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Nepal loses Rs200 million in Dashain power spillage

Nepal loses Rs200 million in Dashain power spillage

Amid reduced domestic demand and India not buying more electricity, the Nepal Electricity Authority saw massive spillage of power during the Dashain festival

The authority said spillage reached as high as 800MW at times with domestic demand falling as low as 700MW against the peak demand of around 1700MW.

The total installed capacity of Nepal’s power projects exceeds 2,200MW and all of them were operating in their full capacity, aided by continued rainfall for days during the festival season.

As Indian authorities have allowed Nepal to sell only up to 364MW in their power trading market, the NEA had no way to sell the surplus energy.

“Around 40 million units of electricity went to waste in a week during Dashain,” said Kul Man Ghising, managing director of the NEA. “If we calculate the cost of spillage based on Rs5 per unit, we lost as much as Rs200 million in potential earnings in a week.”

According to the NEA, there has been a reduction in spillage as factories and businesses, major consumers of electricity, have resumed operations after the Dashain festival.

“The spillage still amounts to around 200MW in the day, which goes up to 500MW during the night,” Ghising told the Post.

The state-owned power utility had foreseen the potential spillage of energy during the festival time as it struggled to get timely approval from New Delhi for exporting more energy.

With hydropower projects operating in full capacity owing to continued monsoon rains, Nepal is currently producing more electricity than the domestic demand.

The NEA, however, is hopeful that the southern neighbour will soon give it approval to sell an additional 111.8 megawatts. “We are getting information from India that the approval process has reached the final stages,” said Ghising. The NEA sought approval from the Indian authorities to export an additional 212.7MW through competitive bidding.

In mid-August, the NEA had requested approval from India to sell 111.8MW generated from Mistrikhola, Likhu Khola-A, Solukhola and Chilime hydropower projects.

The NEA said in late September that it has also sought approval to sell an additional 100.9MW generated from Likhukhola, Kabeli B1, Maikhola, Hewa Khola A and Lower Modi hydropower projects.

The state-owned power utility has been selling 37.7MW from Trishuli and Devighat hydropower projects, 140MW from Kaligandaki, 68MW from Middle Marsyangdi, 67MW from Marsyangdi and 51MW from Likhu-4, which was developed by the private sector, according to the NEA.

The NEA earned as much as Rs7.19 billion by exporting electricity to India in the last four months—between early June and mid-September, according to the power utility.

Even though the country’s sole distributor had long been seeking India’s approval to sell the power generated by the 456MW Upper Tamakoshi Hydropower Project, Indian officials refused to give their nod citing the involvement of Chinese contractors in the project, which is currently Nepal’s largest.

India instead asked the NEA to propose other projects without Chinese components to sell electricity in the Indian market. So, it had submitted a list of new projects to export power to India.

“We expect to earn as much as Rs16 billion by selling electricity in the next fiscal year,” said Ghising.

Court extends Sandeep Lamichhane’s remand

The Kathmandu District Court on Monday extended the judicial custody of suspended national cricket captain Sandeep Lamichhane for seven more days for further investigation as sought by the Metropolitan Crime Division of Nepal Police.

The court extended the remand of Lamichhane for seven days starting from October 6, the day the police had arrested him from Tribhuvan International Airport.

Police need to complete the investigation within 25 days from the day of arrest before filing a criminal case against him.

Lamichhane was produced before the court only on Monday as the courts were closed for Dashain holidays.

Advocate Saroj Ghimire informed that the court extended Lamichhane’s judicial custody for seven days beginning from the day of his arrest. He said Lamichhane has produced evidence of his innocence before the court during the hearing.

Following the court order, police will now record Lamichhane’s statement in the presence of the district attorney.

Lamichhane has been accused of raping a 17-year-old minor on August 21. An investigation is being conducted against him under Section 219 of the Criminal Code 2074. If the crime against him is proven, he will be imprisoned for 10 to 12 years as per the existing legal provisions.

The minor, through her guardian, had filed a case against the cricketer on September 6 at the Metropolitan Police Circle, Gaushala.

Earlier, the District Court had issued an arrest warrant against the 22-year-old cricketer on September 7 acting on the case filed by Gaushala Police Circle after the girl accused him of rape.

Following the arrest warrant, the Cricket Association of Nepal (CAN) suspended the globe-trotting cricketer. Lamichhane was in Trinidad & Tobago to play the Twenty20 franchise Caribbean Premier League (CPL) from Jamaica Tallawahs when he was accused of rape.

Lamichhane wrote on Facebook the same day claiming that he was innocent and would return to Nepal to seek justice. However, after he mysteriously disappeared, Nepal Police issued a diffusion notice through the International Criminal Police Organisation (Interpol).

