We are focused on robust transmission, distribution system

Though Nepal Electricity Authority has eliminated load-shedding, the power utility has been facing major problems due to its low distribution capacity and outdated transmission system. The country will have excess energy from next year along with the completion of the 456-megawatt Upper Tamakoshi hydroelectric project and NEA is working to reinforce and upgrade the transmission and distribution system for reliable power supply and increased electricity consumption. Moreover, NEA aims to export surplus power and the cross-border transmission infrastructure has been upgraded accordingly. Pushpa Raj Acharya of The Himalayan Times caught up with Kul Man Ghising, managing director of NEA, to learn what the power utility has been doing in terms of distribution, transmission system augmentation, executing generation projects and cross-border power trade. Excerpts:

The perennial challenge of load-shedding has been eliminated. However, the power supply is unreliable due to constraints of distribution and transmission system. How long will it take for NEA to address this challenge and ensure reliable supply?

Our distribution system is not very reliable because our system has not been upgraded in line with increased consumption of electricity. Hence, all the transformers, feeders and cables are overloaded. We faced challenges of tripping during the wet season due to high voltage fluctuations. NEA has given top priority to augmentation of the transmission and distribution system and installing double circuit high capacity transmission network to enhance the quality of power supply. We have started installing 400 kV transmission lines from east to west, which we call ‘transmission highway’. Likewise, we have been upgrading the transmission and distribution system of around 1,000 megawatts. Around 100 sub-stations will be upgraded across the country and particularly in the load centres. Construction of 75 sub-stations is under way and 25 will be started shortly. Five sub-stations are under construction in Kathmandu Valley — Lapsiphedi, Matatirtha, Koteshwor, Phutung and Chapagaun.

Electricity supply is irregular mainly in industrial areas. What is your plan for reliability of supply to industrial estates?

Our plans to upgrade the distribution and transmission system include the supply to industrial users as well. It will not only ensure reliability of supply for industrial estates but also unleash the potential of industrialisation in various places across the country. We plan to develop the main ring (ring circuit) in industrial area and major load centres so that we can feed electricity from multiple points. We have planned to construct ring circuit of 220 kV in Kathmandu. We will feed the industrial areas through 132 kVA transmission lines.

How long will it take to complete the upgradation of transmission and distribution system?

Works on the 400 kV transmission line from Inaruwa (Sunsari) to Hetauda (Makawanpur) and 220 kV transmission line from Bharatpur (Chitwan) to Bardaghat (Nawalparasi) are under way. Similarly, another 95-kilometre Khimti, Barhabise to Lapsiphedi 400 kV transmission line is also being built and the sub-stations are also under construction. The largest grant ever from the Millennium Challenge Corporation (MCC) of the United States has picked a few transmission projects, namely, Lapsiphedi (Kathmandu)-Damauli (Tanahu); Galchhi (Dhading)-Hetauda (Makawanpur); Damauli (Tanahu)-Sunwal (Nawalparasi) and three sub-stations of 400 kV capacity at Galchhi, Damauli and Sunwal (India border). Detailed designs of transmission line from Butwal (Rupandehi) to Attaria (Kailali) is being carried out under the assistance of Asian Development Bank. Some of the projects are under way. MCC projects must be completed within five years. Mid-hill transmission corridors of 400 kV and 220 kV and North-South corridors of 220 kV and 400 kV are being initiated. Namely, 220 kV Koshi Corridor; Kaligandaki Corridor, Marsyangdi Corridor are under construction. Trishuli to Kathmandu double circuit 220 kV transmission is also expected to be completed within the next seven to eight months. Similarly, 400 kV transmission lines are being added. Thus, we will be able to ease all the bottlenecks of distribution and transmission within a few weeks. The robust transmission network will not only ease evacuation, but will also make system reliable. When the voltage is high, electricity can be reserved at the transmission line as we are upgrading current overloaded transmission system to high-capacity transmission system. Import and export points are being upgraded, 400 kV transmission line is under construction in Dhalkebar (Nepal-side of the Dhalkebar-Muzaffarpur cross-border transmission line), which will provide flexibility in importing or exporting power.

We will have surplus power from next year after the 456-megawatt Upper Tamakoshi starts commissioning power. How is NEA planning to utilise the surplus power?

