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Under Kulman Ghising’s effective management and visionary leadership, Nepal has seen a considerable amount of growth in its energy generating capacity. This has been true particularly recently, owing to the completion of a major hydroelectricity power plant, the Upper Tamakoshi Hydropower Project in August. The plant produces an additional 456MW energy making Nepal an energy surplus country for the first time.
But while that is applaudable, what’s often left out of the picture and fails to garner attention of the public is the country’s energy needs during winter, which is fulfilled through Indian imports.
But currently Nepal’s southern neighbour itself is having problems with its coal energy supply, which is what fuels its electricity plants. Unanticipated and unannounced power outages have already started all over India. According to a report in The Hindu, India saw its highest number of power outages in five year last month.
Why is there a shortage in India?
India’s coal shortage is a result of an extended monsoon halting extraction in coal producing regions, cutting off replenishment of the much needed stock.
The country has more than 100 coal-fired power plants, among which 75 have reported shortages, according to WION. The same news agency also reported that these plants provide 70 percent of the country’s total electricity. Further, the country’s power consumption demand increased from 116 billion units to 124 billion units, according to the news piece posted on WION’s Youtube Channel. The demand of electricity has surged in India and the globe as it starts to bounce back from the slow down brought upon by the global pandemic.
Why could this affect Nepal?
During winter, the meltdown of glacial lakes and snow that eventually feeds rivers is less which means there is less water in hydropower dams to generate electricity. There is also more demand for electricity during winter, owing to more household use. The country currently has a peak demand of 1,500 Megawatts (MWs) during the dry season.
To meet the demand, Nepal buys electricity from India every year. In January 2019, Nepal imported a staggering amount of 653 MWs, which was 50 percent of total electricity required. In 2020, however, Domestic Independent Power Producers (IPPs) filled in the gap. NEA’s fiscal report for 2020/21 paints a grim picture: in spite of IPPs contribution, electricity imports from India increased by 63.45 percent. The import rose from 1,729 Gigawatt Hours (GWh) in 2019 to 2,826.21 GWh in 2020.
Power cuts are happening all over the world
India is not the only country undergoing an energy crisis. Other countries like Germany and China are also going through energy shortages. Apart from the torrential monsoon rain halting supplies and surge of demand, the global rise in price of coal consequent to post pandemic demand surge is a major factor in power cuts. The ability of the power plants operating from imported coal has struck every country.
Adding fuel to the painstaking costs of rising international coal prices for the producers is China’s diplomatic rift with Australia and Beijing’s own environmental goals to shift to renewables. This diplomatic rift has resulted in a ban on imports from Australia while the stringent environmental legislation alongside fines have decreased incentives of miners to mine coal.
Meanwhile, a buying spree in countries like South Africa and Kazakhstan has ramped up prices from $45 per metric tonnes to $120 in just 11 months this year. The price rise is also a result of the environmental mishaps faced by coal’s leading producer, Indonesia. The country’s production capability was cut short by the flooding that affected large swathes of the nation.
Elsewhere around the globe, like the UK, nonavailability of truckers and surge in gas prices are threatening availability of gas in power production plants. Lebanon has succumbed to the power outages as two of the main national grids shutdown on October 9, after its inability to procure fuel for power plants.
On October 10, Delhi’s chief minister Arvind Kejriwal said that the state’s stocks have been depleting to troublesome levels for the last three months and most of the 135 coal-fired utilities in the country only had three days worth of stock. Almost a month later, on November 7, a report by Bloomberg stated that following a host of government interventions, the shortage has been moderated for now.
This is a sign of relief, as it seems the electricity will not switch off any time soon in India. But the country’s sole reliance on coal and stocks of multiple plants depleted to emergency levels is a cause of grave concern for Nepal.
For more than a decade, Nepalis had to live with power outages that lasted for up to 18 hours a day. And although it is currently enjoying and also selling its surplus hydropower energy for the first time, the country needs to be more cautious because the situation will change once winter sets in. Before it does, the country should start preparing a contingency plan that will avert an energy crisis. Or we will have to go back to living in darkness.
Nikesh Man Napit A final semester BBM student at Herald College with deep seated interest in public policy impacting business, business research and consulting.
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