When villages plug in

A Consumer movement is catching on in Nepal.Communities are extending the grid to villages.This threatens to undo the effort put in small-scale off-grid power generation to fight poverty. How can Nepal harmonize the two initiatives ?

By Aditya Batra
Last Updated: Thursday 11 June 2015 | 11:04:53 AM

When villages plug in

In Nepal, lost in the chaos of political upheavals, a silent revolution is afoot.

In remote villages of this mountainous and energy-starved country people are demanding their right to electricity.

They say electricity is a national good; everyone must have a right to it.

This is not to say Nepal has enough electricity for all. It is crippled by hours of power cuts. But the question is: if there is some, who should get it? Only the urban Nepal connected to the grid or the entire country? A notification offered an answer. It provided the way to distribute energy on demand from communities, who would share the burden of its management. The new arrangement is bringing gains to the country, where transmission losses are high. This consumer movement is fast reshaping the ways in which electricity is distributed and managed across rural Nepal.

From a mother’s group in north Pokhara to a forest users’ group in Bangesal to a Thame Bijli Company that has trained 11 villagers as linesmen and meter readers, people are leading from the front to manage power. But the challenge has only just begun. Nepal’s hunger for electricity remains. The big projects it planned are on paper. The country’s electricity generation plans are coming full circle. A few years ago Nepal was the donor’s dream as far as micro-electricity projects—hydel to solar—were concerned. They were, and are, being tried out with varying success. But people wanted reliable power and also the equal right to state-generated electricity.

The electricity rights movement brought the grid to villages. It can displace the micro-generation projects, while bringing more power cuts than power. Can Nepal integrate decentralized and centralized generation through the grid? This grand experiment will bear lessons on new energy futures.

Aditya Batra travels to villages in Nepal and meets the people behind the idea and the movement.

BaluaSome six years ago, people in Balua were fed up waiting for electricity to reach the village, 50 km from Kathmandu. They had witnessed the glacial pace at which the government utility, Nepal Electricity Authority (nea), was extending the grid in adjoining Kharel Thok village development committee.

“It took them 17 years to cover 400 households. We were determined to prevent such delays,” said Bhairab Prasad Sedhai, a resident of Balua in Kavre district. The village desperately needed electricity to irrigate the fertile valley’s famed garlic fields. The grid was just five km away in Paanchkhal. They knew they could do better.

Sedhai had heard of a scheme that could speed up the process: any registered body could extend the grid on its own by contributing 20 per cent of the cost. In 2004, he and several other residents formed the Devbhumi Balua Samudayak Grameen Vidyutekaran Upbhogata Samiti (community rural electrification consumer committee), applied for extension of the grid and mobilized the community to contribute money for the 20 per cent cost. They raised Nepali Rs 16.44 lakh (1 NRe=0.60 Indian rupee) from donations by people, loans and grants from the village and district development committees. It took the consumer committee only three years to electrify 400 households.

The committee was deeply involved throughout the process. Construction began after the executing agency nea, its contractor and the user group signed an agreement. The contractor was paid in instalments, similar to a construction-linked payment plan, subject to the approval of the user group. The user group closely scrutinized the pace of work and quality of materials used.

Self reliance
At first running the system seemed daunting, said Sedhai, now the committee president. It involved managing the 11 kva transmission poles and lines, household wiring, repair and maintenance of one 50 kva and three 100 kva transformers, installing meters, and taking on the full basket of customer service functions, such as meter reading, billing, repair and accounts. All this in a community with no trained manager or electrical engineer.

HomeYet, today the committee has four employees—two technical staff (one a woman trained in house wiring) who learned the trade hands-on when they worked with the contractor, an accountant, and one biller who doubles as an office assistant.

Erasing loss
A small brick-lined room serves as the committee’s office. The walls are crowded with names of customers and their payment status, a board listing committee members, the latest audited accounts, posters exhorting safety precautions—and tangled wires nailed to the wall with hand-scribbled notes pasted beneath.

This last—a metal hook attached to wires—is ‘evidence’, common tools of the electricity pilferer’s trade. The pasted notes identify the name and offence of the wrong-doer.

