TECHNICAL PAPER ON COMMUNITY RURAL ELECTRIFICATION IN NEPAL ON THE OCCASION OF “POWER SUMMIT 2008” By

1. TECHNICAL PAPER ONCOMMUNITY RURAL ELECTRIFICATION IN NEPAL ON THE OCCASION OF “POWER SUMMIT 2008”By RAMESHWAR YADAV Director NEPAL ELECTRICITY AUTHORITY COMMUNITY RURAL ELECTRIFICATION DEPARTMENT PULCHOCK, LALITPUR,NEPAL PHONE, 55 22 308, FAX, 55 23 451 E-MAIL: neacred@gmail.com Ashoj 7- 8, 2065 (Sept. 23-24, 2008) Kathmandu

2. Different Models of Rural Electrification Institution • Alternative Energy Promotion Centre, GoN, responsible for OFF-GRID Electrification. • Nepal Electricity Authority, Govt. Undertaken • Butwal Power Company (BPC) generates power, sell to NEA, as well as distribute electricity on their own rural areas. • Two companies, Salleri Chaialsa Electricity Company (SCEO) and Khumbu Bijuli Company (KBC), which generate in isolated mode and distribute electricity on their own in rural areas.

3. Rural Electrification Models of NEA • RE under Power Projects • RE under Grant projects • RE through Community • RE by using Small Hydro Power Plants • RE by annual Government Budget • RE of small line extension by NEA’s budget .

4. Concept Of Profit Center and User’s group cooperative in NEA • NEA established Lamjung Electricity User’s Association (LEUA) as a first pilot project in 1997 under GoN and NORDIC funding to manage better services at least cost and restricted distribution losses. • With the background to reduce the technical and non-technical loss of distribution system, arrears and black listed consumers NEA introduced the concept of profit center and accordingly Profit Center Bye Laws was brought enforce in 2059 BS • Concept of load centre based user’s group cooperative formation under Kailali- Kanchanpur Rural Electrification Project started in 1999. • An international consultant National Rural Electric Cooperative Association (NRECA), USA was appointed in 1998 under loss component of KG-AHPP financed by ADB

5. Concept Of Profit Center and User’s group cooperative in NEA contd... • The action plan was focused on following recommendations also. -- Formation of village user groups • Lease out the distribution centers • The study tour program in international utilities of Bangladesh, Thailand and Philippines was also included in the scope of this consultancy service. • one of the common recommendations of study tour was “Formation of Cooperatives involving the local people. • The consultancy works were completed in 1999, • With the background of above facts and study, the NEA formed the Community Electricity Distribution Bye Laws 2060 . • The policy of 80%-20% investment in rural electrification was shortly introduced by the government..

6. Other Types of Cooperatives in RE • More than 500 Cooperatives of OFF-GRID System by using Micro Hydro Power Plant with the support of AEPC have been benefited. • Khimti Rural Electrification Cooperative (KREC) covers four VDC of Dolakha district and six VDC of Ramechap district • Financed by Himal Power Limited and UNDP • Tamakosi Rural Electrification Cooperative (TREC) financed by HPL for four VDC of Dolakha district is also in the stage of formation.

7. Objectives of Community Electricity Bye Laws 2060 • To promote public participation • To encourage community management • To promote technical and managerial capability of rural community • To attract private investment in the field of rural electrification

8. The salient features of Cooperative Programs • Community Rural Electrification is considered as priority one ( p1 ) project by the Government of Nepal . • A separate “Community Rural Electrification Fund” is established for the community • 20 percent of total investment is invested by the Community and 80 percent by GoN. . • Mostly projects are completed by turn key contract basis. • There is a Task Force with the Chairmanship of NEA Board Member.

9. The salient features of Cooperative Programs • Project area is selected by the consumers, which reduces the dispute of consumers for power supply in that area . • There is no any right of ways problem in construction of project . • Highly transparency because the involvement of community is started from finalization of proposal to project hand over . • All decisions regarding community are done by the Steering Committee of Community Rural Electrification .

