The construction of 120 micro- and medium-level hydropower projects, mostly undertaken by the private sector, has been badly affected after India failed to supply explosives through the Nepal Army.

Although this is not a new problem, as several private sector hydropower projects have for years been facing explosives shortages, the crisis has again become severe. The Independent Power Producers’ Association Nepal (IPPAN), an associate of private developers, has started reaching out to ministers to facilitate smooth supply.

“We met Foreign Minister Arzu Rana on Wednesday and told her to address our demands immediately,” said Ganesh Karki of IPPAN. “We also met Energy Minister Dipak Khadka and others, and asked them to take our concerns seriously.”

According to Karki, of the 183 hydropower projects that are under construction and mostly owned by the private sector, 65 percent of those needing explosives are experiencing delays due to the lack of timely availability.

These projects, with a combined installed capacity of 4,000 megawatts, are under construction, while another group of projects of the same capacity have signed power purchase agreements (PPA) with the Nepal Electricity Authority (NEA) and are in the process of financial closure, said IPPAN in its demands submitted to minister Rana.

It added that 80 percent of additional hydropower projects with combined capacity of 20,000 megawatts that are in various stages of development, are led by the private sector and these are also affected by explosives shortage.

“Due to the unavailability of explosives on time, several of these hydropower projects are not being completed on time and their construction costs are also increasing. After failing to complete the projects on time, the private sector is forced to pay huge amounts in penalties,” IPPAN said in its memorandum to Minister Rana.

“In most cases when we have taken up the matter, officials, leaders and diplomats have cited ‘geopolitical’ reasons behind India’s sluggish approach to supplying explosives,” an IPPAN official said. “Sometimes the Indians blame us for providing explosives to projects not designated for their use.”

The process of importing explosives involves the private sector opening a letter of credit (LC) and, as per the LC , the Indian side supplies the explosives to the Nepal Army, which then distributes the explosives to the private sector, as there are concerts that direct supply to the private sector could lead to misuse.

Even though the army has for long been producing commercial explosives at its Sunchari Emulsion Plant in Makawanpur district, it does not churn out enough to meet the demands of all the country’s infrastructure projects. The army relies on raw materials imported from India to manufacture these explosives, but it still struggles to keep up with the demand in the market.

After Chinese companies and firms started making inroads into Nepal’s energy sector, we noticed Indian uneasiness, which ultimately resulted in two things—not buying Nepali electricity with any Chinese involvement and halting the supply of explosives for projects, a former foreign ministry official said. “Meanwhile, we sometimes tried to import explosives from China, and this may have irked the Indians.”

After Indian reservations, Nepali hydropower producers began submitting all details of investors and promoters so that India would stop raising concerns, but this too did not yield positive results, said an IPPAN office bearer.

In April last year, some private firms brought in around 90 tons of explosives from China, but that supply did not last, and there were issues with price, time constraints, and other factors.

Generally the Indian Embassy in Kathmandu issues a ‘No Objection Certificate’ (NOC) for the supply of explosives for infrastructure projects. Nepal has of late been importing explosives exclusively from India.

After explosives became scarce, the government changed the law. According to a new rule, explosives can be borrowed for roads, energy projects and other development projects that require blasting.

Projects can borrow explosives only when they face a shortage and cannot get an immediate supply, and when the Nepal Army is also unable to provide them. “If a project doesn’t require explosives immediately and has them in excess, it can provide them to another project,” the new rule says.

When a hydropower project faced a similar problem last year, the government tried to import explosives from China, but that proved unfeasible due to very high cost, time consuming import process, and other factors.

The current requirement only for hydropower projects is around 5,000 metric tons, with 199 metric tons needed on a monthly basis, said Karki.

Nepal Army spokesperson Brigadier General Gaurav Kumar KC admitted that there is a shortage of explosives and production, and the army’s plant in Hetauda is unable to meet the current demand. Most hydropower projects have been facing shortage of explosives since last December.

“We can only meet 20-30 percent of the demand and the rest is met by the private sector,” said Brigadier General KC. He also acknowledged that the army itself has been unable to get enough raw materials to produce explosives according to demand.

After hearing the concerns of IPPAN officials, Foreign Minister Rana assured them that she would try her best to facilitate the import of explosives required for hydropower projects.

IPPAN has also warned that if shortages continue, Nepal’s target of producing 28,500 megawatts in ten years will not be fulfilled, and the country’s goal of exporting 10,000 megawatts of energy to India in next ten years will be affected.

In order to encourage foreign investment in energy, IPPAN has urged the Ministry of Foreign Affairs to facilitate the import of explosives, create an environment of exporting 10,000 megawatts of energy to India in next ten years, and coordinate with Nepali missions abroad to attract foreign investment in the energy sector.

As per the Working Procedure on Import, Transport, Storage and Use of Explosives-2017, the import, transport, and storage of explosives for industrial and construction projects should be carried out under strict vigilance of the Nepal Army.

Imported explosives, mostly from India, are managed by the army, which oversees their distribution, storage and use, said Karki. And during detonations, the army sets up a dedicated camp near the project site to ensure the explosions are carried out safely.