 |
||
|
||
| OPINION |
|
||
|
||
| OPINION |
STARTLING PARADOXES: Upper
Karnali Project By Dr. AB Thapa Here is a foreign consulting
firm that gets a job to conduct pre-feasibility
level study of the 300 MW Mini Upper
Karnali Project. The consulting firm must have agreed
to do the job with the intention of earning money.
They had nothing to do with the Upper
Karnali Storage Project Nobody might have
expected from them that they should dig into the
Upper Karnali Storage Project and unravel the
truth that the 300 MW Mini Upper Karnali
Project and the 4,000 MW Upper Karnali
Storage Project are mutually exclusive. As far
as the Upper Karnali Storage Project is concerned, any reasonably
experienced hydropower engineer would not have
any hesitation to tell outright with absolute
certainty that this project is the best
among the hydropower projects identified in Nepal.
The consulting firm must have sensed
without much difficulty that the
government intends to implement the 300 MW Mini
Upper Karnali Project in near future. So
they might have considered that it was their
solemn duty to caution the government against
such intention. They devoted a special chapter
in the pre-feasibility study report to explain
the truth that the 4,000 MW Upper Karnali
Storage Project and the 300 MW Mini Upper Karnali
Project are mutually exclusive, despite the
fact that such additional reporting was uncalled
for. Their message is very clear. DO NOT
THINK OF BUILDING THE 300 MW MINI UPPER KARNALI
PROJECT. The relevant excerpts from the report
of pre-feasibility study of the Upper Karnali Project
carried out with the assistance of the World Bank
are presented hereinafter. Excerpts from Study
Report The World Bank supported
pre-feasibility study team must have sensed
that our government could easily be misled into
deciding to implement the 300 MW Mini Upper
Karnali Project that precludes the development of
the Upper Karnali Storage Project. As a result,
the study team experts have gone out of their
way virtually to recommend the government to throw
away the idea of implementing the 300 MW Mini
Upper Karnali Project. The relevant excerpt from the
World Bank supported study report is
presented below that warns us about the
dire consequences if the 300 MW Mini Upper
Karnali Project is implemented. “Even when assuming that
the KR 1 A run-of-river project ( small 300 MW Upper
Karnali project) is a sunk cost, it will be seen
that a single large power plant (4180 MW) associated
with the major storage project is less costly
than the combined cost of smaller plant at
the same location (3532 MW) and a second power plant
at the foot of the storage dam ( 408 MW) discharging
directly into the KR 1A run-of-river project head
pond. Based on this assessment, it appears
that the later development of the major hydro
storage project at Site KR 1 ( mega Upper
Karnali Project) would cause the KR 1A
run-of-river project to be effectively discontinued.
There may be limited opportunity for secondary energy
generation during the periods of spillage”. A Paradigm of
Nepal’s Planning It is often said
that many developing countries are unable to
bolster up the economy at a
reasonable pace not for want of natural
resources or capital. They are progressing
very slowly because their policy makers and
planners posses neither a clear vision
of their country’s development perspectives nor
the ability and true dedication to lead the
country in the path to victory over
underdevelopment and backwardness. Certainly in this matter,
Nepal is not an exception. Our country is
also suffering from the same type of
ailment. Planners and policy makers in our
country lack clear vision and true dedication
to their works, as evidenced by the
recent government handling of the Upper Karnali
Project. At present Nepal is
facing upheaval of convincing the international donor
community to lend annually about US $ 500
million in the years ahead to launch
development works to be taken up to reduce
poverty. It was explained in the May 7,
2004 issue of this journal SPOTLIGHT that the 4,000
MW Upper Karnali Storage Project alone could provide
Nepal annually about US $ 400 million in royalty
to our country immediately after the completion
of the project construction, despite the fact
that this project is far smaller than the
Karnali Chisapani Project. The per KW installed
capacity construction cost of the Upper Karnali
Storage Project could be only about 70%
of such cost of the mammoth Karnali Chisapani
Project. Apart from such construction cost advantage,
the Upper Karnali Project could generate
electricity almost twice as much as the project
at Chisapani for the same volume of the regulated flow
The foreign consultants of the Upper Karnali
pre-feasibility study had gone out of their way
to protect our country’s interest in
ensuring that under no circumstances the big
hydropower potential of the Upper Karnali
Storage Project would be adversely affected. We should have expedited
the development of the Upper Karnali Storage
Project to accrue to our country revenue
on a scale far beyond the expectation of
any of our planners and policy makers.
