Arun III Project: Nepal’s Electricity Crisis and it’s Role in Current Load Shedding and the Potential Role 10 Years Hence

(Courtesy: Ratna Sansar Shrestha, FCA)

Abstract

It, has become fashionable to blame “cancellation” of Arun III project, by the World Bank in 1995, in reference to current electricity crisis, inferring that had it been implemented consumers in Nepal would not have been facing current load shedding problem. Now is time for a dispassionate and detached analysis of the two scenarios, the Arun III route and the route sans Arun III. The analysis of alternative scenarios demonstrates that the implementation of Arun III 201 MW project in 1995 would have not eliminated load shedding from 2000 onwards; in fact the power deficit would have been of a higher magnitude. Now, Arun III planning is for a new incarnation with a capacity of 402 MW, expected to be completed within next 10 years. But as the output of this proejdct has been slated for export, it, too, will not alleviate load shedding problem of Nepal.

Nepal is facing severe electricity crisis due to supply constraint and it has already been forecast that the load shedding is here to stay in the increasing magnitude. During this year’s wet season Nepal faced the problem of flood which resulted in loss of life and limb as well as property in the hilly areas and Terai in Western Nepal. Besides, the breach of Koshi embankment played a havoc in East Nepal where people got drowned (and unfortunately killed, too) and displaced, homes washed away, and farmers’ investment of time, energy and resources in the cultivation of their land washed out (in some areas even fertile land was converted to sandy “beach”). Moreover, communication network and infrastructure including road network was brought to disarray. Industries in the area also suffered due to break down of transportation system; either because of failure to access raw materials and other supplies or because of inability to supply finished product to its customers (most of the industries suffered on both counts).

In the past, Nepal Electricity Authority (NEA) used to trot out the excuse of no water in rivers whenever it came up with a new load shedding schedule or made changes in them resulting in the increased hours of load shedding. However, this rainy season, even in the abundance of water (or flood!), NEA imposed a load shedding of 2 hours each day, two days a week, till third week of August 2008. With effect from 27th August, 2008 the load shedding hours was increased to 16.5 hours/week which kept on increasing ad nauseaum. The Chief of Load Dispatch Center of NEA announced in a program in Butwal on 11th November 2008 that there will be load shedding at the rate of 10 hours/day in Marga (November-December), which will go up to 12 hours/day in Paush (December-January) and it will peak at 14 hours/day during Magh (January-February) this year[i].

Many a pages have been written wherein the root cause of Nepal’s electricity crisis has been ascribed to the cancellation of Arun III by the World Bank in 1995, scheduled to be completed in 2005. Besides the journalists of many hues, a number of luminaries have also “invested” time and energy to write on this topic, including a special chapter dedicated to this subject, forming a part of the book by a renowned economist, who has occupied the position of finance minister of Nepal a number of times over last two decades and was the first Vice Chair of National Planning Commission of democratic Nepal in 1991[ii]. It is high time to examine/analyze if there is any truth in it. Irrespective of whether there is an iota of truth in this logic or not, it is also time to draw lessons from this phenomenon so that Nepal is able to learn from this episode and undertake projects for implementation in future prudently. In other words, a dispassionate and detached analysis is called for to test if the argument attributing current load shedding problem to the cancellation of Arun III project by the World Bank is rooted to ground reality or not and find out what lessons could be learnt from this episode. This entails conducting an autopsy of this logic, as it will also be able to throw ample light on the intellect and mindset of the hydrocracy (intelligentsia, politicos and bureaucracy involved in water resource sector) in Nepal.

FOR A FULL VERSION OF THIS TEXT, PLEASE REFER TO THE FOLLOWING SITE:
http://ratnasansar.blogspot.com/2009/03/arun-iii-project-nepals-electricity.html

[i] Source: Kantipur of November 13, 2008.
[ii] Mahat, Dr Ram Sharan, 2005: In Defence of Democracy, Adroit Publishers.