Electricity Crisis

Nepal is facing an ongoing electricity crisis. Explain.

 

Nepal is facing an ongoing electricity crisis. The country’s internal demands were not being fulfilled. The country has a potential to generate over 83000 MW of electricity from hydropower based plants (Ghiglino and Shell 2000). But currently, only about 750 MW is being generated owing to the technological and economic restrictions and lack of technical know how to implement the full power potential. Due to a shortage of full potential power, the country faced problems of load-shedding. The power outage in places for over hours impacted the daily functioning and lifestyle of the people. The sector that was more affected is the medical infrastructure (Medical infrastructure 2010). To overcome this crucial connectivity problem, the Nepal Electricity Authority in the association of Chilime Hydropower Company Limited decided to set up the Chilime Hydropower project (Technical assistance (financed from the Japan Special Fund) to the Kingdom of Nepal for management reforms and efficiency improvements for the Nepal Electricity Authority 2000). The project was to be set up in Rasuwa district. The type of the project would be “run of the river” type of hydroelectric plant. The dam which is 3.25m wide and 13 meters in length was constructed on the Bhote Kosi River. The plant is placed of 133 kilometers far from the national capital of Kathmandu. The plant was the first hydropower project in the country that was entirely funded by the public (Currie 2011). After being commissioned into service, the plant generated 22.1 MegaWatt of power per month. The plant was commissioned on August 25, 2013. The Chilime Hydropower Company was incorporated in 1995, and the construction started from the month of April 2006. Construction of the project finished after seven years. The annual production of the plant is 132.918 Giga Watt Hours. The total cost of the project was valued at 35 million dollars. The Chilime Hydropower Company Limited had a permanent objective throughout its tenure of inception and completion of the plant. Its aims were to utilize resources optimally within the country. The stakeholders of the project are Nepal Electricity Authority having equity of 51 percent, the Federal Government of Nepal, the people of the district of Rasuwa and the general public (Phillips and Freeman 2010). The people of Rasuwa had a stake of 10 percent in the project. The Chilime Hydropower Company Limited sells the electricity it produces to the NEA at PPA price. The plant has highly advanced state of the art machinery which generates 13.8 percent more power than anticipated during the monsoon season. While the company was installing machinery, the technical consultants emphasized the need to install hydraulic machinery, which would increase the lifetime of the main production equipments (Technical training: a job for the specialist consultants 2006). Till date, since the plant started production, apart from minor servicing of equipment, the need for major repairs never arose. The secondary objective of the company, since its inception, has been to empower the local community and improve their quality of life, to create a competitive market, and to maximize the wealth of shareholders and produce good returns on their investments (Adamek 2001).

 

The primary goal of the plant is to provide and increase the reliability of the country’s power grid. The main focus is to reduce dependability on foreign powers for energy imports. There is the impetus to reduce the carbon footprint of the country from electricity generation from conventional coal-based non-renewable plants. There is considerable focus on developing the potential of Chilime Hydropower Company Limited in raking up its efforts to produce electricity to its full potential (Stratis and Salvesen 2002). The other impetus is on driving the local economy of the region in a manner which is both sustainable and ecologically viable. The secondary objective is to minimize the energy crisis being faced by the country. The tertiary objective of the project is to do minimum harm to the ecology of the environment as possible (Hynes 2008).

Chilime Hydropower Company Limited (CHCL) had been successful in setting a benchmark of a company offering hydropower and has proven Nepal’s worth in developing and operating hydropower plants efficiently and all by itself (COPESTAKE 2006). The company has been successful in proving that Government backed, and aided projects can be efficient and profit-making as well. The company has been able to fulfill its promise and currently generates 22.1 MW of electricity. The annual production rate has surpassed 130 GWh capacities and now producing 132.918 GWh of electricity. The efficient machinery and servicing of existing equipment have garnered increased production of 13 per cent of electricity during the monsoon season. So the company has been able to integrate the central power grid of NEA with its individual output and aided in producing the required available capacity to sustain profit making opportunities.

As the secondary objective of developing the region’s infrastructure is concerned; if one visits Rasuwa district, it would be immediately imminent that the project had been able to garner a lot of local support and enthusiasm. One will find people enthusiastically discussing the plant when asked about CHCL. People in the district are so proud to be part of the project that they can be seen boasting of their town’s modern amenities and superior connectivity (Study looks at integrated aluminium and hydropower project 2009). The CHCL had spent a considerable sum of money in holistically developing the local infrastructure. The project had garnered a lot of support from the local communities, who were initially reluctant in parting with their cultivated lands. The CHCL had to displace 62 families who had lost their livelihood due to the construction of the plant on their family tilling the land. The CHCL had compensated the families and brought the land at twice the market rate for the bereaved families. Now excluding the compensation amount paid by CHCL, the persons displaced had been inducted into the plant as employees. So the company had been able to fulfill its promise of developing the region’s infrastructure.

