Three years ago, when Chija Maya, a resident of Piughar, spoke about a run-of-the-river microhydel power station in her village, many people thought that she was whistling in the dark. Though hydro-electricity first came to Nepal in 1911 to light the King's palaces, it still remains a dream for 85 per cent of its population; 90 per cent of rural Nepal is yet to be electrified. With help from undp 's Rural Energy Development Programme ( redp), Maya mobilised the community and convinced them about the electricity project. Villagers pooled in more than Rs 1 lakh (Nepalese rupees) and dug a 200-metre-long canal to propel the 50 kg turbines. "For us it was a major victory when we got electricity. Life has changed now," she says.
To assess the spread of microhydels in Nepal, a visit to the Kathmandu Metal Industries, Nepal's oldest manufacturer of microhydel systems like turbines, can be quite fruitful. "Every month we get four to five microhydel installation orders and countless visits from people wanting to take electricity to their villages," says Akkal Man Nakarmi, the owner of the firm.
He says at least one village decides to install its own powerhouse everyday. According to Nakarmi, the rush is in the 5 kw sector. "This suggests that villagers are also planning their energy policy, since above five kw is not suitable for a typical Nepalese village," he says. According to redp , Nepal's only national programme in the energy sector, by the end of 2000 Nepal would add 50 per cent more power to its capacity through these micro sets. For a country where only 15 per cent of its population have access to electricity, this is encouraging news.
Shedding new light
Nepal is the first south Asian country to privatise its power sector. In 1985, it delicensed projects up to 100 kw to upgrade the ghattas (traditional watermills). In fact for this micro sector, the country's electricity department is not involved at all. Anybody can go for a hydro project by getting a loan sanctioned from the Agricultural Development Bank of Nepal ( adb ), which is extensively funding such efforts. The communities can also decide on the distribution and the cost of power.
"Upgradation of the ghattas and the growing demand for the sets up to 5 kw, is the technological reply of the people to the challenging mountain electrification," says Nakarmi. Out of Nepal's 30,000 traditional watermills, 1,200 have been modified to generate over 3,000 kw of electricity. The government does not take any royalty or tax from these projects. Instead, it gives soft loans, subsidies and tax exemptions on electrical machines as incentives.
"It is a social process where the community has snatched the initiative from the government and has now forced it to facilitate their efforts," says Urmila Simkhada, a Kathmandu-based social scientist. According to her, everyday a new history unfolds in Nepal's remotest villages with the advent of electricity. In remote areas, villagers are seeing their prime minister on the television screen for the first time.
"The coming of electricity has changed village life," says Sunkumari, a community mobiliser with redp. Women no longer spend hours for husking and milling; during the day, electricity is used for milling. "We save about four hours every day," says Sunkumari. Saving in time means more time to spend with children. "At night children study for more than two hours and their performance has gone up," says Maya.
In Lamjung district of central Nepal, residents and the district development committee have invested in a company which aims to chart out an integrated energy plan for the district. This involves all forms of renewable energy, including community forestry, biogas schemes, solar photovoltics and small hydro schemes. They are also planning to sell the surplus power to the national grid.
Though 85 per cent of Nepal's population do not have access to electricity, the abundant water resources always made an average Nepalese to dream about the 'hydro-dollars'. Nepalese have been fascinated by the possibility of generating electricity from the 6,000-odd streams and rivers. The 1970s oil crisis made this fascination for tapping hydropower into an obsession. After nine decades of Nepal's first 500 kw Pharping hydroelectricity project built in the Kathmandu valley to light the palaces, Nepal has been able to install only a total of about 250 mw hydropower, an average of less than 3 mw per year. From 1968 to 1975, there was a surplus of power as there was no infrastructure to consume it in remote areas.
In 1977, the government decided to form the Small Hydel Development Board for supplying electricity to remote areas. It built 30 plants having a total capacity of 5.7 mw . But this was taken up only for the district headquarters and other politically earmarked areas. The project suffered from absence of market in the remote areas and a lack of a target-oriented policy. The board failed to deliver.
In 1981, the ministry of water resources prepared a national development strategy "through the utilisation of water" and hydropower generation. The strategy clearly stated that as almost 60 per cent of the population live below the level of absolute poverty, small-scale projects and programmes should be taken up to directly benefit the rural masses and provide them with new opportunities for self-reliance.
