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India’s policy not to permit Chinese investment in hydro won’t impact Nepal : Kulman Ghising

Pramod Jaiswal

Pramod Jaiswal

 |  Kathmandu

Kulman Ghising is the Managing Director of Nepal Electricity Authority (Photo: Saroj Baizu)

Kulman Ghising is the Managing Director (MD) of Nepal Electricity Authority (NEA). He is well known for his ingenuity in solving the load-shedding problem within two months of taking charge of the office, at a time when people were facing power cuts for up to 18 hours daily. He was appointed as Managing Director in September 2016 and re-appointed in August 2021. Nepalkhabar talked to Kulman Ghising on different aspects of cross-border power trade between Nepal, India and Bangladesh. Excerpts:

In the secretary-level Joint Steering Committee meeting between Nepal and Bangladesh, the two countries agreed to develop a dedicated transmission line between the two countries in cooperation with India. How feasible is this project from your point of view?
Nepal and Bangladesh can be connected through a dedicated transmission line as well as through Indian grid. Both fare options are feasible. The dedicated transmission line also means the Indian grid. How we can export electricity depends upon the charge that we have to pay for the electricity transmission line. If it is a dedicated option, we have to pay the charge or even if it is the Indian grid, we have to pay. It is the charge that we – either Bangladesh or Nepal - have to pay and power can be transmitted. Thus, it does not matter whether it is dedicated line or the Indian grid.

There should be a transmission corridor available. If it is no transmission capacity then power cannot be transmitted. Therefore, Nepal, Bangladesh and India can build a transmission line. If Bangladesh plans to import more than 5000 MW by 2040, it wants to import 9000 MW of Nepal’s hydropower; then in that case it may require more transmission lines that may be dedicated, synchronized or connected to Indian grid. So, it does not matter as long as it is practical, technically feasible and commercially viable.

Do you see the politicization of this cooperation as a hurdle that can derail this agreement?
I don’t think there will be politicization as it is not that India doesn’t want it [transmission line]. Indian guideline of 2018 has already said that third-party transmission of electricity is possible and Indian regulation on cross border electricity regulation has also mentioned the same thing.

Policy-wise it is clear and practical at the political, bureaucratic and execution levels, so we have to work on this. In the Joint Secretary level and Working-level meetings, we are discussing to clear the transmission corridor and export electricity to Bangladesh. I think the BBIN framework, which as four countries - Bangladesh, Bhutan, India, and Nepal – realizes that ultimately in the future, there will be a single market and for a single market, this transmission line and market integration are important. This will happen, but it will take some time for policy formulation and regulation for common understanding.

Bangladesh, Bhutan, India, and Nepal (BBIN) framework for Power Sector Cooperation has been agreed upon by both India and Nepal for the development of power generation projects in Nepal; development of cross-border transmission lines, and bi-directional power trade. How viable is it for Nepal, especially when dealing with both India and China? 
I think the most feasible option is the BBIN framework. We have hydropower generation projects in Bhutan and Nepal, and a huge electricity market in the region - India and Bangladesh. Hence, there is supply and market, making this BBIN framework the most feasible option for this sub-region.

I think if Nepal can develop more hydropower that can be consumed at home, that can complement India’s solar mission and that can be exported to Bangladesh and will be very important for the region because both Bangladesh and India have to meet their COP26 climate change mitigation targets.

We have a long border connected with China and there are many hydropower projects near the Chinese border as well. Hence, we can connect Tibet’s grid to Nepal’s grid and can exchange power with China near the border.

When the Foreign minister of China visited Nepal last time, we signed an MOU to build cross border transmission line between Nepal and China. That is a good initiative, and it will happen in the future because there is long border connectivity with China but lacks cross border power connectivity. I think it is very important as every nation has to be connected.

Do you think this may impact the Chinese investments in the hydro-projects or has any effects on future incoming investments from the Chinese authority? 
There are certain investments from China in the last decade. One project Marsyangdi Hydropower Station of 50 MW they have developed and is in operation. We are using that power for domestic consumption.

I think if projects invested by China are not suitable and is not able to connect or integrate with the sub-regional market, then China can also import Nepal’s hydropower through the transmission line. We can export to Lhasa of Tibet and Lhasa is already connected to Muglan, Sichuan, and other places of China. It means that power can be transmitted anywhere, so every option is feasible.

Similarly, in Lhasa of China, solar power is very cheap and there is huge solar potential in Tibet. Such potential will be very cost-effective for this region and is a possibility and opportunity for this region.