Punishments vary from the mild to the exemplary. A small, first-time offender was let off with a warning, while a school was fined NRs 1,100 for using an unmetered connection to run its two computers for two days. In no case will the committee suffer a loss. The offender has to pay the difference between the bulk meter reading and the cumulative readings from metered households.

Shaming is a powerful deterrent. Take the case of pilferer Sangram Lama. “He’s not able to even walk across the front of this office because he’s feeling so guilty,” said Bhairab, with a wide grin. “But rules are rules. Until he owns up and pays the penalty, we will not take the notice off the walls.”

Losses from theft are naturally close to zero, in marked contrast with 12-15 per cent loss nea bears from payment defaults and theft alone. Studies show 1 per cent reduction in system loss equals 7 MW of added installed capacity.

And they make profit
pilferersThe committee buys electricity from the government-owned utility at the bulk rate of NRs 3.60 per unit. The lowest slab it charges for a household connection is NRs 80 per month for 20 units. Tariffs set by the electricity user group cannot exceed national tariffs—NRs 6.70 per unit for up to 50 units; heavier users are metered and billed directly by nea. Electricity used for commercial purposes invites a higher slab rate. Some heavy electricity users, such as farmers who run pump sets for irrigation, are given special consideration.

The committee keeps meticulous records, and all accounts are audited and public. In 2008-09, it paid dues of NRs 4,91,507 to nea, and earned NRs 7,85,182 from the sale of electricity. After deducting its expenses the committee’s accounts show a profit of NRs 1,25,882, a bank deposit of NRs 1,23,882, and NRs 2,000 in cash.

This, after setting aside NRs 25,100 for a multipurpose rural development cooperative to start a savings and loan facility for members and to kick start ot-her development activities. Plans are on to convert the committee into a cooperative, once the additional 200 households in the neighbouring villages are electrified. “There’s a sense of ownersh-ip in a cooperative as all members share the profits but take equal responsibility for development work,” Bhairab said. A cooperative also makes it easier to start savings and loan schemes and channel funds for other productive uses.

‘Like food without salt’
Community-led rural electrification has a singular purpose: to catalyse income generation. “Without productive end-use, electricity is like food without salt,” said Bhairab.

In Devbhumi Balua, entrepreneurship has closely followed electrification. In three years since the grid reached the area, six rice mills, eight carpentry sheds, 10 poultry farms and 22 irrigation pumps and lift irrigation schemes have sprung up. It makes eminent business sense to promote day-time electricity demand: business activities are charged a steeper tariff, and the surplus can be invested in other income-enhancing activities. The committee now plans to purchase life insurance and medical coverage for its technical workers.

A consumer movement is born

Across Nepal, close to 420 electricity user groups, cooperatives and committees are working to extend the grid into villages. They are taking charge of electricity distribution, maintenance and ‘customer service’. Together they have electrified 176,000 rural households according to nea; another 90,000 are in the pipeline. These numbers are significant because 70 per cent of rural Nepal is not connected to the grid.

Most of this expansion has happened in a little more than four years since a handful of electricity user groups formed an association, the National Association of Community Electricity Users Nepal (NACEUN), in 2005; it now has 202 members. This is more than double the electrification rate of the government utility, and despite the Maoist conflict roiling the country.

naceun helps its members sharpen their technical and financial proposals to nea and trains them on in-house wiring, electrical safety and account book-keeping. As a consumer movement, the association has become a key player in advocating legislative changes to promote the interests and rights of electricity users in Nepal. In its recent general body meeting, members voted to create a fund to enter power generation in the 1 MW to 5 MW scale.

Since it is a consumer-led scheme, 20:80 is more systematic than the ad hoc manner in which the government utility expands the grid
- D P GHIMIRE, chairman, NACEUN

NACEUN chairman Dilli Prasad Ghimire recalls how the partnership between communities and government began. “I was determined to bring electricity to my village Sankhu, 66 km from Kathmandu,” he said. This was 1993, and after many futile visits to the nea office in Kathmandu, members of 19 village development committees from South Lalitpur district organized themselves into the South Lalitpur Rural Electrification Movement Committee.

