEA on track.
The country has an installed capacity of 784 MW of hydropower from both government and private-sector projects, whereas the demand for electricity is around 1,100 MW. As per the NEA, the demand for electricity was 1,000 MW last year, whereas it peaked to 1,800 MW during the Indian embargo. As the demand has not remarkably risen, it has been easy for the NEA to manage the distribution of electricity. Some power is also going to be added to the central grid in the immediate future.
The NEA is saying that the uninterrupted supply of power to the Kathmandu Valley since the festival of Tihar is merely a stopgap measure, hinting that load-shedding may resume from the second week of Mangsir. Now the flow of water in the rivers has not diminished. During the dry season when the level of water in the rivers becomes low, the generation of power is affected. So the chances of load-shedding coming up again are high in the dry season.
But the better management of the distribution of electricity (for example withdrawing excess electricity from areas requiring a low volume of electricity and channelling it to areas that require more electricity) and control of power leakages, together with the replacement of defective transformers with better ones, may contribute a lot to rooting out load-shedding in the country.
In the meantime, top priority should be given to complete ongoing hydel projects in time, start the process of constructing those hydel projects that have been approved and take the initiative in constructing new hydel projects through domestic sources or foreign investments. Here, the will and honesty of the government play a pivotal role.
At the same time, exploring alternative sources of energy is also equally important. In this regard, solar power seems to be a viable proposition. The government has also emphasised the use of solar power. The Alternative Energy Promotion Centre has taken the initiative in popularising the use of solar power among the masses. The drive needs to be spread to every nook and cranny of the country.
The initiative taken by the NEA in eliminating load-shedding in the Kathmandu Valley is highly praise-worthy. The initiative needs to be in place without fear from any vested interests. This initiative has shown that people have been suffering from load-shedding due to the collusion between the government/NEA and the vested interest groups. Such an anti-people practice must come to an end, or else the people will be forced to live in darkness forever.