Nepal allocates $778 million budget for energy sector

Nepal's Finance Minister Yubaraj Khatiwada last week allocated 83.9 billion Nepali rupees ($778 million) for the country's booming energy sector while unveiling the annual budget for the fiscal year 2018-19.

The amount, up from 62.47 billion Nepali rupees for 2017-18, the largest allocation so far, has been earmarked with an eye on economic growth in the impoverished country.

The current leftist coalition government, which came to power after winning a landmark poll last year, has vowed to build infrastructure including hydropower to spur economic growth.

The government, which has garnered a two-thirds majority in the parliament, is expected to last a full five-year term for the first-time in the politically unstable country.

Khadiwada, presenting a $12.18 billion budget on Tuesday, said his government would focus on developing hydroelectricity to provide energy to its 29 million people.

“Emphasis will be given to the development and expansion of hydroelectricity and all types of renewable energy to provide modern energy to all Nepali households within the coming three years and to provide electricity to all households as per the demand within the next five years,” he told the Parliament in Kathmandu.

The finance minister also said preliminary work on the Chisapani-Karnali Multipurpose Hydroelectricity Project, which at a capacity of 10,800 megawatts (MW) is Nepal’s largest project, will begin soon.

Other major hydropower projects in the pipeline include Tamor, Kankai, Uttar Ganga, Naumure, Sunkoshi –II, Sunkoshi –III, Kaligandaki and Nalsingad.

These projects will be developed with at least one multipurpose hydroelectricity project in each of the country’s seven provinces, according to Khatiwada.

Work on Budhi Gandaki Hydropower Project, a 1200 MW project cancelled by the previous government after a contract was agreed with a Chinese company, will resume once compensation is distributed to thousands of people affected by the plant, he said.

Khatiwada also announced an 'energy decade' for the period between 2018 and 2028. He said an additional 3 MW of renewable energy would be added by the end of the fiscal year.

Nepal has the potential to generate at least 40,000 MW of hydroelectricity, but its current production is only 1000 MW. The current demand stands at 1200 MW, but is likely to increase by 100 MW per year, according to experts.