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Nepal: Industries face power supply disruptions as India reduces energy exports

Nepal's Electricity Authority Has Said That It Has Not Been Able To Buy Power From India At Night Amid A Domestic Supply Shortage Brought On By Soaring Coal Prices In The Wake Of Russia's Invasion Of Ukraine.

A man stands in front of an electric pylon installed at a power house in the northern Indian city of Allahabad, July 31, 2012. Photo: Reuters/Jitendra Prakash/Files

Nepal’s reliance on India for electricity has continued even as the country has been exploring options to export power to its southern neighbour. Lately, however, supply from India has stopped during nights, leading to disruptions in power supply to industrial firms in certain regions.

Officials said that despite quoting higher prices, the Nepal Electricity Authority (NEA) has not been able to buy electricity, particularly at night when demands in India surge as there has not been adequate supply in India’s power exchange market, where Nepal meets most of its power deficit from.

Though Nepal has been exploring options to export its surplus energy during the wet season, the country still relies on imports from India for more than half of its energy needs during the dry season (mid-December to mid-April), when water levels decrease in the country’s rivers, which propel hydropower plants.

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Most of the hydropower projects in the country are run-of-the-river (ROR) type projects which channel water flowing through rivers to spin turbines. As such, they only produce only 30-40% of their installed capacity during the dry season.

“We receive a little power from India in the daytime but have not been able to buy electricity in the night for weeks,” said Suresh Bhattarai, a spokesperson for the NEA. “Because of the power shortage in India at night, we have not been able to buy.”

According to Bhattarai, there is no supply of electricity from India to Nepal from as early as 6-7 pm. In late March, India discontinued supplying electricity to Nepal during the night, from 6 pm to 6 am. Moreover, India stopped providing electricity at a fixed rate from the Tanakpur power station in mid-February.

Several coal-powered energy plants in India were shut amid skyrocketing coal prices in the wake of Russia’s invasion of Ukraine, leading to the supply shortage

Coal accounts for nearly 75% of India’s power output. Several Indian states have started imposing load-shedding amidst the rising demand for power. India’s domestic demand for power has also increased due to the summer heat, which prompts people to use their air conditioners and fans more.

According to a Reuters report last week, India is likely to face more power cuts this year as utilities’ coal inventories are at their lowest pre-summer levels in nine years and electricity demand is expected to rise at the fastest pace in 38 years.

According to the NEA, Nepal’s domestic power output stands at around 850MW while peak-hour power demand in the country is around 1,700MW.

“As we have not been able to secure enough electricity from India, we have been unable to supply electricity round-the-clock to certain industrial areas,” said Bhattarai. “However, all industrial firms are getting power for at least 15-16 hours a day. When we cannot supply enough electricity, we ask factories not to operate in full capacity.”

Factories operating in the Morang-Sunsari Industrial Corridor have been facing power cuts at night lately.

Suyesh Pyakurel, president of Chamber of Industries, Morang, told the Kathmandu Post that factories in the Morang-Sunsari Industrial Corridor have been facing power cuts of up to 12 hours for the last five days.

“Though the NEA had resumed power supply after Prime Minister Sher Bahadur Deuba returned from India, we are again facing power cuts,” said Pyakurel.

Earlier in March, factories in the region faced power cuts of up to 14 hours a day for around a week.

“All small, medium and large industrial firms have been forced to shut down operations due to power cuts,” said Pyakurel. “Manufacturing firms related to cement, plastics, iron and steel, among others, have been affected by power cuts.”

According to the NEA, it has been facing twin challenges to ensure the regular supply of power in the country.

“Firstly, we have not been able to buy electricity from India, despite quoting the highest prices within the ceiling set by the Indian authorities,” said Bhattarai. “Secondly, water levels that had started to rise in Nepal’s river in early April have started to recede again, affecting domestic power production.”

Since April 1, India’s Central Electricity Regulatory Commission directed Indian power exchanges not to accept bids of over Rs 12 per unit, arguing that it had to intervene since supply did not improve despite the soaring prices of electricity. Earlier, the maximum price ceiling was Rs 20 per unit.

However, NEA officials say that despite the immediate power crisis, Nepal should not deviate from the policy of increasing the use of electricity in the country and exporting surplus power.

“It is a temporary crisis which has led to the closure of factories in India and China too,” Kul Man Ghising, managing director of the NEA, told the Post.

“There has been a substantial increase in power demand at home and we are also trying to export more energy to India because we will have surplus energy of 400-500MW in the upcoming wet season.”

Experts say that rising fuel prices across the globe and power shortages should be a wake-up call for Nepal to reduce its reliance on imported fuel and electricity.

“We have to develop storage-type projects including the Budhi Gandaki Hydropower Project to ensure that we do not face power crisis even in the dry season,” Ram Prasad Dhital, a former board member of the Electricity Regulatory Commission, told the Post.