The tertiary objective of damaging as little of the environment as possible while undertaking construction of the project has also been taken proper care of. The engineers overseeing the construction of the dam over the river Bhote Kosi undertook the challenge to run a proper Environmental Impact Assessment, although the results were skewed, they undertook another EIA and came up with satisfactory plans to do minimum damage to the local flora and fauna (Adamek 2001). While the plant was being constructed, they relocated the oldest trees of the proposed site to safer areas.

 

The stakeholders of the power plant namely NEA (which has 51 per cent equity), employees of NEA and CHCL (who garners 25 percent of the equity), the general public (which has 14 per cent stake) and the residents of Rasuwa district has a stake of 10 per cent equity. The stakeholder’s fund had been utilized and not abused as indicated in the audit reports over the years in the operation of the plant (Körner 1995). That is the first project in Nepal that was funded entirely by the public.

The public has been reaping the harvest in stocks invested over the years. Gross income although has decreased in the last two fiscal years, which is mainly due to a decrease in the rate of interest. But sales had been increasing in the last two years. The stocks are expected to reap the harvest in the long run So, the utilization of resources of public funds were entirely justified. The general local population has been inducted into the plant which is a boon for the local economy and job prospect of the youth of the region.

The stakeholder’s expectation and concerns were duly mitigated by the CHCL throughout the tenure of the project. The CHCL had set up grievance cells for all concerned bodies and had maintained full contact with the entire concerned stakeholders.

 

The process contains tools and techniques of Scope Management to ratify changes and draft policies of the plant, the engineers had drawn up Environmental Impact Assessment reports. The plant Management authorities had drawn up blueprints in coordinated efforts to redress the grievance in any section of the implementation of the project (Leach 2005). The objectives of the company and the plant were made in writing and made available to all sections of the concerned parties. The objectives were transparent and known to all personnel implementing the plant construction. These steps ensured coordinated efforts from all the stakeholders, and they were engaged in the process despite various challenges.

Like all projects, this power plant project had the current four lifecycle phases. The initiation phase was initiated by the Chilime Hydropower plant limited and NEA. They drafted key policies and carried out preliminary tests and surveys and jointly ratifies that they intended to make the best run hydropower project in the country (Means and Adams 2005).

The second phase of planning saw coordinated efforts between governmental agencies and local public representatives coming together to work out a viable plan to set up the project. Detailed project reports were prepared and reviewed. After consideration of the DPR and the analysis of stakeholders, the Authorities gave a go ahead to the CHCL for building the Chilime Hydropower plant on the river Bhote Kosi.

Execution phase saw engineers being drafted from reputed engineering companies with a worldwide presence. The local consultants joined hands with Chinese counterparts in overseeing the construction of the project. The project had faced uncertainties over land, labor and dangerous, inhospitable roads. The heavy monsoons coupled with landslides delayed the procurement of raw material and supplies. There was a further suspension of work due to the involvement of political parties in an unionized labor culture. The issue had to be resolved amicably by paying donations to the leaders to address the conflict. Overall, the project was delayed and was completed one year behind schedule (Ebeling et al. 2002).
The closeout phase saw the plant being commissioned into service and the operation personnel entering the premise of exploitation. The production started on August 25, 2013, 7 years after it was initiated.

In this phase project manager deliver the physical project for signoff. The civil engineer started the construction work. This phase was very important for the project because this phase takes longer time period than other phase. This phase the project manager manage the time cost, quality and risks. The task were divided to the different team member for execution but there was a lack of coordination and communication between the project manager and engineer as well as the project manager and the sponsor of the project which delay the project by 2 years. The of construction work of a project were divided into different activities like construction of intake, Channel, fore bay tank, penstock, powerhouse and turbine.During execution the construction face the problem of budget for purchasing the material. During construction work poor geological condition delays in the tunnelling work due to poor rock quality. The project team was expected 62% good rocks and 38% poor rock at start but actual condition turned out to 80% poor rock and 20% good rock. To address these problem CHCL brought international tunnelling expert from china to accelerate the drilling tunnel which included change the previous methodology. Project faced the technical problem not in the tunnel but also experienced in the construction of power house due to land slide and wall collapsed occur. There was also unexpected challenges arise while installation and commission of the electro-mechanical equipment and the transmission line for evacuation of the power built by power grid was delayed.

Even though the project was not completed on specified time and budget the project was able to complete the project and handover the project on August 2013 to Chilime Hydro Power Company limited. The Activities were completed by transferring the data, defect liability, commission and evaluation were done (Employer’s liability (defective equipment). A bill to make further provision with respect to the liability of an employer for injury to his employee which is attributable to any defect in equipment provided by the employer for the purposes of the employer’s business ; and for purposes connected with the matter aforesaid 2007). The company has paid all the remaining money to the construction company at the time of handover. Even though this project of Chilime Hydropower Company limited was completed late and over run the time and budget we can say this project is successful project of the Chilime Company and for the nation as well. This project contributed the development of the economic and social aspect of the local resident and nation people by supplying electricity and helps to minimize the loads heeding problem facing by Nepalese. This project is successful because this project generated 13.8% more MW electricity than the estimated (North West Midlands Joint Electricity Authority Provisional Order. A bill to confirm a provisional order made under section one of the Electricity (Supply) Act, 1922, relating to the North West Midlands Joint Electricity Authority 2007). The financial position of this company is also sound and investor are getting higher investment return from this project. Overall we can called this project as a successful project for entire stakeholder and the nation.

