Nepal Electricity Authority is hit with a double whammyAmid energy wastage, power utility’s cost is rising on the Nepal-India transmission line, which remains underused.
The 400kV Dhalkebar-Muzaffarpur Transmission Line between Nepal and India hasn’t been put to optimum use, but the Nepal Electricity Authority has been paying around Rs1 billion annually for the past 25 years to the companies that developed it.
The amount to be spent for booking the transmission line is huge considering the authority’s net profit in the last fiscal year 2020-21 which stood at just Rs3.51 billion, a sharp drop from Rs11.68 billion in the fiscal year 2019-20.
After electricity was first charged on the transmission line on November 11 last year, it was expected that Nepal could use the line as much as possible for trading power with India.
India has cleared the way for Nepal to take delivery of as much as 350 megawatt power through this cross-border transmission line.
The NTPC Vidyut Vyapar Nigam Ltd, which is the agency designated by India for electricity trade with Nepal, can sell up to 350MW electricity to Nepal through this transmission line.
But the southern neighbour has been delaying approval to the Nepal Electricity Authority (NEA) for selling its surplus energy to India. It has been nearly two months since the NEA sent a request to India seeking approval to sell its electricity. The Indian indecision has led to a wastage of electricity in Nepal, which has now become an energy surplus country.
While the authority is losing money due to the wastage, it has also been bearing the “booking charges” for failing to use the Dhalkebar-Muzaffarpur Cross-Border Transmission line to its maximum capacity.
The NEA has to pay the charge to the Cross-Border Power Transmission Company India, a joint venture with the NEA’s 10 percent stake, and the Power Transmission Company Nepal, a company registered in Nepal, in which the authority has 50 percent stake.
In the India-based company, there is an investment of IL&FS India, Power Grid India and Satluj Jal Vidyut Nigam (SJVN) besides the NEA.
In the Nepal-based company, besides the NEA, Indian companies—Power Grid Corporation of India, Hydroelectric Investment and Development Company and IL&FS Energy Development Company Limited India have stakes.
“We have already paid an annual charge of around Rs1 billion to these companies for booking the transmission line for electricity trade with India,” said Dirghayu Kumar Shrestha, chief of the transmission directorate at the NEA. “But it would have been less costly for us had we used the transmission line to its maximum capacity.”
According to Shyam Yadav, chief executive officer of Power Transmission Company Nepal, the authority pays around Rs20 million each month to the Nepali company.
“The rest should be paid to the India-based company,” he said.
The cost for the NEA has increased at a time when its energy is going to waste for the last one and a half months due to India’s delay in giving approval to the NEA to sell electricity in India’s power exchange market.
Officials at the authority say they have been awaiting a decision from India’s Ministry of Power. The utility has proposed selling electricity generated by projects including Upper Tamakoshi Hydropower, Upper Bhotekoshi, Marshyangdi, Trishuli and Devighat whose combined generation capacity stands at 621.1MW.
The Dhalkebar-Muzaffarpur Cross-Border Transmission Line has the capacity to transmit 1,000 megawatts of electricity.
Officials at the authority say the transmission line is not being used recently as Nepal cannot sell power to India, while Nepal does not need India’s electricity in the monsoon.
“There has been an inflow and outflow of 20MW-50MW of power between the two countries through this transmission line, whenever power is needed in Nepal or India,” said Suresh Bahadur Bhattarai, spokesperson for the NEA.
Nepal has a power exchange mechanism with Bihar and Uttar Pradesh states of India. Under this mechanism, two countries can buy power from each other whenever there is a need.
“If the NEA is allowed to sell electricity regularly to India’s power exchange market, it can earn more and the cost of paying for booking charges would be compensated,” said Bhattarai.
According to him, the NEA can also levy wheeling charges on private sector power producers if their electricity is transmitted through this transmission line. A wheeling charge is the fee power producers and power network users pay transmission line owners and operators for the use of the line.
Nepali officials wonder why India has been delaying the approval process for buying electricity from Nepal even though the southern neighbour has been facing an energy crisis due to coal shortages. In India, 70 percent of the electricity is generated using coal. While power consumption in the last two months has jumped by almost 17 percent compared to the same period in 2019, global coal prices have increased by 40 percent and India's imports fell to a two-year low, according to the BBC. Amid this, Nepali officials believe a swift approval by India to buy power from Nepal could benefit both the countries.
With Nepal having surplus energy, the NEA has been forced to shut down some turbines of some power plants to prevent wastage of energy.
According to the authority, Nepal now has surplus power even during peak hours, usually between 7pm and 8pm. The current peak hour demand stands at 1,500MW. The country is currently producing 2,000MW electricity, and of that 1,900MW is generated from hydropower projects.
In an interview with the Post two weeks ago, Kul Man Ghising, managing director of the authority, said that only 900MW-1,100MW is consumed during the night, when the demand drops significantly. During the day, 1,200MW-1,300MW is consumed when the demand is the least.
According to him, purchasing electricity from Nepal would be less expensive for India as the electricity rate in the Indian Energy Exchange has reached as high as INR20 per unit because of the increased demand.
“We can offer a price in the range of INR5 per unit which will not only be less costly for India but will also balance power prices there and boost the Indian economy,” said Ghising. “In fact, India purchasing Nepal’s power can be a win-win deal for both countries.”