The development of the Nepal-Bangladesh dedicated power transmission line, which would be using an avenue for transporting Nepal’s electricity to Bangladesh through the Indian territory, is coming to life. How likely can a similar tripartite agreement be achieved among India, Nepal, and China?
The trilateral agreement between India, Bangladesh, and Nepal is going to happen in the coming future. I think Bangladesh wants to invest in Nepal’s hydro projects. There are many Indian investors developing mini hydropower projects in Nepal. Thus, for those developers, Bangladesh is another destination for power supply, apart from India. GMR is developing a 900 MW Upper-Karnali Project and they have already processed the final stage of signing the PPA with Bangladesh, which is a milestone. In that PPA, there is a tripartite agreement between India, Bangladesh and GMR. So, this will open the BBIN connectivity and integration of the market.

I think India, China, and Nepal cannot say there is no option. There is always the option, always an opportunity. Whole Europe is a single market, why cannot Asia be one? So, the market can be integrated when the transmission line is integrated, power can be supplied and transmitted anywhere so we should not be pessimistic, but optimistic in all respects.

Once this connectivity will be up and running, how do you think this trade will aid in the expansion of other such projects in different regions? What is the other possible feasible region that you are working on to establish cross-border connectivity? 
When we talk about the integration of the market, the connectivity and capacity of the transmission line is very important. We have already been connected with India through many transmission lines and many more transmission lines are in the pipeline. Butwal-Gorakhpur transmission line is in execution; Lamki-Bareli, Inaruwa, Purnia and many other projects are in the pipeline. Hence, when these projects are completed, I think more than 13000-14000 MW can be exported and in Nepal there are many such sites. The biggest site is 10800 MW Karnali Chisapani. To wheel that power, we will require many more transmission lines. Thus, the transmission line is the major bottleneck, and we have to build them.

Power connectivity and Indian investors are important for investment in this region. There are many big Indian investors that have shown interest in Nepal’s hydropower; many Nepal’s reservoirs are taken up by different government companies of India. Bangladesh is also interested in one of the reservoir projects of Sunkoshi III. We have visited the site and have had several rounds of discussions with Bangladesh’s counterpart. There are many other countries, outside the region, showing interest in Nepal’s hydropower such as Europe, America, Korea and Japan.  

However, the major part is the transmission connectivity and market. If the market is open and the transmission line is available, investment will come. And this region has a market as it has two largest economies of the world. China is also a huge electricity market for Nepal because it is also facing an electricity shortage. There is load-shedding in some industries because of the coal shortage. There is electricity shortage in the region. In addition, our energy is green and can be exported to south (India), north (China) or anywhere.

India has caveated that the electricity trade with Nepal is possible only when the latter ensures that there will be no Chinese components in their hydropower projects. Do you think this will have any impact on the Chinese-invested projects?
 Actually, there are many investors in Nepal, not only the Chinese. Much investment is coming from other countries like India, Korea, and others. Chinese investment is there and there is an interconnection going to be built between Nepal and China; China is interested to connect the power market of Nepal with China. Hence, when it is connected then China can also import power, and Nepal can also consume domestically. Nepal’s demand itself is increasing day by day; our average demand increment in the last five years has been 20 percent. 20 percent increment every year is huge in the electricity sector. Thus, our demand is increasing, Nepal will need more and more energy, so heavy investment will be required in the generation. Not only in the generation, but in transmission and distribution as well.

Thus, this policy of an Indian guideline that does not permit third-country investment will not influence much in future. I think the market will open for the North (China) and Nepal’s domestic demand will also increase. I think geopolitics will change. I hope geopolitics will not always remain the same. For this region, the market integration is important.

Electricity trade with India from Upper Tamakoshi, Upper Bhotekoshi, and Marshyangdi was unsuccessful because of Chinese involvement in the projects. What will be the next step to deal with the Indian authority’s terms and conditions?
Actually, Nepal’s demand is coming up with a 20 percent increment, so we need more and more hydropower projects to meet the demand of Nepal itself. So, if the project of Upper Tamakoshi and other projects are not targeted in India then there are many other projects we can export to India. We are supplying nearly more projects to India and if that is exported, then other projects, we can consume ourselves. It does not matter.