First, we have to increase local consumption. Our entire effort in increasing and upgrading the transmission lines and distribution system is aimed at increasing consumption. Urban areas have the potential to increase energy consumption and we are focusing on distribution upgradation in urban areas. We have a lot of potential to increase the consumption of electricity as the share of electricity in total energy consumption is below five per cent. Currently, 70 per cent of the population has access to grid electricity and 15 per cent has access to off-grid electricity. The government has a vision to provide electricity access to all within five years and we are focusing on electrification in accordance with the government’s vision. However, rural electrification will not increase the load. To increase the load, we have to develop industrial corridor, reinforce and upgrade the distribution system in urban areas, and increase the consumption by consumers, like through use of electric home appliances (replacement of LPG) and promotion of electric vehicles, among others. We have not been able to supply sufficient electricity to industries. Currently, there is additional demand of 500 megawatts from the industrial sector. We have been obtaining support from Asian Development Bank to reinforce electricity distribution to the industrial areas. In addition to that, if we have surplus power after catering to the domestic demand, we can export electricity to India. We have already charged Dhalkebar sub-station at 220 kV, through which we can export 200 to 300 megawatts of electricity to India. We have taken forward the concept of energy banking with India, which means we will supply excess energy to India in wet season and import equal quantum of energy in winter season. Because the load pattern in India and Nepal is different, we will have excess generation in wet season and there is high demand of electricity in India during summer. In Nepal, demand picks up in winter season and we can import electricity from India as per the concept of energy banking. The next joint steering committee meeting between Nepal and India is expected to reach an agreement on energy banking.

NEA has changed its power purchase agreement policy with run-of-the-river projects and is encouraging peaking- and storage-type projects. What is the status of the PPA signed so far?

NEA has signed power purchase agreement (PPA) with projects that have cumulative generation capacity of 5,200 megawatts. Of that, projects with capacity of 512 megawatts have already come into operation and projects with total capacity of 3,000 megawatts are under construction. NEA has been encouraging private developers of peaking and reservoir projects by offering them high tariffs because most of the generation projects are based on run-of-the river model and the generation from such snow-fed run-of the river projects goes down to one-third of rated capacity when flow of water decreases in winter season, which coincidentally is when energy demand peaks. This is why we have been focusing on peaking- and storage-type of generation projects.

One of the conditions to begin the transmission projects under MCC grant is finalisation of the construction modality of the New Butwal-Gorakhpur cross-border transmission line. When will it be finalised?

We believe that the next joint steering committee meeting led by energy secretaries of Nepal and India will be held in November or December. It will finalise the issues of capacity booking, financing, wheeling charges, among others, that have been discussed so far.

The government has envisaged developing 10,000 megawatts of electricity in 10 years and initiatives have been taken to attract resources from foreign countries. How feasible is it for NEA to sign dollar-denominated PPA with foreign investors in view that the sharp appreciation of the greenback vis-à-vis Nepali currency is expected to affect NEA’s financial health?

The current appreciation of dollar vis-à-vis Nepali currency will not affect NEA much as we have dollar-denominated PPA projects only with 60-megawatt Khimti and 50-megawatt Upper Marsyangdi A. We have been consulting with Nepal Rastra Bank to set up a hedging fund to cover exchange rate risks. We expect that by time of commissioning of other projects like Upper Trishuli-1, with which NEA has signed dollar-denominated PPA for first 10 years of operation, we will have finalised hedging modality. Government has been looking into investment from power hungry South Asian neighbour Bangladesh, which plans to purchase up to 9,000 megawatts of electricity from Nepal by 2040. We can supply power to Bangladesh via India. There could be two modalities to sell power to Bangladesh. First we develop projects and export electricity to Bangladesh or allow it to develop projects. Bangladesh has also expressed interest to develop Sunkoshi Hydel Project to export power to Bangladesh. Recently, a bilateral mechanism on energy cooperation between Nepal and Bangladesh and Nepal and China has been initiated. We are also looking into investment, technical knowhow and possibility of cross-border power trade with China.

The construction process of projects initiated by NEA has been accelerated and most of them are in the last leg. Are there other generation projects that NEA is planning to implement in the near future?

Most of the NEA-initiated generation projects are near completion. Trishuli 3A is expected to be completed by March next year and Kulekhani III will be completed by the end of this year. Projects initiated by our sister companies — Upper Tamakoshi Hydropower Ltd and Chilime Hydropower Co Ltd — will be completed in next one to two years. We are planning to initiate 1,000-megawatt Upper Arun and 300-megawatt Dudhkoshi Hydro project. NEA’s sister company Tamakoshi Jalvidyut Co Ltd has already issued tender/prequalification notice for the construction of 87-megawatt Tamakoshi-V hydel project. NEA is focusing on high-capacity and reservoir projects.

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