History of power development in Nepal
Electricity Development in Nepal - History of power development in Nepal
Introduction
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Nepal was isolated from global development until the democratic movement of
1951-52.
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During the Rana Regime (1846-1951), there were no serious attempts at
systematic economic development until 1930.
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In 1935, the UDYOG PARISHAD (Development Board) was constituted as a
development agency.
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Planning for development in Nepal began with the First Five-Year Plan
(1956-1961).
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Before 1951, only limited development occurred, such as the establishment of
power, water, schools, banks, and some roads.
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Since 1956, the government has started using periodic plans to guide
development.
Development in Nepal followed three main systems:
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Centralised Planning during the Panchayat regime (up to the 7th plan).
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Liberalised Planning during the constitutional monarchy (8th to 10th plans).
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Inclusive Planning during the Federal Republic (11th and 12th Three-Year
Interim Plans).
First Plan (1956-1960):
- This plan began Nepal’s organized development efforts.
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Total power generation increased to 9,860 KW (1,000 KW from hydropower and
2,580 KW from diesel).
Panchayat Regime (1962-1990):
- During this period, Nepal followed a controlled planning approach.
- Power generation increased significantly:
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Second Plan (1962-1965): Total power reached 17,360 KW (4,000 KW from
hydropower and 3,500 KW from diesel).
- Third Plan (1965-1970): Power generation grew to 37,320 KW.
- Fourth Plan (1970-1975): It reached 49,634 KW.
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Fifth Plan (1975-1980): Power generation increased to 68,344 KW.
- Sixth Plan (1980-1985): Power output reached 129,500 KW.
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Seventh Plan (1985-1990): Total power generation jumped to 258,500 KW
(126,850 KW from hydropower, 2,050 KW from diesel).
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Plan Holiday (1990-1992): This period was a transition phase from controlled
planning to liberalized planning, with no specific development plan.
Constitutional Monarchy Regime (1992-2007):
- Nepal adopted liberalized planning during this period.
- Power generation continued to grow:
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Eighth Plan (1992-1997): Total power reached 271,500 KW (10,000 KW from
hydropower, 3,000 KW from diesel).
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Ninth Plan (1997-2002): Total power output expanded to 584,500 KW (297,000
KW from hydropower, 20,000 KW from diesel).
Republican Regime (2007/08-2012/13):
- This period marked the shift to inclusive planning.
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By the end of the Tenth Plan (2002-2007), total power generation had reached
619,000 KW (566,017 KW from hydropower and 57,003 KW from diesel).
More Information
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Rural electrification has been a major priority in Nepal's development plans
since the mid-1970s, continuing through successive plans, especially up to
the Tenth Five-Year Plan (2003-2008).
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The 2001 Hydropower Policy emphasized the importance of rural
electrification, proposing the establishment of a central rural
electrification fund to support power supply development in rural areas.
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The Tenth Plan solidified rural electrification as one of the highest
development priorities for the Nepalese government, fully incorporating the
2001 Hydropower Policy's goals.
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The plan specifically called for the creation of a central organization
tasked with developing and managing rural electricity supply, ensuring
sustained focus and development in this area.
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In 2003/04 government adopted a policy of creating a Community
Electrification Program to accelerate rural electrification in Nepal.
Source of Energy in Nepal
Solar energy
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Solar energy has been used traditionally in Nepal for drying crops, clothes,
fuel wood, and crop residues.
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In the 1960s, the first PV system was installed in Bhadrapur, marking the
start of solar energy technology in Nepal.
- In 1977, RECAST introduced solar cookers as parboiling cookers.
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The development of solar cookers continued in 1997 with the introduction of
parabolic cookers by RECAST, followed by locally developed box-type cookers.
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By 1990, NTC was using PV systems extensively, powering 75% of its Public
Call Offices (PCOs) and generating about 47,000 kWh/day of electricity.
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In 1998, the government announced a 50% subsidy on the cost of solar dryers
through AEPC.
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In 2000, the government introduced the Renewable Energy Subsidy Policy and
Renewable Energy Delivery Mechanism to promote solar energy use.
Biomass
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Biogas technology in Nepal started in the 1980s as a research project with
limited test models.
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During the 1990s, the Biogas Support Program expanded biogas technology into
a successful market development initiative.
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By July 16, 2007, 186,073 family-sized biogas digesters had been installed
across 67 districts.
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By June 2009, biogas plants were installed in 2,800 of the 3,913 village
development committees (VDCs) of Nepal.
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The Biogas Support Program is currently the second largest alternative rural
energy program in Nepal.
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In 1982, pyrolysing and extrusion briquetting technologies were introduced
in Nepal.
- Bio-briquettes became commonly adopted about a decade ago.
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Issues with high initial investment, rising raw material costs, and
operational challenges have limited the success of many briquetting
enterprises.
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In 1981, research on improved cooking stoves began with support from CFDP
and FAO.
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The national ICS program (2002-2006) installed about 300,000 improved
cooking stoves in 44 mid-hill districts of Nepal.
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During the 10th plan period (2002-2007), the government installed an
additional 250,000 improved cooking stoves in Nepal.
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The government has prioritized increasing ICS installation in the 9th plan
and supported ICS dissemination through the Energy Sector Assistance
Programme (ESAP) funded by DANIDA.
