September 22, 2021, Wednesday
Nepal 1:37:26 pm

Electricity tariff should be revisited for wider consumption

The Nepal Weekly
August 3, 2021

More facility to poor people proposed

By Purna N. Ranjitkar

Minister for Energy, Water Resources and Irrigation PamphaBhusal, has mentioned that the time has come to work on reducing the electricity tariff. She was addressing a political meeting in Dhanusha recently.

Minister Bhusal said that she is in favour of providing up to 20 kilo watt hour (units) of electricity free of cost for those who cannot afford. That will benefit more than 10 million people in addition, she added.  Stressing the need of bringing a plan to make electricity cheaper, she opined that it was necessary to create an environment where poor people can consume electricity free of cost.

In the past, Governments had talked frequently on the utilising electricity for all type of end-uses. Energy for industries, transportation and domestic and cooking activities and access to poor people had been the much talked subjects. So as Nepal Electricity Authority (NEA) consumers who consume 10 units (kWh) per month or below have been provided electricity without cost. The facility is certainly not enough for the people who use minimum electricity. Thus, the Minister’s intention for providing 20 units of electricity freely to poor people is a good decision.

In the meantime, higher authority at Nepal Electricity Authority indicated that the utility has been facing loss in comparison to previous few years. One of the reasons of the loss is providing free electricity to the consumers of 10 unit bracket. 

On the other hand, people those who really need support or subsidy for free electricity access should be well identified. And also it should be clear that who will cover the cost of facility provided to poor people. Naturally, NEA is a Government owned institution and has to go with government policy and instructions. If not, Government’s some other agency has to take the responsibility. Similarly, the provincial governments and local levels may extend support to the programme conducted by the Federal Government in context of free access to electricity for the people who consume 20 units or below.

Similarly, Minister Bhushal mentioned that cost of electricity generation should be made cheaper. This is, in fact, very important point to ponder as cost of hydropower generation is going up showing different causes. Moreover, the real cost of electricity generation by hydropower projects per megawatt run very high than their prior evaluation. Likewise, hydropower projects are not completed as per schedule, but pushed behind years to complete showing various reasons (or excuses). Such situations happen with both the government operated projects and privately owned projects. However, government owned projects appear in the surface more than that of private owned projects.

Talking once again on free electricity to poor people, we simply understand that the governments consider all NEA consumers those who consume 20 units per month or below are poor.  That may not be fair as all basic needs could be done within 20 units limit. That means such people should consume more but only more than 20 units should be billed for payment. Hope, this will be made possible. The access to energy (renewable energy) within affordable range should be taken as the first step for poor people to get opportunity to raise their socio-economic level.

The Multi-Tier Framework (MTF) for measuring energy access is important tool to compute what should be the minimum energy facility provided to the grass-root people.

The MTF defines energy access as the ability to obtain energy that is adequate, available when needed, reliable, of good quality, affordable, formal, convenient, healthy, and safe for all required energy applications across households, enterprises, and community institutions.

Access to electricity is measured based on 7 attributes: capacity, availability, reliability, quality, affordability, formality, and safety. Tier 1 refers to households with limited access to small quantities of electricity provided by any technology, even a small solar lighting system, for a few hours a day, enabling electric lighting and phone charging. Higher tiers are defined by higher capacity and longer availability of supply – enabling the use of medium – and high-load appliances (such as a refrigerator, washing machine, or air conditioner)- as well as by adequate affordability and reliability, quality, formality, and safety.

The Government of Nepal is saying that 93% of total households have been connected by the national grid. Rest of others where national grid may not be stretched in near future will be provided by deploying mini-grid systems (micro hydro and solar mini grids mainly). However, it is not clear about the ratio of consumers out of the accessed with national gird are getting enough electricity for all domestic appliances to use. Likewise, how many out of all those who have access to the national grid can use only for lighting, operating TV, radio and charging mobile phone sets. This picture may be understood better presented in a Tier basis (as referred above). This would also be interesting if the authorities mention if mini-grid systems provide electricity to the consumers for their cooking needs and use of other appliances.

The electricity distribution system is all managed by NEA across the country. Otherthan that Community Rural Electrification Entities (CREEs) which are organised under the umbrella of National Association of Community Electricity Users-Nepal (NACEUN) are responsible for distribution of electricity to the consumers. The functionality of CREEs is purchasing bulk quantity from NEA system and sale to its members. Development of transmission and distribution system is shared by the government and community at the ratio of 80 per cent and 20 per cent respectively. Professionals mention that this model is more practicable for electrifying the communities.

Time has now come for local governments (metropolitan cities, sub-metropolitan cities municipalities, municipalities and rural municipalities) to be ready to operate electrification systems. That will also help identify the poor people who really need free electricity access. Likewise, the local authorities will have to take responsibility of all energy management for industrial, institutional and residential requirements.  Thus, the local units will also look for opportunities to generate electricity by intervening Solar PV, Solar PV Roof-top Net Metering and other technologies at public private partnership model as well.