Energy shortage needs urgent response: Survey

A UN agency has suggested Nepal to urgently respond to the severe energy shortages to boost growth.
"Severe energy shortages require urgent response and widespread poverty continues to remain a major long-term development challenge in South Asia including Nepal," according to Economic and Social Survey of Asia and the Pacific 2012 of the UN's Economic and Social Commission for Asia and the Pacific (ESCAP).
"Regarding physical infrastructure, several countries in the subregion, like Nepal, Bangladesh and Pakistan, are facing severe electricity shortages," it said, suggesting the establishment of viable new power projects, minimising transmission and distribution losses including theft of electricity, increasing exploration of natural gas, crude oil and coal, tapping of regional markets and setting up infrastructure for energy imports and incentivising the development of renewable energy resources.
"The private sector's involvement should be encouraged along with the public-private-partnerships approach due to limited public resources," said the flagship publication of ESCAP — the regional arm of the UN — providing policy options for the government to overcome challenges and maintain the pursuit of inclusive and sustainable development.
It has also prescribed the implementation of economic reforms to improve productivity, strengthen public institutions, improve economic governance and build social safety nets to protect the more vulnerable segments of the population to fight against poverty.
"To promote more inclusive growth, the provision of basic services like health care and education should remain the principal priorities in the policy agendas," it said, adding that generating ample employment opportunities is key for the poor to earn a livelihood.
However, inflation remains stubbornly high in Nepal as it is closely linked to inflation in India because of the fixed exchange rates between the currencies of the two neighbours as well as the close economic ties between them, it said, adding that inflation remained close to a double digit, 9.6 per cent in 2010-11. "Weak supply of food items kept inflation high while at the same time, the cost of production of both agricultural and industrial products rose due to severe electricity shortages and rising labour wages stemming from the overseas migration of Nepali workers."
It has, however, expected higher GDP growth in 2012. "Slow growth in Nepal in recent years has largely been due to political instability, frequent strikes, persistent labour problems and severe electricity shortages," it pointed out, adding that GDP growth slowed to 3.5 per cent in fiscal year 2010-11 as compared to four per cent in fiscal year 2009-10. "The country's agriculture performance improved due to favourable weather conditions but its industrial and services sectors recorded lower growth rates."
However, the survey projected GDP growth to be about 4.5 per cent in fiscal year 2011-12. "Economic revival in the country largely hinges on improved law and order, as poor security and political instability limit the government's capacity to spend money and boost rural income," it noted,
Growing tax revenue in Nepal led to an improvement in the country's tax-to-GDP ratio, which was higher than 14 per cent in 2010-11, according to the survey. Similarly, current account deficit also narrowed in fiscal year 2010-11. But remittance from Nepali migrant workers played a major and positive role in keeping the economy afloat.
"Despite, large merchandise trade deficit, remittance helped cushion the shock," it concluded, estimating that the establishment of South Asian Migration Commission could help formulate the framework for a coherent and comprehensive response.

Financing in sustainable energy must to reduce cost of operation

Financing in sustainable and renewal energy will help reduce the cost of production and dependency on fossil fuels making domestic products more competitive, according to a study.
"It provides cover for the rising cost of fuel," said 'Sustainable Energy Finance Market Study for Financial Sector in Nepal' carried out by the SouthAsia Enterprise Development Facility, managed by International Finance Corporation (IFC) in partnership with the UK Department for International Development and the Norwegian Agency for Development Cooperation.
The study, that has analysed the current energy use pattern by the industries and identified areas where financial institutions can invest for greater efficiency, reported that the country can save around $9.02 million — from the selected industries — with the adaptation of energy efficient methods.
Currently, domestic industries consume more energy, which could be reduced bringing their operation cost down, said the report that has studied some 265 industries — 72 large, 154 medium and 39 small — including cement, brick, steel, food and beverage, paper and pulp, poultry and feed, tourism, dairy and tea.
The country had imported petroleum products worth Rs 67.38 billion in the first nine months (mid-May) of the current fiscal year against imports of Rs 52.35 billion in the same period of last fiscal year.
The increasing dependency on fossil fuel due to lack of energy required for industries has increased the cost of production of the domestic industries making Nepali products uncompetitive in both the domestic and international markets.
According to the Environment Sector Programme Support, domestic industries can save up to 30 per cent of energy costs by implementing energy efficient measures alone.
There is also a significant investment potential estimated at some $17.92 million for energy efficient and renewable energy projects in the country's 10 selected industrial sectors, the report concluded, adding that the payback period is also comparatively less, a little over two years for equipment and technology change, process modification, installation of modern technologies and fuel switching,  whereas for retrofit options it will be upto two years only.
With the study, IFC — a member of the World Bank Group — has targeted financial institutions to help them develop sustainable energy lending
business.
Together with energy service providers and end-users, the project aims at making sustainable energy projects bankable by carrying out energy audits too. With IFC’s support in building capacity for proposal evaluation, loan product development and due diligence, Clean Energy Development Bank specifically is launching a unique sustainable energy financing product, the first such offering by any financial institution in Nepal.
“Clean Energy Development Bank invites all stakeholders to join the Sustainable Energy Finance initiative to tackle the energy crisis responsibly and effectively,” said chairman of the bank Manoj Goyal.
"Promoting energy efficiency is particularly significant in the country which is completely dependent on petroleum imports," he said, adding that additionally, unreliable grid power supply forces plants to use expensive diesel generators.
"Energy is a major priority for industrial growth," said IFC programme manager Thelma Tajirian, adding that the sustainable energy finance market study will help financial institutions make strategic decisions in the new market and spur the private sector to take the lead in clean and sustainable economic development.
Similarly, head of energy finance of IFC Pavol Vajda said that the developing world could move up towards higher income generating countries by using efficient energy forms and not just traditional energy sources. "As energy is a key economic driver, its efficient use will boost gross domestic production," he said, adding economic prosperity and development depends on secured energy future.

Alternative energy exhibition on February 13-15

Ministry of Environment, Science and Technology (MoEST) is organising Alternative Energy exhibition on February 13-15 at Bhrikutimandap Exhibition hall in Kathmandu.
The government has declared the year 2065 BS an Alternative Energy Year. "To promote the alternative and renewal energy, the ministry is organising the exhibition," Umesh Mainali, secretary at the MoEST, said adding that the ministry has planned such exhibition in other parts of the country too.
The global consumption of alternative energy stands at eight per cent in total energy consumption. "However in Nepal it is less than one per cent," he said. At a time when Nepal is facing a severe power crisis alternative energy can help reduce current power crisis. Though, the government has also planned to increase its consumption, there is no any such project at present.
The government in this fiscal year's budget has also promised to generate 20 MW from the wind energy. But the process of generating energy from wind is moving at a snail's pace. "We may be able to generate around 4-5 KW within this fiscal year," said Mangal Das Maharjan, acting executive director at the Alternative Energy Promotion Centre that has received a couple of proposals for installation of wind turbines to generate energy.
Apart from wind, biomass and geo thermal, solar energy is yet another alternative energy that Nepal can take benefit from. "Not only the rural Nepal but the urban Nepal and Kathmandu valley can also benefit from the alternative energy as the only means to tackle present power crisis."
The three-day long exhibition -- that is expected to be visited by around 15,000 to 20,000 -- will help policy makers and people understand the value of alternative energy, hoped Mainali.
Alternative Energy Centre and other INGOs and NGOs are actively involved in promotion of alternative energy.