NEFPORT ISSUE 45 – JULY 2021
ENERGY ENERGY AGRICULTURE
Despite the on-going pandemic, the energy sector has received a positive transformation. Nepal has been able to make successful agreements with General Electric (GE) and Bharat Heavy Electricals Limited (BHEL) for upgrading and maintaining consistent supply of electricity. A feasibility study to extend the Motihari- Amlekhgunj oil pipeline to extend to Chitwan has been conducted. Nepal annually spends NPR 6 billion (USD 49.8 million) in transporting fuels into the country with the government’s plan to extend the pipeline to Chitwan and (in future) to Kathmandu might help in saving transportation costs. However, the energy sector has also seen certain downfalls. Nepal Oil Corporation (NOC) hiked the prices of petrol and diesel recording it as one of the highest prices for fuel in past seven years. The increase in price is likely to make domestic products less competitive which might further worsen the trade balance. Besides this, Budhi Gandagi which was supposed to be Nepal’s largest hydro power project has failed to start its operation questioning the government’s ability to manage the establishment of huge hydropower projects in Nepal. Nepal Electricity Authority (NEA) has contracted GE Renewable Energy’s Grid Solutions to upgrade three gasinsulated substations: The capacity
of substations in Khimti, Barhabise and Lapsiphedi will be increased from 220kV to 400kV as Nepal Electricity Authority (NEA) has contracted GE Grid Solutions to upgrade three gasinsulated substations. The substations will help produce a consistent supply of electricity, especially to households outside Kathmandu that currently do not have access to the national grid. The project will also allow Nepal to trade excess energy with neighboring countries.38
NEA to order electro-mechanical work from BHEL: The Raghuganga
Hydropower Limited (RGHPL), a company 100% owned by NEA has placed an offer to BHEL for electro-mechanical works for 40MW
Rahughat Hydroelectric Project in Nepal. This is the second consecutive success for BHEL in the hydropower sector of Nepal. The project is majority funded by EXIM Bank of India in the form of a soft loan, along with funding from NEA and the Government of Nepal.39 Industries in Bhairahawa face uncertainty in production due to insufficient electricity: Medium
and large factories in Bhairahawa have been forced to cut down their production since mid-March 2021 due to insufficient electricity. As a result, the factories have been forced to increase their cost of production and are facing problems of paying daily wages to the laborers. Frequent tripping of circuit breakeNPRdue to unreliable distribution and old and weak local transmission systems are the main reasons behind insufficient
electricity. The existing transformer capacity in the Bhairahawa–Lumbini Industrial Corridor is 20MVA, while a 23MVA power transformer is needed.40 Highest prices for fuels in the past seven yeaNPRhave been recorded due to the recent surge in its prices by Nepal Oil Corporation (NOC):
The prices for petrol and diesel have increased by more than 20% in the past one year after NOC hiked the fuel prices again on Sunday (4th April, 2021). The new prices have been recorded as one of the highest prices of the fuels in the past seven years. NOC raised the prices of petrol and diesel each by NPR 2 (USD 0.01) per liter to NPR 120 (USD 0.99) per liter and NPR 103 (USD 0.85) per liter, respectively. For the price of the petrol that stood at NPR 96 (USD 0.79) per liter a year ago, the price
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