“We proposed what we thought was a winning formula: we will contribute half the costs to electrify our villages,” Ghimire said. The community share worked out to be NRs 35 lakh. For many years the plan was in limbo “because there was no act or policy to provide electricity to us in bulk for community-led distribution”. This became a rallying cry for the movement.

He recalled the telephone call he made to Dipak Gyawali, then minister for water resources who managed the energy portfolio and served on nea ’s board of directors. “I told his secretary to tell Gyawali ji, ‘We need electricity’,” Ghimire recalled. Gyawali returned the call the following day, asking for a guided tour of South Lalitpur. Impressed with the movement’s ambitions and plans, Gyawali promptly set up a committee to review community-led rural electrification and distribution in the country. Ghimire was inducted as a member. The bylaws were finalized and notified in February 2003.

Gyawali considers the bylaws among his ministry’s big achievements, and serves on the board of NACEUN today. He recalled the anxiety the proceedings sometimes caused his bureaucrats. “The bylaws went through 27 drafts, and I would insist this was listed on top of the day’s agenda in every meeting,” Gyawali said with a laugh.

Key catalyst
The Community Electricity Distribution Bylaw 2060 (February 2003) allows any group, company, association, committee, cooperative or user association—with their constitutions suitably amended—to distribute electricity to members. The same year the Community Rural Electrification Department (cred) was created under nea to carry out community-based electrification.

The first grid extension project in South Lalitpur was under the 50:50 scheme, where the community pooled in half the share. Later nea increased its contribution to 80 per cent. Today the South Lalitpur Rural Electricity Cooperative—it registered itself as a cooperative in 2000—covers 19 village development committees, distributes electricity to 2,321 households, about a quarter of the households in the district.

The cooperative offers the clearest example of how electricity is the energy that can drive a local economy. It has 37 sub-committees that actively raise funds for grid extension within the district, while a telecommunications centre and three milk chilling plants are the biggest consumers. As per a study by University of Cambridge researchers A Yadoo and H Cruickshank, under review for publication in Energy Policy, the cooperative supplements its income from tariff payments with the sale of electrical appliances and wiring bought at wholesale prices from the manufacturer.

Interest payments from a micro-financing scheme that targets poor households and income-generating and welfare projects add to the resource pool. Between 2005 and 2008, micro-loans alone catalyzed 167 meter connections, 237 small enterprises—such as carpentry tools, poultry, irrigation units and a community milk refrigeration unit—and the building of 23 biogas digesters, the study points out.

This emerging consumer movement is more efficient. Three years since grid extension by community started, pilferage is down due to less theft and timely payments, cost of service is lower than government utility, service requests are handled promptly, while the focus on finding on electricity-driven activities means some electricity user groups are already in the black, say people associated with the initiative.

Costs are cut when communities lead electrification efforts. Ratna Sansar Shrestha, a water and energy analyst, has crunched the numbers: The per household cost of connection is three times lower when communities get involved—roughly US $100 compared with US$ 300 when the government utility is involved. One reason for lower cost is that nea pays for the higher capacity hardware, while the low capacity transmission lines and substations fall on the user groups’ plate.

Grid ‘communitized’
“The point,” said Gyawali, “was to democratize the grid; in fact, communitize it to ensure control, use and access to electricity in rural areas.” This was more than ‘unbundling’, or fracturing the vertical government monopoly of generation, transmission and distribution of electricity. It was to pluralize it by bringing in community distribution to act as checks and balances between private, commercial and statist interests—functional democratization, if you will.

Electricity user groups are just a recent addition to a long list of community-led development interventions—from the powerful federation of forestry user groups (fecofun alone comprises 11,200 user groups representing 8 million people across Nepal), to water user associations (nfiwuan has 2,139 user associations), mothers’ groups, user groups in water supply sanitation, to community-operated community radio.

Still the movement faces stiff tests. One is the opposition from the entrenched trade unions of nea that fear job losses with increased community participation. Two, cooperatives that grow too fast too big often replicate the inefficiencies of centralized utilities they seek to replace. Third is how to accommodate these urgent needs into an already overloaded grid. Community involvement must also make business sense (see: Scale matters).

