Thursday, December 18, 2008

Corruption takes toll in Nepal: Acute energy crisis hits the country

The Nepali government has declared energy crisis and has approved operation of thermal plants to add 200 MW to the national grid. The present demand of electricity is 770 MW but the supply is just 420 MW. The country is in deficit of 2.8 million units power per day. Imagine this happening in a country with the second highest potential to generate hydroelectricity in the world. It is estimated that Nepal can produce 83,000 MW of electricity.

The question is why is Nepal still lagging behind? Is it a lack of funds? I think no given the level of investment and investor’s interest in this sector. Is it appropriability? Yes, it was for around five years back when the Maoists rebellion reached its peak and they attacked hydropower plants. But, now no one is doing that. So, appropriability is not a constraint. Returns to investment and appropriability are not holding back progress in this sector. What could be? Corruption comes on the top of my list. It was estimated that almost 30% of the total estimated cost is actually invested in real project. Where does 70% go? In the pockets of bureaucrats at Ministry, regional offices, and local administration! Corruption is a form of red tape and future tax on people. At present, there is 10 hours of load shedding per week in Nepal.

I wish the corruption investigation (CIAA) body was a little bit more powerful and independent!!