Helping Nepal Develop New Sources of Energy

Nestled in an upscale district of Nepal’s bustling capital, Kathmandu, an animation studio makes world-class videos of 3D characters for games, movies, and inventive public-service announcements: one stunning production shows an animated red panda explaining landslides; another teaches children how to take cover during an earthquake.  While business is good, the studio still finds it difficult to keep the lights on and frequent electricity outages often interrupt the designers’ work.  

It’s a fact of life in Nepal that having access to power lines does not mean that you always have power. What’s more, about 24 percent of the population still has no access to electricity at all, whether on-grid or off-grid.  During a helicopter ride to the Bhote Koshi hydropower plant, about 70 miles northeast of Kathmandu, it’s clear to see why the vast majority of Nepalese meet their energy needs by burning wood, agricultural waste, and animal dung.  Many live in isolated villages high in the mountains, far from any roads or power lines.  Combine that with decades of social and political upheaval, and it’s no wonder that Nepal still ranks among the poorest countries in the world and the poorest in South Asia.  In fact, at 120 kWh, Nepal’s average per capita electricity consumption is one of the lowest in the world, and just 8% of its regional peer Sri Lanka.

Deputy Assistant Secretary Sumar Enjoys The Helicopter Ride To The Bhote Koshi Hydropower Plant [State Department Photo]

Creating new sources of electricity is part of the solution, and distributing it throughout the country will require infrastructure and reform.  The hydropower plant we visited helps with the production side of Nepal’s energy challenge.  The 45 megawatt plant — built with U.S. and Nepalese investment and still partly-owned by a U.S. company — can make enough electricity annually for, on average, about a tenth of Nepal’s roughly 28 million citizens.  Yet it represents only seven percent of the country’s total installed hydropower capacity of 758 megawatts.  And even that is just a drop-in-the-bucket compared to Nepal’s economically viable hydropower capacity of 80,000 megawatts; that’s about 20 Hoover Dams.

(L-R) MCC CEO Dana Hyde, USAID Mission Director Beth Dunford, MCC Energy Expert Himesh Dhungel and SCA DAS Fatema Sumar Speaking At A Construction Site Near The Bhote Koshi Hydropower Plant, About 70 Miles Northeast of Kathmandu, Nepal [State Department Photo]

The United States will now be a major player helping Nepal develop that capacity.  Last December the Board of Directors of the Millennium Challenge Corporation (MCC), an independent U.S. development agency that follows private-sector principles, made Nepal eligible for an MCC compact, essentially a contract between the agency and the country.  I traveled through Nepal with MCC’s CEO, Dana Hyde, who emphasized that it was Nepal’s democratic progress that convinced MCC to do business with it. What’s more, an MCC compact not only delivers substantial investment on its own, it also represents a kind of good housekeeping seal of approval that can attract private-sector investment.  The message is clear: democracy can deliver development.

Construction Site Near The Bhote Koshi Hydropower Plant, About 70 miles Northeast Of Kathmandu, Nepal [State Department Photo]

But the truly hard work remains ahead.  To reach its full potential and avoid inefficiency, Nepal will need to adopt a strategic national plan for its hydropower development.  And as Dana and I heard from Nepalese officials and power producers, significant reforms to the energy sector are required, and the government will need to increase its technical capacity. To that end, USAID and the State Department will work closely with the Nepali government and private sector on capacity constraints and regulatory reform to lay a strong foundation for MCC programs.

With our three U.S. agencies working hand-in-glove, it’s possible that the next time I fly over the Himalayas, I’ll look down and see new power lines running through those same villages, carrying electricity to light bulbs and stoves and televisions.  And maybe, if business is still good, some of those televisions will be showing public service announcements featuring a helpful red panda – 3-D animated, of course.

About the Author: Fatema Z. Sumar serves as a Deputy Assistant Secretary of State in the Bureau of South and Central Asian Affairs.