“The 20:80 scheme is perhaps the country’s biggest development programme today,” said Kishore Thapa, secretary, Water and Energy Commission Secretariat – government’s policy making body on these matters. “It is very popular with rural communities, and the government is trying to facilitate this process.”

Thapa said the government has set aside NRs 1 billion a year as a backstop grant to those communities that fall short of their contribution in the scheme.

Big engagement with small power

Away from the grid, villages have been generating their own electricity for decades in Nepal. The country is the developing world’s petri dish for experiments on small-scale renewables. Generous international donors have supported biomass (biogas, improved cooking stoves and biofuels); mini- and micro-hydro power; improved water mills; solar (photovoltaic and heating systems).

Power from wind is still in its infancy. Some like to joke that in Nepal the wind behaves like bureaucrats, who start work at 10 but leave by four; it is ineffective because most rural residents use electricity at night.

Each technology has its own programme in place, is backed by particular donors and has a raison d’être influenced by technology, cost, terrain and financial health of communities.

To reduce overlaps and streamline funding and implementation of these programmes, the government created the Alternative Energy Promotion Centre (aepc) in 1996. The nodal body manages the well-capitalized rural energy fund, with money pooled by leading international donors, and administers the delivery of subsidy to projects. aepc accounts for 90 per cent of the budget of the environment ministry.

The diminutive technologies—some as small as 5 kva hydel power plants, or for instance the ‘family hydro’ being developed by the ngo crt /Nepal, which generates up to 60W for a household—have nonetheless had a big effect across rural Nepal.
aepc data shows that off-grid electricity reaches 3 per cent of Nepal’s rural people.

Narayan Prasad Chaulagain, aepc executive director, stresses the mandate of his institution. “It’s not just about electricity; it’s about addressing the livelihood needs in rural areas, where 95 per cent of Nepal’s poor live.

Energy=social capital
In Nepal, rural electrification was always a development deed, with poverty-reduction, good governance and social and environmental sustainability as the goals. The undp -supported Rural Energy Development Programme (redp) was the harbinger of this approach. In its third phase now, the programme has installed 285 micro hydro plants, with a cumulative capacity of 4,453 kW, covering close to 50,000 of the total 3.6 million households in Nepal.

Although there is a definite bias toward micro-hydro in redp —some mock this as “bullock cart technology”—solar photovoltaic systems for isolated households, biogas and improved cooking stoves are the other energy choices it promotes.

“We don’t promote technology; we work to alleviate poverty,” said Kiran Man Singh, the national programme manager. redp’s holistic approach helps build social capital that encourages communities to match their environmental, economic and social goals with the appropriate energy choices, and the wherewithal to manage such systems once the project is operational (see: Model village, but for how long?).

“We don’t build a turbine for them, we teach them how to build one,” Man Singh said. “And we don’t spend a paisa on them; we facilitate the process. Our motto is all must have access to electricity and have the ability to pay for it.”

But small-scale, off-grid power generation was not always the focus of the government. It was the maelstrom of civil society protests in the 1990s over the then world’s most expensive hydropower project, the World Bank-backed 402 MW Arun III, that forced the government to re-evaluate cheaper, small-scale, hydel and other off-grid renewable power plants run by communities in remote villages. Arun III was scrapped in 1995 (See ‘Power struggle’, Down To Earth, May 31, 1995).

Today’s crippling power crisis (see box: In poor health) evokes much the same debate. There are strident calls for large hydro projects custom-built for export of power to India. Some are scrambling to find ways to retain the fulsome gains made by small off-grid community-run systems threatened by consumers who want to connect with the grid—be it at their own cost.

How to take community-led rural electrification forward

Meticulously planned off-grid systems of power generation face the greatest threat from haphazard extension of the grid. “The subsidy is disbursed, plants are built, and then mothballed as soon as the grid reaches,” Ratna Sansar Shrestha, water and energy policy analyst, said. Despite the long and frequent power cuts, many prefer power from the grid to the hassle and costs of maintaining off-grid power plants.

