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Interview

Power lines NEAs priority

MAR 01 - Mukesh Raj Kafle is managing director of Nepal Electricity Authority (NEA). He was appointed to the
post on October, 2014, following a court verdict in his favour after the suspension of then chief Rameshwar
Yadav for his alleged involvement in a procurement scandal. Sanjeev Giri of The Kathmandu Post caught up
with Kafle to talk about his first four
months at NEA.

You have completed four months as


NEAs chief. How do you review your
work so far?
Let me first tell you that I signed a
performance contract with the Ministry
of Energy before taking this job. I have
fixed Terms of Reference which guide
me. When I stepped in as a NEAs MD,
the institution was in a troubled situation
in many ways. In such a situation, I
started up with shorting out administrative issues first. The staff members were demotivated. With several
initiatives, I have created a proper working environment. Pending issues have been taken care of and have
been largely executed. We have prioritised load-shedding management and I feel we have largely succeeded.
From the four-month experience, I can say NEA has competitive human resources. We have infrastructure and
resources which are its strength. However, we lack capacity to make optimum utilisation of the resources. This
is because of the lack of a proper leadership for leading a group of competent people.
In my first four months, I have adopted a policy of keeping the right man in the right place. We have established
a trend of encouraging competent employees and sacking those who do not work. This is based on their
performance. NEA is a big institution and bringing it back on track will take some time. I can say we are
heading in the right direction. Our social and political culture as well as huge expectations from all for even
petty issues are some weaknesses. And, these need to be countered.
What are NEAs priorities for now?
We have prioritised the development of transmission lines. However, this does not mean other issues are less
prioritised. I have a clear roadmap on executing ongoing projects in time, provided no unavoidable
circumstances occur. The Trishuli 3A project does not have any problem at the moment and it will conclude on
time; Kulekhani III too is on track. As for Chameliya, the contractor has suspended work and this project has
become a white elephant. We have been urging all the stakeholders, including the Parliamentary Public
Accounts Committee, to find a common way out. Apart from transmission lines, NEA also needs to focus on
generation. We have prioritised four projectsDudhkoshi, Upper Arun, Tamakoshi V and Uttar Ganga. Within
four months, these projects have come back on track and we are hopeful about making some significant
progress within the next one year.
Despite NEAs priority to transmission lines, no significant headway has been made. What do you say?

I am quite optimistic about the development of transmission lines. There are several problems, but they are
workable. We have prioritised the east-west trunk line, cross-border transmission line, Dhalkebhar-Muzaffarpur,
Khimti-Dhalkebhar and Marsyangdi corridor and Trishuli-Chilime lines. These are important projects for us. We
have talked about expediting work on Khimti-Dhalkebhar line which is being supported by the World Bank. We
have talked with them about this and I have directed the authorities concerned to mobilise the contractor. The
progress of the cross-border transmission line is quite satisfactory. The project has completion deadline of
June, but we aim to complete it a month ahead. We dont have much issues besides forest clearance on the
East-West transmission line project. We can clear this project within nine months once the government gives
the clearance. This is a matter that requires G2G (Government-to-Government) coordination, and I dont think
itll be a big problem. In my opinion, there will be a substantial progress in transmission lines in the next one
and half years.
So there wont be much problem in evacuating the power generated.
Lets be optimistic about this. NEA is looking forward to generating a substantial amount of energy from its
projects. The peak demand stands at around 1,300MW. Within a couple of years, we will be able to counter
load-shedding through our own resources during the wet season if things go as planned.
When will the load-shedding end?
Ending load shedding within two years is something we can do. If things move ahead as planned, in the next
two years, NEA will be able to manage load-shedding through internal generation during the wet season (eight
months). In the dry season, generation capacity of our run-of-the-river projects drop 25-30 percent, and we
need to increase imports from India. With cross-border transmission lines in place, we can import additional
electricity.
The country is power-hungry, but NEA is accused of not showing urgency for Power Purchase
Agreement (PPA) with large projects. The 750MW West Seti is one of the projects that has been
affected. What do you say?
There are two aspects. It is true that we are power-hungry. At the same time, NEA is developing certain types of
projects and calculation is done based on the projects capacity and completion time. West Seti is a large-scale
project and since it is a storage-type project, the cost will be higher compared to run-of-the-river type projects.
So we need to have more discussions and cost analysis. NEA is not against the development of projects. We
can come to a conclusion by holding discussions with all the stakeholders.
The government has decided to unbundle NEA and form three entities generation, transmission and
distribution. What is NEAs say?
The concept of unbundling is accepted worldwide. The concept is all about creating competitiveness. However,
the concept in Nepal is a bit different. The issue of unbundling has come largely based on the concept that NEA
has failed to develop transmission lines. So it is different here. A section of the people said Budhi Gandaki
Hydropower Project would do well if it was disassociated with NEA and thus a development committee was
formed. But no significant progress has been made. This is because of the lack of human resource and strong
institution, among others. NEA does not have any reservations over the governments decision. But we really
need to look after the bases of sustainability. We are holding discussions on the issue of unbundling and we
hope to reach a logical conclusion soon.
Dont you think NEAs unbundling would increase competence, benefiting the consumers?
I have already said unbundling is an accepted concept worldwide. The crucial thing is execution of that concept.
If we had will power we could have achieved a lot in transmission line development. So more important is
changing the working attitude. But since Nepal is not that stable nation, we need to be really careful about

unbundling. Proper homework should be done. Our concern is only related to stability and sustainability of the
institutions to be formed.
Projects executed by NEAs subsidiaries have seen successes, while those being developed by NEA
itself are making slow progress. Does this mean models like Chilime and Upper Tamakoshi need to be
adopted for hydropower development?
We need to conduct a research before coming to a conclusion in any matter. Chilime model is a successful one.
Upper Tamakoshi, a bit different model, too is successful. The interesting fact is NEA has stake in both the
projects and are being commissioned by NEA staffers. The best knowledge from these projects is when you
make a move through a participatory approach, you can achieve stability and sustainability. We cannot term
these models right or wrong. NEA also commissioned Kulekhani, Lower Marsyangdi and Kaligandaki
successfully. So the current context shows the participatory approach (PPP model) is best suited for
hydropower development.
What do you say about the Electricity Act which is being amended? What kind of Acts and polices are
required to expedite hydropower development?
The new Electricity Act is being drafted and a lot of suggestions have poured in, especially regarding the
licensing regime. In my opinion, licenses should be issued based on competition among companies. There is
also a need for changing Acts and policies regarding compensation. Billions of rupees is poured in hydropower
development, and thus developers should not refuse to share benefits with locals. In the case of forest
clearance, another important issue, there should be a clear understanding through Acts and polices. The
government should fix priorities and we need to go into a one-window policy by setting up priorities. There
should be a clear-cut provision about within how many days NEA should be given go-ahead for forest clearance
if it is for the development of transmission lines or hydropower projects. If the issue is left under subject to
judgment, things will differ person-to-person. And, this will hurt the development process.
The issue of tariff hike has always been crucial. Does NEA think tariff hike is the only way to reduce its
losses?
We dont necessarily think increasing the tariff is the only way for managing the account book of NEA. Inflation
has increased over the past few years and I feel the cost should be adjusted by the government based on the
same. NEA has an annual loss of around Rs 6 billion. If the tariff is increased by 15 percent, we can collect Rs
4 billion from it. Remaining deficit of Rs 2 billion can be countered by controlling electricity leakage, assets
management and increasing employees efficiency.
Once the tariff is increased, NEA will reach break-even. Our say is the government should help bring NEA to a
certain point. Once NEA is financially stable, things can move ahead in a different manner.

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