Nepal can Attract More Foreign Capital in Energy Sector

Experts claim that Nepal can attract more than Rs. 28.93 trillion in foreign capital into the energy sector by 2045, reports Kathmandu Post. This can be done if Nepal makes Foreign Direct Investment (FDI)  a top priority by adopting an accelerated power trade strategy.

Experts believe that to expand the economy at a faster rate in Nepal, it is important to understand the requirements of FDI. They added that Nepal has to understand that two energy-hungry and populous countries, India and Bangladesh, are potential power trading partners.

Prof. Kirit Parikh, chairman of Integrated Research and Action for Development, while presenting a paper entitled ‘Consequences of Nepal India Electricity Trade’ remarked that FDI can be used to increase Nepal’s power capacity substantially.

Parikh presented his paper at a high-level roundtable discussion Regional Cooperation for Power Trade: Nepal India Perspective, under USAID’s South Asia Regional Initiative for Energy Integration (SARI/EI).

He also claimed that run-of-the-river type plants to harness energy are the cheapest and easiest to construct. These plants also cause a less environmental impact. However, a number of storage-type hydro projects are required to meet domestic demand.

According to Parikh, With accelerated power trade, net annual export revenue from electricity trade would be Rs. 310 billion in 2030, Rs. 840 billion in 2040 and Rs. 1,069 billion in 2045. The gross domestic product (GDP) in 2045 with accelerated power trade will be 39 percent higher than in the current scenario. This suggests even more robust economic growth in future.

The 21 percent GDP in the current scenario will become 30 percent as trade will promote industrialization and create better-paying employment. The power capacity will also increase to 34.4 GW in 2045 with accelerated power trade.

The hydro potential in South Asian Countries such as Nepal 83,000 MW is one of the largest untapped potentials in the world. But Nepal has the installed capacity of less than 1,000 MW, whereas demand stood at around 1,385 MW in the last fiscal year, as per the Economic Survey 2015-16.

In Manjeev Singh Puri’s opinion, Indian ambassador to Nepal, the conversations gap between the South Asian regions in the last 20 years has delayed growth. He added that there has been a lot of talk of the potential of hydroelectricity but not a single project has started. It is for this reason that the per capita annual electricity consumption is one of the lowest in the region, as per Puri.

He believes that for large changes, one or two MW cannot make any difference. A large project will make a difference and benefit all. Puri also remarked that the technology evolution would not wait for anyone.

For example, producing a unit of hydro energy costs INR. 4 while wind power was auctioned at INR. 2.64 per unit and solar at INR 2.42 per unit in India recently. He believes that Nepal and India should act and come up with ideas before its too late.