Power producers warn of investment risk in lack of cross border power trade

Kathmandu, Sept. 1

Independent Power Producers’ Association of Nepal (IPPAN) has said that about Rs. 1 trillion investment would be at risk should the country failed trading energy across the borders.

Vice-president of the association Ashish Garg claimed it during an online interaction with journalists on Tuesday.

The country’s electricity production would reach about 6,000 megawatt from the current 1,360 MW. “The production will increase at an exponential rate while the consumption is not on the condition to increase dramatically. So if we cannot create good cross-border trade opportunities about Rs. 1 trillion will be at risk,” said Garg.

He said that since there was no chance of rapid industrialisation that would increase the demand of energy, the total demand of electricity would reach about 1,800 MW in three years from now.

The national electricity grid is likely to receive 1,000 MW electricity in the current fiscal year, 2,000 MW next year and 1,500 MW the following year.

According to Garg, if the country failed to export the electricity, about 4,000 MW energy would be wasted. The Nepal Electricity Authority (NEA) had reported that about 200 MW electricity was wasted in last April. The amount would continue to increase in the years to come.

Such waste of energy might have serious repercussion on the investors both the equity and shareholders, and banks investing in the projects.

As it would take more than 5 years to create trans-border transmission line to China and Nepal needs 23 KM Indian land to take electricity to Bangladesh, India is the immediate market for the surplus energy. Therefore, the government should immediately start dialogue with India for the G to G energy trade, said Garg.

He said that Nepal could immediately export about 1,000 MW electricity to India through the recently built cross-country transmission line while the under-construction Butwal-Gorkahpur transmission line project would facilitate the trading of additional 3,000 MW electricity.

He urged all the stakeholders not to politicise the Millennium Challenge Account Nepal project which is developing the Butwal-Gorkahpur Transmission Line Project.

Published in The Rising Nepal daily on 2 September 2020.