Energy for Socioeconomic development Surendra R Devkota

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Energy for Socioeconomic developmentSurendra R
Devkota

• Neoclassical economic growth model (labor,
  capital, and technology)
• Economic growth demands both
• (Energy and factors of production)
• Compatibility of Energy resources sustainable
  development?
• Whether 10th Plan could be achieved in terms of
  energy demand and supply in Nepal?

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10th Plan 2002-2007

• The main features of the Tenth Plan are
• It aims to achieve annual economic growth rates
  between 4.3 and 6.3 percent. (The Ninth Plan,
  1997-2002, which had targeted a 6 percent growth,
  incurred a negative growth of 0.63 percent in its
  final year).
• The 10th Plan, based on the gross output of
  9.03 billion in 1999 anticipates that by the end
  of 2007 gross output should be about 14.21
  billion, which is an increment of 57 percent.
• Less than 2 since royal takeover!

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• Traditional biomass (95),
• modern or commercial sources, and
• alternative energy sources (lt 1 Hydro)
• 37 Electrified (87 urban 27 Rural).
• Av. Cost 0.95/unit of electricity consumed

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Supply side Politics of energy

• 1. Politico-economics
• States monopoly over all types of energy
  resources (NEA, NOC, TCN)
• Energy pricing in Nepal reflects neither the
  economic cost nor considers the efficiency or
  equity principles.
• Consumers are paying higher prices due to
  failures state owned companies and
  mis-utilization of resources!
• e.g.Load shedding 35 hours per week per
  household, and 25 leak in the distribution
  system!
• e.g. NOC monthly loss about Rs 500 million/month

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Nepal Electricity Authority (NEA)

• NEA reported net loss  of  Rs. 1.78  billion
  2003/04.
• NEA Plants are operating on an average  less
  than  3500 hours  (out of 389 MW installed
  capacity) whereas the IPP owned  hydropower
  plants are reported to be operating  6000
  hours/yr (141 MW).
• NEA is on the way of diseconomies of scale and
  may bankrupt along with NOC and TCN !

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2.Political Ecology

• State has total control over resources, but it
  simply overlooks its social, economical, and
  ecological impacts, e.g. load shedding surplus
  energy 2 yrs ago?
• Hydrological cycle in Nepal winter dry and
  summer over flow
• Electricity demand high in winter and low in
  summer
• Nature plays a key role on demand and supply!
• Water mafias dont bother to take care of local
  watershed.
• Who conserves the water resources? Do they any
  rights? E.g. Fraction of sedimentation clearing
  cost could not only prevent but also enhance the
  sustainability of dams!
• What if ? global warming !

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NOCs money asking tactics
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Fuel wood Forest

• Fuel wood consumption is at unsustainable rate,
  since 1980s (3 million tons of deficit).
• Forests also victims of politico-economic
  policies (e.g. role of TCN, referendum, landless
  people).
• 10th Plan cant be meet in such supply scenarios.

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Further ecological and social injustices are
rooted in energy policy and market failures

• Price manipulation by the government owned
  agencies including planners and policy makers
  characterized by over investment to maximize
  commission income to rent seekers who dream
  either to export (hydropower) or to import
  (fossil fuels) and over look its externalities as
  well as local needs.
• Energy sector policy and strategy never tried to
  scale down the prices at the consumers level.
  Rather, the trend is more the production, higher
  the prices at consumer level diseconomies of
  scale.

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Policy options

• Nepal needs an overhauling of energy policy
• Involve the private sector in all types of energy
  businesses of NEA and NOC in order to increase
  efficiency.
• E.g. Power distribution like electricity system
  could be mobilized through private, community or
  cooperative, and public sectors so that prices
  could be at the market level.
• Encourage alternative energy sources that are
  environmentally sustainable and economically
  feasible. (Remember HH sector is the major one)
• Watershed conservation activities must be ensured
  by royalties received from any sorts of
  hydro-power development activities. For example,
  sharing of royalties could be 25 to village unit
  (s), and 25 to the district and remaining 50
  should go to the government.

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Policy options contd.

• Local government such as district unit should be
  empowered to regulate and manage small scale
  hydropower, say up to 25 MW. Less than 5 MW may
  not need to be linked to national grid system.
• All micro-hydro power, say up to one or two
  megawatts should be tax free, if owned by the
  community. Like wise, tax incentives could lead
  to alternative energy sources, and industrial
  credit system for energy efficient boilers.

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• Q ?