Nepal Energy Situation

Situation Analysis and Framework Conditions

Energy Situation

Nepal’s energy resources are limited to hydro power, biomass and other renewable energy sources. 557 MW out of potential of 44,000 MW are currently harnessed in Nepal. Despite 25 to 40 % higher per unit installed cost of hydropower due to topography and unfavourable hydrology and geology, it is still an important energy resource of Nepal. Lack of seasonal storage capacity and inadequate transmission and distribution system compared to demand has resulted in frequent load-shedding. Electricity supply is limited to 40 % of the population (CBS, 2001) most of which is in urban areas. The low level of electrification hampers both economic development and access to information and education in rural areas.

Other primary energy supplies are biomass (87.2 %) used by 95 % of population and commercial energies oil, coal and electricity (13.5 %). Nepal spends about 57 % of its export revenues in importing petroleum products.

The power sector objectives of the country include “increasing rural electrification to promote economic growth and improve living standards and to develop hydro power as an important export item”. The Asian Development Bank, Danida and the World Bank are supporting rural electrification in about 35 districts. Government of Nepal (GoN) and Nepal Electricity Authority (NEA) are also funding rural electrification expansion in a limited scale.

Rural Electrification

Rural electrification in Nepal is naturally very expensive and at the same time the purchasing power of the consumers very low. This unfortunate combination of obstacles is documented in the hard fact that 60 % of the Nepalese households have no access to electricity. State funds are insufficient to cope with the problem at hand, therefore in 2003/04 GoN adopted a policy to involve communities in accelerating the electrification process by:

         a) community contribution of 20 % of the cost

         b) buying bulk power from NEA and manage/operate Community Rural Electrification Entities (CREE)

Over 200 communities have positively responded to this initiative and deposited 5 % (as a pre-condition to be part of the program) of the anticipated costs to the Community Rural Electrification Department of NEA. More than 50 communities have already got access to electricity under this arrangement (20 % local contribution, 80 % grants from GoN). Among the remaining communities having paid 5 % already a large number will not be in a position to comply with their obligation to come up with the remaining 15 %.  In addition, many communities are lacking the necessary management and technical skills to properly operate and manage the system.

Policy Framework, Laws and Regulations

Energy Policy

Bis dato gibt es keine ‚Nationale Energiestrategie‘ für Nepal. Die energiepolitischen Zielsetzungen werden durch jeweils gültige 5-Jahrespläne festgelegt und fortgeschrieben.

Sowohl der 10. Fünf-Jahresplan (2002/03 – 2006/07) als auch der aktuellen 3-Jahres-Interimsplan (2007/2008 – 2009/2010) befassen sich ausschließlich mit dem Elektrizitätssektor. Die Zielsetzungen des letzten und des aktuellen Plans sind:

• Bau neuer Wasserkraftwerke
• Erweiterung des nationalen Netzes und des Verteilungsnetzes und dadurch
• Erschließung nicht versorgter Gebiete mit Elektrizität

Die Realisierung dieser Ziele ist aber weit hinter den Planungen zurück geblieben