The main objective of this project is to generate 22.1 MW electricity power and supply to the Nepal Electricity Authority (NEA). The product is completed and deliver the product but project was over run and take more than 1 year time to complete than expected schedule due to procurement, infrastructure facilities like unsuitable road, facing the problem from environment in monsoon season like landslide which block the vehicle to supply the material. Strike from trade union in the name of political parties, donation etc. delayed the project schedule which negatively effect on the budget and increases the cost of construction from AUD35 million to AUD40 million (Van Hanh 2002). After completion the project deliver the qualitative product to the general people and the sponsor and meet the requirement of the stakeholder. Although this project helps to increase the living standards of local people and minimizes the load shedding problem facing by Nepal it has negatively impact on environment which causes the land slide, earthquake, flooding etc. Chilime Hydropower Company limited provides around 3000 employment opportunities to the local people. The project has also invest money on local health and educational sector by construction 2 health post in the village and providing 5 ambulance to the local hospital. This project also funded the money on constructing the primary school for the villager which helps to increase the living standard of people. Currently NEA operates about 757 MW electricity which is lower than the actual demand. The current demand of the electricity is 950 MW. People of Nepal are facing the problem of daily load shedding which has negatively impact on socio- economic sector of Nepal. Therefore Chilime Hydroelectric plant has contributed 2.92% of total electricity operated by NEA to minimize the electricity crisis (Hydroelectric plant employs FRP pipes 2007). Hydropower project create a job opportunities and also helps for irrigation of land for economic development of the nation(Urban et al. 2012).

The sources of all information are from legitimate journal publications of Nepal Electricity Authority. All information cited in this literature has appeared in the Annual Report of NEA. Besides that, this literature can be used as a further guide of research on this project. This information regarding financial and production related terms appeared in the CHCL Annual Convention Report. This literature is conclusive in the nature that it has compared and contrasted varied literatures on the subject of Chinese Hydropower ambitions in occupied Tibet. The other relevant sources that were used as references were available at physical libraries across Nepal.

 

This project adversely affected the environmental sector of Rasuwa district resident. The construction of dam for this project cause land slide, earth quake. This also effect on the fertile land. The company had acquisition of 50 hectare of land from the local land by which they lose their farm and business. While construction work, the company made a 10 Km road for vehicle access to the site which need to cut the trees. Due to construction work people loss the forest and create the decline in crop and livestock. It adversely affect on social lifestyle of local people by displacement of which increases the deforestation(Shao, Li and Yuan 2012).

The overall outcome from this project is satisfactory. The outcome rating is good on the basis of high sustainable achievement and high relevance of the project development and the efficiency robust the economic return and social development despite the overrun of time and budget.
Lesion learned

The following are key lesion learned from the project are mentioned below:

• Coordination between the different stakeholder like NEA, CHCL, Construction Company and local resident is the key to managing the project challenges.
• It is essential to build the trust to the local community people through regular communication, coordination and interaction.
• Implementation, monitoring and controlling are difficult but very crucial for complex project like Hydropower.
• The challenges in project occur but there need to be system in place to ensure that other activities progress continuously even though the management are facing the other problem.

Chilime Hydropower Company Limited achieved the physical objective of the project with degree of success. Even though the project was completed 2 years late due to several reason like obstacle from the local resident, political parties, lack of material and equipment, strike from the trade union. Successful coming over the major construction difficulties was not possible without the open and innovate collaboration between the Chinese construction company, NEA and CHCL. The cost of the project increased to AUD35 million which is about AUD5 million more than estimated budget due to increase in raw material cost and delay in project schedule. Change in schedule affected the different activities of civil construction. At present the plant is running smoothly and company has not needed the major repair on plant. The plant is generating 13.8% more than the expected electricity on monsoon season. The financial position of the company is also sound. Investor are getting good return from their investment. The major emphasis of this project is provide electricity to the NEA to meet their internal power demand so that NEA can supply the electricity to the general public. CHCL operation plan for this project is fully based on computerized system of planning, executing and monitoring & controlling of the plant operation and maintenances. The successful completion and operation of this project motivate the CHCL to construct the new hydroelectric project. Due to successful operation of this project CHCL are now constructing the Sanjen hydroelectric plant which is 42.5 and Sangen upper hydroelectric plant which is 14.8 MW capacity project in the name of Sister Company “Sangen Jalavidut Company Limited”. This project is expected to complete on December 2016. CHCL successful operation on Chilime hydroelectric plant provide the detailed planning, executing, monitoring and controlling operation carried out on Sangen project.

 

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