Once reluctant about the transmission lines being included in the transit arrangement as a privilege to the landlocked countries, India, now has been coming to terms to promote multilateral cooperation in the trilateral energy sales and purchase agreement of the power sector. What do you think caused this drastic change of heart from the Indian side? 
Actually, this power sector is vibrant and without energy, the economy will not move. It’s very important. India’s demand for fossil fuels is also increasing; and there is shortage in the supply of coal and gas in this region, and the price of fossil fuel is going up every month. And India has COP26 target of climate mitigation. By 2030, India is going to consume 50 percent of its energy from renewable sources. By 2070, they are going to make their energy use net zero carbon, for this hydropower is important, because hydropower is renewable.

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To meet the climate change mitigation target and the increasing demand, India will need much more energy supply from Nepal and other countries, because 70 percent of India’s electricity is from thermal, that is coal. In Bangladesh, it is almost 99 percent not renewable energy and they also have to meet these COP26 targets else they will also be in a difficult situation.

Hence, clean energy is important. Our energy is very important to complement solar as well because India’s solar mission is huge. “One sun, one world, one grid” - this is the vision of Indian Prime Minister Narendra Modi. Thus, when solar power production is increasing during the daytime, what can be for the night time? Hydropower can be the complement. Therefore, there are three important aspects – the first one is complementing the solar, second is meeting the COP26 climate change mitigation target, and the third and the most important is meeting the increasing demand.

The fossil fuels, i.e., coal, diesel, and gas, are depleting and there is going to be a shortage and the price is going higher. Today, you can see in Europe, the energy price is very high, so green energy, and other source of fuel are coming up – such as green hydrogen.

Nepal can be a pioneer in green hydrogen and green ammonia, and can export it without a transmission line, even to Europe. This technology exists today. Nepal’s water can be the source of all energy and electricity sources – for hydrogen vehicles, buses and submarines. Hence, this is very important for Nepal.

So, I think, ultimately India will see this region’s energy integration that will benefit all the countries. This is a win-win situation, not zero-sum game for every country.

And if we develop Nepal’s hydropower, that will benefit reservoir projects and that will benefit more countries in flood control, irrigation, drinking water, navigation benefits, and others. So, if we build hydropower in Nepal, that will benefit downstream countries as well. There are many other benefits that we can count on. Thus, I think this marketing division and grid integration is very important.

Nepal currently produces a surplus power of around 500MW. If successful in making the necessary investments, Nepal aims to reach its target of additional power generation of 5,000 MW by 2025 and 15,000 MW by 2030. How is the exploration of other regions proceeding regarding the trade of surplus electricity? What are the features that NEA is looking for in its potential trading partners? 
At present Nepal is exporting around 400 MW to India and we are trying to get clearances for another 200 MW in next two months. So, this year we will be exporting 600 MW and the export will be increasing day by day. In the last four months, we have already exported electricity worth around NRs 8 billion. This volume will increase. Our generation capacity is increasing every year by 800 to 1000 MW. By next five years, our generation capacity will be more than 7000 MW and our demand will be less than 4000 MW. Hence, we will be exporting more than 3000 MW. In next 5 years, the energy export will be equivalent to more than USD 2 billion or NRs 200 billion. This will be increasing and that will balance the trade deficit between India and Nepal. In future, more domestic, Indian and other investors will be investing in Nepal, thus, more volume of electricity will be traded between Nepal and India. That will be monumental for both the countries.

Despite the forecasted results, are there any backup plans if Nepal experiences a deficit due to various reasons whether it be political instability, recession, or any other unfavorable circumstances in its surplus power supply generation goal? 
Nepal has already achieved its generation target. We are in a surplus situation now and by next two years, we will be surplus even in the dry season making us self-sufficient. We will not have to import power in the dry season. But, the most important part is how we can replace fossil fuels such as petrol, diesel, and gas with electricity. We are importing fossil fuel equivalent to around USD 5 billion and that has to be replaced by electricity. This is a very important goal that we have to meet. For that, we have to come up with electrical vehicles, hydrogen vehicles, and induction cooking. If we can replace these fossil fuels with our electricity, then Nepal will be not only net-zero, but carbon negative and our trade deficits will decline. Nepal will also contribute to this region’s climate mitigation goal.

Has the power trade been easy after the recent visit of Prime Minister Sher Bahadur Deuba to India?
The last visit of PM Sher Bahadur Deuba was the milestone visit for the power sector. We signed Joint Vision Statement on power sector cooperation. That is the blueprint for this power sector. PM Modi himself, expressed in his press statement that the Joint Vision Cooperation Statement is the blueprint for Nepal and India’s power sector cooperation. In that Joint Vision statement, four important aspects were mentioned.