Such efforts would have been greatly helpful
in gearing up to preparing our country
for the bright prospect for progress and
prosperity. Unfortunately to our great horror
our government is at present on the verge
of deciding to implement the 300 MW
Mini Upper Karnali Project despite the fact
that we would be forfeiting the opportunity
to accrue to our country enormously large sum
in revenue from the implementation of the 4,000
MW Upper Karnali Storage Project. It is hoped
that the National Planning Commission and other
government agencies would look into this matter
seriously before it is too late. Why Upper Karnali
Site is Attractive The Karnali river makes a
big loop in its lower reach near a place
called Asare. From here, the river flows in the
southeast direction for about 25 kilometers,
after that the river makes a complete
reversal in its direction. The river comes
back to a point just two kilometers
away from its earlier position near Asare.
There is a drop of about 150 meters
in Karnali riverbed elevations between these
two positions merely two kilometers away
from one another. There is a good site
near Asare to build a high dam with a
large storage volume. Such unique feature of
the topography on this stretch of the Karnali River
makes this river extremely attractive for a large
storage project for the generation cheap peaking power.
The project to utilize this bend for
power generation was originally known as the
Karnali Bend Project. Later on, the name
was changed to Upper Karnali Project. Upper Karnali Storage
Project Nepal might be able
to get easily up to 50% of the total
power in royalty from the private developers
if they are properly briefed about the
impressive advantages of this project. By comparison
with the Karnali Chisapani Project, the firm head
of the Upper Karnali Project would be almost
two times greater. It can be derived
based on Stage A Optimization Study Data
of the World Bank financed Karnali
Project Study report that per KW installed
capacity construction cost of the Upper Karnali
Storage Project could be only about 70%
of such cost of the project at Chisapani.
It need not be explained that the firm
power generation of the Upper Karnali Storage
Project operating at two times bigger head
would also be two times greater from the
use of same volume of regulated flow of
the Karnali by comparison with the Karnali Chisapani
Project. In terms of energy production
the generation cost of per KWh firm
energy of the Upper Karnali Project could be
only about 40% of such cost of the
Karnali Chisapani Project. Thus, Nepal would be
justified to require that the private developer
pay about 50% power in royalty because
such royalty would still be less than the
total additional generation solely from the use
of the topographical advantage without involving further
investment. The total generation of
the Upper Karnali Project could be about
10,000 GWh. Nepal could get about 5,000GWh in
royalty. At present, there is a big surge
in demand for peaking power in India. The
generation cost of such power as explained
below could be about US Cents 12 per KWh.
The amount in royalty from the developers
could be as high as US$ 400 million per
annum if it is assumed that the
electricity would be sold at a price of
only US Cents 8 per KWh. Big Surge in Demand
for Peaking Power At present India is
experiencing an acute shortage of peaking
energy. At the beginning of the Eight Plan,
the total peaking shortage was 20% whereas the
energy shortage was only 9% of the total
power generation. The thermal and nuclear power
stations are suitable to supply electricity to
meet the base load demand of the
system. It is not economic to use them
to supply peaking energy. Gas turbines can
be used to meet the peak load demand
because of low specific investment costs and
quick start up. However, the efficiency is
limited due to the high exhaust gas
temperature of the turbine. India is making every
effort to improve the hydrothermal mix for
ensuring better system operating condition. However,
the share of hydropower in the overall
power generating capacity has steadily declined
since the last few decades. The share of
the hydropower in the overall power
generating capacity was 50.6% in 1963.
But few years before it has come
down to only 25.66%. Role of Rastra
Bank It is said that
nowadays Nepal is receiving annually about
one billion US Dollars equivalent from Nepalese
citizens working in foreign countries. At present,
our country is in the grip of economic
depression. There is little economic activity
within the country. Banks are refusing to
accept new deposits. People are holding foreign
currency either in cash or spending it in
buying properties. In the past, the Rastra
Bank had played avant-garde role in resolving
country’s economic problems. Some years back the
APROS was established under the aegis of
the Rastra Bank to resolve agriculture related
problems of our country. Now Rastra Bank
should think of finding new ways to
utilize the surplus foreign remittance to
bolster up our country’s economy. Such
money sent by Nepalese citizen working in
foreign countries could be invested in exceptionally
attractive export oriented hydropower projects. The
4,000 MW Upper Karnali Storage Project estimated to
cost about 2,500 million US Dollars could be an
ideal project for such purpose. Shares
could be floated to raise capital. Nepal
could hope to borrow money from foreign
banks also against the guarantee of the
purchaser of electricity. The equity debt ratio
could be around 25%. It appears quite
likely that there might be about 30%
return on equity even after paying around
50% of the total amount earned from the
sale of the electricity in royalty to the
government. In Conclusion It is primarily
intended to draw the attention of the
concerned Government agencies, various institutions
involved in Nepal’s water resources development
and financial institutions like the Rastra Bank
to great loss to the nation if it
is allowed to implement the 300 MW Mini
Upper Karnali Project. (Dr. Thapa writes on water resources) |
Send your feedback to the
editor: spot@mail.com.np |
