Small Scale Hydropower Taking Hold in Nepal

Small-scale hydropower is taking hold in Nepal feeding electricity into the national grid and helping rural electrification.

LAMJUNG, Nepal 2002-02-27 [] In Lamjung District, on a snow-fed tributary of the Marsyangdi River, is an example of how the projects can work. Last month the Syange Project delivered the first unit of electricity to the national grid, the first kW of hydroelectricity supplied by a private producer since the 36 MW Bhote Kosi Project came on line last year. Electricity from the Bhote Kosi costs the government about twice what electricity from the Syange project during the wet season, though, and even though the price will increase by six percent annually for the next three years, it is still far more competitive. “The development of water resources by foreign parties, which inevitably had to be big enough to justify their costs, led to the price of energy being unaffordable for the Nepali population,” said Kumar Pandey of the Lamjung Electricity Development Company (LEDCO). “This is a new model of hydropower development in Nepal. This is the future.” Since 1994, when the LEDCO was established, the organization has been trying to see if the government’s policy to involve the private sector in energy production can actually happen. LEDCO helped set up the Syange Bidyut Company (SDC) along with other investors including local individuals, the Lamjung District Development Committee, local Village Development Committees and non-governmental groups. The Pokhara-based Macchhapuchhare Bank provided a seven-year loan for the project at 12.5 percent interest. Other shareholders in the SBC include individuals in Lamjung and Kathmandu and a finance cooperative. “This is a model, it involves the local people, they own it, they run it, and the whole country benefits,” Pandey said. To be sure, small hydropower is not the complete answer to Nepal’s energy development. Big projects come with economies of scale, and can give development a kick-start if efficiently managed and built. For domestic consumption, experts say, there is now an urgent need for a medium-size reservoir projects like the Andhi Khola in addition to small hydro, which can provide dry season power when production from run-of-the-river schemes falls below capacity. “Run-of-the-river schemes of snow-fed rivers, unlike the Kali Gandaki, should be promoted. But at the same time projects like Arun should be developed. It gives you firm energy, but does not have the environmental impact of many large projects,” said water expert Dr Binayak Bhadra. “Of course there have to be adequate mechanisms and checks and balances, and room for activists to oppose them if they feel the sociological and environmental impacts of the projects are unjustified.” With the Syange project, villagers will not only benefit from the power generated from their local stream, but also from revenue earned by selling power to the national grid. The Syange River has its source on the snowy slopes of the Lamjung Himal and descends through a series of spectacular waterfalls to the Marsyangdi. Water is transferred through a 120 meter penstock pipe to the powerhouse. The head gives Syange an installed capacity of 183 kW. It has become easier in recent years for the private sector to move into hydropower due to favorable government policies and financing. LEDCO will continue to develop water resources in Lamjung to promote rural electrification by operating a locally-based enterprise that links local natural resources with local investors through a profitable, professionally managed private enterprise, and will include the people of Lamjung in developing their district’s water resources.
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