10. The salient features of Cooperative Programs • Meter Reading at single point of distribution system transfers the distribution losses to the account of Community • It maintains the non-technical loss free zone of distribution system . • Distribution Institution shall have to deposit monthly at least 10 percent of monthly sales income in “Repair and Maintenance Fund • There is a provision of five members “Conflict Management Committee” to solve any type of controversy between NEA/CRED and CBO. The chairman of the committee is nominated by the Ministry of Water Resources

11. Progress of Community Rural Electrification Programs

12. No of Communities currently in operation. From CBOM: 20 From CBRE: 50 Total no of Districts: 38 Details of Construction Activities to be accomplished from the program of 2061/62-64/65 HT Line length : 1130 Km LT Line length : 3266 Km No of Distribution Transformer Installed: 745 33/11 KV, 3 MVA Sub Station : 3 Nos No of Beneficiary House Holds: 1,80000 Progress of Community Rural Electrification Programs

13. Total No of Communities Undertaken

14. Distribution of Beneficiary Households among Different Zones

15. STRENGTH OF PROGRAM • More than 51 percent population are living without electricity . • Investment by community . • Operation and maintenance of distribution system by Community . • Non-technical loss free zone . • Payment of bulk consumption . • Timely Payment’ . • No problem of right of way

16. OPPORTUNITY OF PROGRAM • Expansion of RE in fast rate. • Uplift in rural economy contributes in national economy. • Knowledge and skills transfer to rural people. • Community Rural Electrification is considered as p1 Project in National Planning Commission. • Electrification in all house holds of Nepal within 10 years is the Govt. commitment

17. OPPORTUNITY, Contd.... • Hydro power potential is high and in different capacity. • Rate of rural electrification through cooperative is faster than other system of electrification. • Fossil fuel to electric conversion. • Expansion of productive end uses in community • Lower tariff can be fixed than the tariff approved by the Tariff Fixation committee. .

18. WEAKNESS OF PROGRAM • It is difficult to pay 20 percent of total project by the rural people • People below the poverty line within the cooperative are not in position to take electricity supply . • Electricity consumption rate by the consumer within the cooperative is very low • Incoming generating activities within the cooperative is not satisfactory. • High maintenance cost is impossible to pay by the cooperatives. • Irrigation tariff is equal to bulk rate.

19. THREAT • Project cost is high due to monstrous hilly geographical situation and increasing in material cost. • The cost of energy of NEA is Rs. 7.40/Kwh but the rate for CBRE is Rs. 3.60/Kwh. • Load shedding period is in increasing order. • Electricity price of NEA has not been increased since 2001 but the materials used in NEA have been increased more than double.

20. THREAT • NEA itself suffering from the challenges of Tariff vs. Affordability and there is no clear opinion on NEA’s role towards rural electrification • Profit of cooperative is negligible, which indicates its future survival problems. • Technical and managerial capacity building of Communities.

21. THREAT • There is no non-technical loss within the cooperative but the high non-technical loss surroundings of cooperative gives the negative impact in cooperative. • NEA is Commercial organization with social obligation also but the cost of cooperatives decreases the financial health of NEA. • The ratio of investment in generation with respect to transmission and distribution is not satisfactory, which causes the problem of power flow and weak infrastructure in various parts of rural area.

22. RECOMMENDATIONS • Separate Rural Electrification Policy is required. • Special arrangements should be done for the people of community who are below the poverty line. • GoN should help also in productive end use activities within the cooperative • Community Rural Electrification should be considered as much essential as road, education, health and security for the people of the country.

23. RECOMMENDATIONS, Contd... • Special mechanism should be developed for Irrigation Tariff of Community. • Special focus should be given for reduction of Non-technical loss reduction programs of existing system surroundings of CBOM • Regular Training programs and Various awareness to the Community based Rural Electrification are also required for fast and sustainable growth of electrification and their participation

24. RECOMMENDATIONS, Contd... • A Revolving Fund (loan for electrification and small income generation people within the community) is required for speed up of Rural Electrification and strengthen of Community. • Rural Electrification is linked to Poverty Alleviation and therefore should not be commercially oriented. • Ratio of investment in rural infrastructure compared to hydro power development should be maintained scientifically. • Big scale of generation is necessary to cope with the ever growing demand of power in the country.

25. THANK YOU