This brought the adb into the picture. The adb started funding microhydel projects in 1981 and now supports around 80 per cent of the microhydel projects in the country. Till now the units supported by adb generate 4025.4 kw of power through 1,000 units. In a network covering 60 districts, the bank has given Rs 21,900,000 as subsidy and Rs 35,100,000 as loans. Since 1993-94, it has handed over the management of 31 projects to these groups of farmers after forming them as cooperatives (see graph: growing power ).
In 1984, the government was decided to delicense all electricity installations under 100 kw capacity. This led to upgradation of ghattas for electricity generation at night. It continued till 1985-86, when the government announced a subsidy on the electrification costs of the private installation: 50 per cent of the costs of generators and electromechanical parts (75 per cent on the remote areas). It made electrification more attractive and many sick watermills were converted for this. Also, exclusive power generation units came up. In 1985, it delicensed projects up to 1,000 kw . As the energy need in the hills is in kilowatt, and not in megawatt, villagers took the initiative to generate electricity. As an incentive, a subsidy of between 50-74 per cent is given, depending on the remoteness of the project location, for installation on the cost of electricity generating equipment and transmission system. A flat rate of Rs 7,500 per kilowatt is provided as subsidy on pole in areas designated as remote and Rs 5,000 for other areas in the country. Manufacturers of turbines and generators get tax exemption on the import of raw material. "During this time the government advocated microhydel projects and the private sector jumped into it," says Govind Nepal, manager, Intermediate Technology Development Group's energy programme.
Nepal's tryst with 'hydro-dream' got a setback with the cancellation of Arun III (210 mw ) hydroelectricity project which ironically also opened the floodgate of community participation in the microhydel sector. The project on Arun river was backed by the World Bank and a consortium of donors. But there were protests. A group of Nepal's engineers, economists and journalists formed a pressure group, Alliance for Energy, to campaign against the project.
Arun III was cancelled in 1995 and this triggered a public debate. While the government and the political parties made it their political plank to get back the project, the civil society pressurised for rural electrification as the priority and questioned the utility of big hydro projects which are installed to export power but not to electrify Nepal. It was the first civil movement in Nepal which forced the government to bow down and the World Bank had to beat a hasty retreat. "The realisation came to us: hydropower is not all about projects but about real electrification in the Nepal context," says Gyawali.
"After the cancellation of the Arun III, there was a public debate on which mode of hydropower exploitation Nepal should take on," says Gopal Krishna Siwakoti, executive director of Inhured International, an ngo dealing with environmental and human rights issues. According to Siwakoti, the small hydropower sector was primarily the result of sustained pressure by the people, who had given up hope on the slow pace of big projects. "The cancellation of Arun III was a major turning point for Nepal and a big victory for the civil society asking for a suitable and sustainable mode of harnessing the hydropower. After the cancellation, the small sector got the right boost," says Gyawali. In fact, there was a sharp polarisation in Nepalese society on the lines of big or small projects after the scrapping of Arun III. "Political parties went for big projects as they brought in more money and more commission. While the people wanted small and decentralised electricity," explains Siwakoti. "After the initial government support, now it is the civil society which have taken the initiative. It happened so after democracy came to Nepal," says Govind Nepal.
The cancellation of Arun III opened the way for private sector involvement and provided the much-needed space for a flexible and pragmatic approach. "The agitation over Arun III was Nepal's first civil society intervention, and privatisation is a result of it," says Ajaya Dixit, editor of Water Nepal , a journal on water resources development. "The small sector is a success as it started from the private sector and the government just recognised it by facilitating all the process," says Kamal Rijal, a renewable energy specialist with the Kathmandu-based International Centre for Integrated Mountain Development ( icimod ).
"During this time generation of electricity was more of a honour than a commercial activity," says Bikash Pandey, director, Winrock International's (Nepal) Renewable Energy Project Support Office. Private entrepreneurs and communities had installed microhydel plants mainly for rural domestic electrification since grid extension is expensive for Nepal's remote and scattered Himalayan villages. There are also other strong economic considerations: the people's inability to pay for electricity, inability to generate revenue for maintenance, lack of capital, technical and managerial skills to establish and operate large enterprises. Microhydel schemes are, therefore, the appropriate option, especially since they use indigenously manufactured water turbines and generators.