Petroleum Products
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The need for petroleum products in Nepal was first felt in the early 1930s
with the arrival of the first four-wheel vehicle in Kathmandu Valley.
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Following the construction of the Tribhuvan Highway in 1956, which connected
Kathmandu to India, the consumption of petroleum products began to rise.
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In the 1950s and 1960s, private entrepreneurs acted as dealers for Indian
companies such as ESSO, Burmah-Shell, and Caltex, marketing products like
petrol, diesel, and kerosene.
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In January 1971, the Nepal Oil Corporation (NOC) was established under the
"Company Act, 2021 (1964)" as a state-owned company to handle the import,
transportation, storage, and distribution of petroleum products.
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The government owns 98.36% of NOC's shares, with the remaining shares held
by four other state-owned enterprises.
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NOC, headquartered in Kathmandu, operates five regional offices, branch
offices, fuel depots, and aviation fuel depots, with a total storage
capacity of 71,558 kilolitres and around 600 employees.
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By 2007, NOC procured most petroleum products from Indian Oil Corporation
Ltd (IOC) under a five-year contract agreement signed on March 31, 2007.
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NOC imports products from IOC's refineries and depots in eastern and
northern India, with transportation conducted by tank trucks.
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In response to increasing demand, an MOU between IOC and NOC for a
cross-border petroleum product pipeline from Raxaul (IOC) to Amlekhgunj
(NOC) has been signed, with the Detailed Feasibility Report prepared and
investment modalities under discussion.
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The government announced plans to end NOC's monopoly by allowing private
sector participation in the import and processing of petroleum products.
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The government set capital requirements for new entrants: Rs 20 billion for
refineries, Rs 10 billion for fuel importers, and Rs 5 billion for LPG
importers.
Wind Energy
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Wind energy is available in the northern belt of Nepal, but the exact
potential is yet to be estimated due to a lack of technical personnel.
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It is reported that Mustang has the potential to generate about 200 MW of
wind energy.
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The Kagbeni wind power project, built in 1987 with a 20 kW capacity and
supported by the Danish Government, could not sustain itself due to
maintenance issues.
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Wind-solar hybrid systems of 400W with 150W solar power projects have been
established in six rural communities in Nepal, benefiting more than 48
households and two secondary schools.
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The government planned to generate 20 MW of electricity from wind energy in
the Three Year Interim Plan (2007/08-2009/10), but the lack of research
data, complicated geography, site-specific conditions, and limited
infrastructure hindered implementation.
Hydropower
Hydropower development in Nepal began with the 500 kW Pharping power plant in
1911, the first power plant in Asia.
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In 1968, 'Shree Chandra Jyoti Prakash' was constructed under Rana Prime
Minister Chandra Shamsher J.B.R., providing electricity to the Rana Palace
and local areas.
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The second hydropower plant, Sundarijal, was established in 1934 with a 900
kW capacity and is still operational, producing 640 kW.
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The third hydropower plant, Chisang Khola, with a 1600 kW capacity, was
constructed by Morang Hydro Electric Company in 1942 but was later damaged
by landslides.
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Nepal's second largest hydropower plant, Kaligandaki A, with a 144 MW
capacity and 791 GWh output, was commissioned in 2002.
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The 3 MW Piluwa-Khola hydropower and 7.5 MW Indrawati III hydroelectric
projects were also commissioned around this time.
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In 1962 establishment of the Nepal Electricity Corporation (NEC) marked a
formal structure for electricity management.
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In 1985, NEC was restructured into Nepal Electricity Authority (NEA),
enhancing its role in hydropower development.
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Systematic importance was given to hydropower development starting with the
five-year development plans from 1955.
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Until 1990, hydropower development was solely under NEA. The Hydropower
Development Policy of 1992 opened the sector to private investment,
diversifying development beyond government control.
The three distinct stages of hydropower development are:
Donor-aided (till 1995)
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During this period, major projects were financed through grants and loans
from organizations like the World Bank and Asian Development Bank.
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Till this time hydropower development in Nepal was solely relying on
international funding and technical assistance.
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Significant infrastructure was established, including large government-led
hydro plants such as the Kali Gandaki A and Arun III.
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The sector largely depended on external support, with minimal private sector
involvement.
Independent Power Producers (IPPs) oriented (1995-2001)
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The introduction of the Hydropower Development Policy in 1992 facilitated
the entry of Independent Power Producers (IPPs) into the market.
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IPPs were encouraged to develop, finance, and operate hydropower projects,
leading to increased private-sector participation.
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This period saw the development of various small and medium-sized
hydroelectric projects by private companies.
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Challenges included regulatory issues, financing difficulties for smaller
IPPs, and operational problems.
Open and liberal policy (since 2001).
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Since 2001, Nepal has adopted an open and liberal policy approach to further
encourage private sector investment in hydropower.
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Policy reforms were implemented to create a favourable environment for
private investment, including streamlined licensing and financial
incentives.
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The open policy approach led to increased investment in both large-scale and
small-scale hydropower projects, such as the Upper Tamakoshi Hydro Project.
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This stage has resulted in substantial growth in hydropower capacity,
improved energy security, and advancements in technology and efficiency.