“In the end isolated off-grid systems will fail. The government should ready a clear roadmap to keep certain areas off-grid,” said Rameshwar Yadav, general manager (electrification), nea.

Their very small scale makes it difficult for off-grid producers to partner with nea the way electricity user groups do. The Electricity Act does not allow the government utility to purchase power from community-run power plants to feed into the grid, unless the community generates enough to feed at least a 33 kva substation, a condition many small systems cannot meet, Narayan Chaulagain, the head of the Alternative Energy Promotion Centre (aepc), pointed out.

Synchronization technologies for feeding power from off-grid systems to the grid are expensive. aepc is making some headway on this but faces opposition from nea, mostly on technical grounds. Once connected to the grid, the quality of power becomes a critical consideration, Shrestha said. Connecting the tiny contributions of off-grid technologies (some as low as 15 kva systems) to the national grid has a very real danger of tripping the entire grid; available technologies are not mature enough to harmonize the frequency of these small disparate systems with endemic fluctuating voltages, he explained.

Experiments are on to connect the off-grid systems. The German development agency gtz is running a pilot at Terhathum in East Nepal, on behalf of a joint task force set up by the environment and energy ministries, to synchronize a 200 kW hydro plant with the grid using a power exchange agreement. (Shrestha and Chaulagain are members of the task force.) In periods of shortfall the user group buys power from the grid; and inversely, sells power to the grid in times of excess.

An redp pilot in Baglung in the midhills of Nepal has connected seven 10 kW to 40 kW off-grid turbines to create a mini-grid of 128 kW. The choice is clever since Baglung’s ongoing road construction offers communities the prospect of supplying power to the 50 kW stone crushers. In 2006, redp had successfully tested synchronization of power from a 50 kW turbine to the grid at the Institute of Engineering under Tribhuvan University in Kathmandu.

Needed: a new act
Despite the community electrification bylaws, rural electrification in Nepal has progressed in a policy and legislative vacuum. “We don’t have a clear policy or targeted legislation on rural electrification,” said D P Ghimire, chair of naceun.

What could help is the Bill on Electricity, 2065 (2009), which streamlines licensing procedures, prioritizes domestic energy needs over export-oriented projects, allows power trading by private entities and unbundles nea. The bill is under review by the parliamentary statutory committee and is expected to be tabled in the winter session 2010.

“The act sets out to reduce the void between a government agency headquartered in Singha Durbar in Kathmandu and community groups that invest in electrifying their villages,” Ghimire said.

User groups and development planners have lobbied hard for amendments that promote the interests of electricity user groups, but this is not the form in which the bill has been placed before the parliamentary statutory committee, Shrestha said.

A more ambitious amendment, which may have to wait till the current version of the bill is passed, is to replace the Community Rural Electrification Department with a Rural Electricity Development Authority (reda) not under but parallel to nea, reporting directly to the government. This will help streamline policy and rural electrification plans. This will create a central fund, just like aepc’s energy fund, which attracts donor funding.

nea cannot continue to meet grid extension demands without help from international donors. nea made a loss of NRs 12 billion in the last year alone from theft and transmission losses, high overheads, overstaffing and low electricity demand in rural areas. The government has only recently announced a NRs 1 billion a year grant to support the community-led grid extension efforts.

reda will channelize money, formulate policy and execute, monitor and regulate rural electrification projects in the country.

Some are pushing for changes in the nea regulations to iron out differences between electricity user groups and the government-owned utility—for instance to clarify ownership of assets after electrification. naceun member groups have collectively invested close to NRs 71 crore in transmission lines, poles, transformers, meters and wiring. As of now, nea owns the system hardware, while the user group shoulders maintenance costs.

Such regulatory changes, if approved, will align rural electrification with the decentralized spirit of cooperatives. For instance, electricity user groups will be able to offer skilled manpower or locally procured materials to bring down their cash contribution. But the push from decentralization to true devolution, at least to the district level, could affect a game changer. “Why hire a contractor from Kathmandu,” asked Ghimire.

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