First is joint development of large hydroelectricity projects in Nepal as soon as possible. Second, joint development of transmission lines - we have already executed the Butwal-Gorakhpur transmission line. 50 percent from Nepal Electricity Authority (NEA) and 50 percent equity from the Power Grid India and other projects will also be developed in this module. Third, Arun IV hydropower is going to be developed through the joint venture, 49 percent from the NEA and 51 percent from Satluj Jal Vidyut Nigam India, along with many other projects.

Fourth, the most important part for Nepal is access to all types of energy markets in India – such as daytime market, real-time market, short-term market and long-term market. That is very important for us because market integration and cooperation will be extended to BBIN countries as well. The market will be extended to Bangladesh as well which is very important. These things are mentioned in this Joint Vision Statement and hydropower is recognized as the key driver for climate mitigation. India has recognized Nepal’s hydropower as renewable energy and it is a key driver for climate integration. There are certain projects like Pancheshwor to be developed as soon as possible. So, these are the major milestones that are mentioned in the Joint Vision Statement. So, in my perception, that visit and the document should be and will be the milestone document in the coming future.

Media reports state that Nepal exports electricity at lower rates and imports at higher rates. Is it true? Do you think the power trade agreement benefits Nepal’s economy? Especially when the country is exporting power at lower prices and importing fuels at higher prices. 
It’s completely wrong. You have to understand the market dynamics. In which market we are selling electricity? We are selling electricity at the competitive market; day ahead market – daily we bid and whatever price is generated in that day in the market, that is applicable to all the purchasers and sellers. So, we are not fixing the market price. The whole market of 20,000 MW bidders are there, who determine the market price. We are getting a much better price in the last four months.

In last four months, we even got INRs 12 per unit in the evenings. On average it was INR 5-10. The four month’s average is around INR 5 to 5.25. This is a very good price as it’s almost NRs 9. And we purchase electricity even at INR 1 in some months. We have to see the average. Sometimes it is INRs 12 during March or April for short block of 15 min to 1 hour. But daily average price comes around INRs 3 which is very cheap. So, the average purchasing price is low and it is the market dynamics. It’s not me fixing the price nor PPA, it’s not long-term, it’s short-term trading competition. Sometimes when it is raining everywhere in India and there is no demand then the price may go down. At that time for me, INRs 2 is also a very good price because if I don’t sell, I have to spill, and I have to go without money. Electricity is one commodity that cannot be stored even for one second. If I cannot store it, then I have to spill at zero price. Then at that time if I get even INRs 2 or 1 is better. Sometimes, it may happen.

So, it is completely wrong, and this electricity is just like a commodity. If we do long-term PPA at a lesser price for 15 years for INRs 3-4, and buying electricity for 15 years at INRs 5, then you can say that Nepal is selling at a low price. But it is not there. We are bidding everyday every 15 minutes blocks. So, the bidding price sometimes is very high and sometimes it goes down.

Looking at the worldwide trends, almost every country is promoting electric vehicles and clean energy. What’s Nepal’s position in this regard? 
Yes, I think for Nepal to be self-reliant on energy, we have to convert everything into electricity. Everything should be run by our hydroelectricity, so the energy transition is very important. Transition means from fossil fuel vehicles to electrical vehicles, from gas to induction cooking, and the brick factory should be run by electricity. Everything should be run by electricity.

No other energy should be utilized. That is very important so we are promoting electrical vehicles. Now, there are many charging stations all over Nepal and we are installing more. NEA and the private sectors are installing the charging stations. We have clear-cut policies for the promotion of these charging stations and electrical vehicles. The price of electricity is very low for electrical vehicles which is around NRs 5 per unit in the off time which is good. Induction cooking is 40 percent cheaper than gas cooking. Thus, we are reducing the price and making all infrastructures available and a continuous supply of electricity will be maintained.

Now we are investing heavily in infrastructure - distribution, transmission, and subscriptions. We are investing in the reliability of the system and the quality of the system. I think this will promote replacing fossil fuel, promoting electrical vehicles and induction cooking and we are also promoting green hydrogen. We are going to construct some green hydrogen plants as well. If we can promote green hydrogen, our electricity can be converted to hydrogen and ammonia, even Urea fertilizer consume a huge amount of electricity and this will promote clean initiative.


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