On October 1, Lamichhane announced that he would return to Nepal on October 6 to face legal charges. Soon after he landed at the airport, he was arrested by officials at the Department of Immigration and plainclothes personnel.

The central bank of Nepal issued a notice about the circulation of new currency notes for Dashain. Thereafter, it also released one more circular that invited consultations from the public to explore the prospects for launching digital currency in an economy that is largely cash-based. Only 67.3 percent of Nepal’s population had access to banking services using one unique bank account as of mid-June 2020, as per the financial access report of the central bank. The dream of introducing digital currency in the economy and transitioning towards a cashless society remains utopian as long as a majority portion of the population is not inducted into the banking system.

To convert such a dream into a reality, appropriate enabling infrastructure in the form of suitable connectivity and mobile devices need to be put in place to be able to reach every nook and corner of the nation including far-flung places devoid of any kind of banking facilities. Thus, rolling out any kind of innovative digital product is not only fraught with many technical obstacles, but it also involves overcoming several critical challenges relating to digital awareness, digital access, digital availability and digital affordability.

The prospects

There are three kinds of digital currencies, namely, (i) Central bank digital currencies (CBDC), (ii) Crypto currencies, and (iii) Virtual currencies. Investments in crypto currencies and non-fungible tokens are regarded as highly speculative in character as they are susceptible to volatilities involving both plunges and upswings. Countries like India, Bangladesh and Pakistan are coming up with feasibility reports for the introduction of CBDC as a more secure and safer substitute for such investments. On similar lines, the central bank of Nepal has also taken such an initiative, and it can be considered timely and pertinent in the given scenario.

There is ample research evidence to support the rationale for launching CBDC. The immediate motivating factors could be found in the form of a reduction in usage of actual cash, provision of digital means of payment that are almost cash-like, providing a big boost to such digital payment services, injecting and creating a healthy competition among payment service providers, efficiency enhancement, and a perceptible reduction in the cost of providing financial services. An Asian Development Bank report of 2021 stated that the entire Pacific region was plagued by financial inclusion and remittance problems, for which a well-designed and implemented CBDC offered a pragmatic solution. CBDC has to be designed only after giving due emphasis to all the reputational and cyber security risk dimensions as is demonstrated by various research studies.

Going by the global trend of more and more economies going digital, it is only a matter of time before the much-hyped digital currency is put into circulation and gains momentum resulting in financial inclusion and accelerated economic growth aided and assisted by wallet, innovations and digital transformations such as meta-verse. Generally, cash-based systems are vulnerable to rampant corruption, especially in low-income economies. Moreover, the contraction in economic activity led to the hoarding of cash. Digital currency can ensure transparency and offset such undesirable practices by providing security and mechanisms for tracing the money. As our currency is pegged to the Indian rupee, the speed of digitalisation also depends on that of the Indian currency. It is hoped that transactions involving illegal currency will not happen once Indian currency becomes totally digitised. In addition, any decision to go for digital currency in Nepal would also have an impact on remittances made through informal channels.

The challenges

In a predominantly hard currency economy like Nepal, people handle bank notes not only in normal times but especially during festivals such as Dashain and religious ceremonies. In such a setting, migrating to digital platforms and moving over to digital currency requires a change in attitudes, preferences and mindset. Going by global trends, Nepal is also likely to catch up with universal wallets like Google Wallet and other indigenously developed ones, which work with or without internet connectivity, and are presently in use and gaining acceptance and prominence. We need to keep in place a supportive internet-driven infrastructure and all the required digital devices to be able to keep pace with the digitisation momentum and also the changing behavioural patterns of the common people.

Productive utilisation of the internet is missing, despite large segments of the Nepali population having internet connectivity and using mobile devices. This is mostly due to a lack of digital awareness and skills on the part of the people, which is of paramount importance for any effective implementation of digital innovation. This calls for governmental intervention in association with all private stakeholders. In this context, the importance of sensitising and educating people about data privacy and security need not be overemphasised. Glaring disparities between men and women in terms of owning a personal bank account, independent mobile ownership and access to the internet and other electronic devices are causing the digital gender divide in Nepal. This demands a focused training intervention targeted at womenfolk centring on cyber security and productive use of the internet.

To conclude, the introduction of digital currency in a country like Nepal, which is a hard currency economy, is fraught with cultural challenges. There has always been a sense of exuberance and excitement to hold brand new currency notes during the festival days of Dashain, which continues to remain one of the characteristic hallmarks of the Nepali socio-cultural milieu. The general public at large in Nepal has a typical currency-handling culture that is rooted in the traditional hard currency mindset. In this context, it would be prudent on the part of the central bank to wait for some time before full-scale digital currency adoption and be on the watch for the experiences of neighbouring countries. All decisions that involve the design, adoption and implementation aspects of CBDC or any other type of digital money should not be pivoted on technical criteria alone but also on cultural implications

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