Way to go
redp' s decentralised and community-based rural energy programme started in 1996 and has emerged as a model for other countries to emulate. It is also Nepal's only national energy programme. Starting from three districts, it has now been adopted in 15 districts. By the end of 2000, 60 micro hydro plants generating about 1,000 kw would be installed. This will add about 40 per cent more electrical power from micro hydro plants in Nepal. About 8,500 households will have access to electricity after the completion of these projects.
Under this programme, the community decides, installs and owns the micro-projects through a community organisation formed for this purpose. The community organisation is a self-governing broad based institution. Besides rural electrification, it also looks after other community activities. "Energy would enhance the economic level of the people at the grassroots and enable them to come out from the subsistence level," says Shankar Sharma, a member of Nepal's Planning Commission (see chart: micro march ).
The villagers first identify their energy needs and decide the site where the project would be located. The project is then placed before the village development council ( vdc) which screens the projects and makes a priority list to allocate the money. After another screening at the village cluster organisation called Illaka level Planning workshop, the final list is submitted to the district energy committee. At the Illaka level, financial resources from all sources are channelised. The district energy committee ( dec) compiles all the projects and list them in the annual energy plan which is sanctioned at the district development committee ( ddc) meeting.
The ddc and vdc and the communities are required to share the cost: ddc and the vdc provides 10 per cent of the cost and the beneficiaries contribute 12 per cent, through labour and collection of materials available locally. Now more and more vdc s are giving priority to electricity generation and allocating money from their development corpus. Besides this, the community takes loans from the adb also. So the average contribution comes to around 30 per cent according to redp . The community owns the projects and decides its own tariff. Henning Karcher, undp resident representative, says, "The unique feature of this programme lies in the fact that it does not choose technology as a part of entry, but social mobilisation of the communities." "Once people are aware of the benefits, their participation is total," says Kiran Man Singh, programme manager, redp . "In the last four years we are recording more and more community participation in the microhydel sector," he adds.
But there are some hurdles that threaten to jeopardise the spread of these initiatives. Water management is turning out to be a major issue in the hydel projects. Several of these projects have failed due to this conflict. Eight per cent of the turbine mills have failed due to riparian conflicts alone, according to a report icimod Report of a National Seminar on Mini-and Micro-hydropower Development in the Hindu Kush Region -- The Nepal Perspective . Usually, the traditional watermills do not create conflict but the turbine watermills have canals that divert water thus creating conflict between different interest groups like the farmers versus the electricity users. This conflict is more visible when the electricity users and the irrigation users are different.
The Water Resources Act, 1996, prioritised the use of water resources, with the generation of hydroelectricity ranking fourth in order after drinking water, irrigation, and agricultural uses. The law doesn't specify any right of prior use of water resources for micro-hydropower projects. This caused the closure of a microhydel project in the Dhading district because the water that was used to generate power had been diverted for an irrigation project. This problem is more visible when the project is implemented by individual or a private companies.
However, the government recently set up a district level water resources authority to solve these problems. Also, experts say that the traditional ghattas owners and the villagers using water for agriculture evolved a mutual system where water from a stream was used in a mutually agreed way. "With this and a bit more effort from people to settle their interests there should not be any conflict," hopes Man Singh. "The Local Governance Bill now gives the community all power over electricity, agriculture and irrigation. So the irrigation department is opposing it and sometimes the conflict also affects the hydropower sector," says Gyawali.
A study published in icimod' s Renewable Energy Technologies A Brighter Future reported that out of 25 micro-hydro schemes analysed, 20 had overdue loans despite the fact that 19 had generated enough income to repay the debt. The study observed that five of the 25 projects, in fact, should be making money instead of loss but became economically unviable due to the competition from diesel mills. For diesel mills, the investment is less and easy to handle too.
At present, surveys and designs are being done by the manufacturers to reduce the per unit cost. There have been cases when faulty design and location of projects have created problems for the smooth functioning of the project. "Manufacturers take care of the technical aspects but not the socio-economic aspects thus causing problems," says Govind Nepal. He says manufacturers push for sale. "Manufacturers are not accountable to anybody so there are lapses while installation," says Simkhade. If the subsidy which now goes to the manufacturers are restructured and passed on to the consumers, the users will show an increased interest, says Nepal. "Electricity has to be paid in cash unlike the fuelwood which comes free. So the question now is how to make it sustainable?" asks Pandey.