How Nepal’s mountain dwellers are adapting to climate change

Nepali journalist Saroj Dhakal interviews British Council Climate Champion, Saurav Dhakal on his experience of completing the Great Himalayan Trail and what he thinks is needed to promote climate compatible development in the region.

I recently had the opportunity to discuss, over a cup of ‘chai’, with the British Council Climate Champion, Saurav Dhakal, about what he learnt and discovered when completing the Great Himalayan Trail in 99 days between January – May 2012 as part of the Government sponsored‘Climate Smart Trek’.

The 4-month trek, led by world record holder mountaineer Apa Sherpa, was a huge success in raising awareness of the effects of climate change on the Himalayan region, as well as highlighting the opportunity of eco-tourism.

For Saurav, the most immediate benefit from participating in the grueling trek was learning more about how people survive and have adapted to the harsh and varied climatic conditions.

At the top of the hills only a few people live, whereas at the base where there is a river and fertile land for irrigation, there are dense settlements. Many roads have been built haphazardly and they are not ‘climate smart’ in any sense (e.g. they get severely damaged by flooding). Furthermore, people living on the top are migrating to the base of the hills. These new settlements tend to be near the bank of the river where agriculture is most productive. However, this puts them at a highly vulnerable spot when the river changes its course due to monsoons and high rainfall.

Local people he met on his travels told Saurav that while mosquitoes and flies used to rarely be found in the upper part of the hills, they are now a common and unwelcome feature of life. They have brought with them new problems of dysentery and diarrhoea which are now increasingly common among the local people.

Farmers on the top of hills where there is ice have traditionally received a generous income from a cash crop called Yarsagumba which is a natural Himalayan stimulant that comes out of Caterpillar fungus (Cordyceps Sinensis) and is popular in traditional Chinese medicine. It grows in high altitudes in Tibet, Nepal, China and Bhutan at around an altitude of 300 – 5000 m. However, the cultivation of this worm is slowing down. The average harvest in Dolpa, a Nepalese district which borders Tibet and accounts for more than 50 percent of the trade with China, haddecreased from 267 pieces per harvester in 2006 to 125 pieces in 2010. While overharvesting is an issue, increasingly warmer winters and a lack of snowfall, is also reported to have affected production.

However, there are some positive stories which Saurav could recount about examples of local people taking the initiative to adapt to climatic changes. For example, many villagers are now using ‘Poly-houses’ – an area covered by a transparent sheet – to grow their vegetables. Vegetables that could previously not be found in upper mountains and hills such as onions and chillies, and off-season vegetables, are now being grown within these Poly-houses. In addition, a number of villages that are near to a water flow have built themselves water mills.

While observing and learning about these changes, both negative and positive, that have occurred in recent years in the Himalayan region, Saurav was able to come up with a number of recommendations for how to foster climate compatible development in this unique eco-system.

Carefully plan renewable energy

In recent years, there has been a flurry of attempts by NGOs, the Government and others to introduce renewable energy into the region, such as water mills, solar and biogas. This brings many benefits, including preventing deforestation, but ensuring the new technology is used and sustainable requires a great deal of careful prior planning and thought.

In particular, the isolated nature of the villages and the distance from the nearest market means that replacing new parts is a challenge. There is also a lack of qualified people within the village to ensure even basic maintenance. The risk is that villagers will be forced to turn their back on these technologies and return to using wood as the primary source of energy.

Prioritise and protect local seeds

New types of seeds have been distributed and promoted within the villages, which are capable of producing higher yields. However, this has brought controversy. Traditionally, farmers get their seeds free of charge from their last year’s harvest. With these new seeds, farmers have to purchase the seeds every year.

For many farmers they prefer to stick with the local seeds which have a long history in Nepal. However, if their neighbours are using the new type of seeds, there will most likely be cross contamination of the crops. The result is that for both farmers productivity will be reduced.

This is a well documented problem, with countries such as India taking action. However, in Nepal, there is less awareness among farmers of the need to keep the crops separate, and the value of the precautionary principle.

Nurture indigenous and new knowledge

Adapting to climate change requires local communities to understand their risks and identify coping strategies.  A massive awareness campaign at the grassroots level is a vital first step. Schools and young people are a valuable resource and a great means to penetrate the community with new information.  But, it should not be all about educating people with ideas from outside the community. Many of the solutions needed can be found in their traditions and cultures – such as the use and design of water mils – but these need to be documented and adapted to suit today’s situation.

Understand and tackle migration patterns

Many of the most at risk people are those who have migrated in search of better employment opportunities. They settle by river banks and often in unsuitable housing making them highly vulnerable to the effects of flooding. Local and national Governments need to understand why these people are migrating and address the reasons that make them leave their homes. The communities themselves also need to be educated on the risks that they are taking and how they can reduce these.

Following his trek Saurav is motivated to keep up the campaign to raise awareness of these mountain issues, and a book of his experience on the trek is in the pipeline. Hopefully, it is not just the intrepid tourists and mountaineers who will get to learn about the beauty and challenges facing these remote communities.

Saroj has been a regular columnist with Kathmandu Post, one of the premier broadsheets of Nepal . He has written reports and publications on a wide range of climate change and development issues, and has previously worked as an analyst for the Asian Development Bank, the Asia Foundation and the editor of the Asian Journal of Public Affairs.

Read more from him about the Climate Smart Trek in the previous part one and part two of the series for CDKN.

We occasionally invite bloggers from around the world to provide their experiences and views. The views expressed here are those of the author, and not necessarily those of CDKN.

http://cdkn.org/2012/09/what-i-learnt-on-the-climate-smart-trek/?loclang=en_gb

Sights and Sounds of Climate Change on the Great Himalayan Trail

In a small town called Beni, in a valley divided by a river and surrounded by green hills, the team are having a well deserved rest day. They are tired after walking for 65 days covering 936 km, but  resolved in their mission. They are gulping pizza, burgers and other high calorie food that their friends brought from Pokhara, as they prepare themselves for a press conference being attended by Honorable Minister of Environment Hem Raj Tater and other prominent members of the government, civil society, and the business community of the town of Beni.

In the press conference, Dawa Steven Sherpa, two times summiteer of Mount Everest, reflected on what had been seen by the team so far on the trail. Two days previously they had stayed in Ghale Ghau village, where the villagers had started home stay tourism and currently there are 35 households offering their services.

The trekkers split up to stay in different houses for the night and saw a glimpse of village life. Dawa observed that due to lack of opportunities for work or education, youth have left the village. The impact of climate change was also visible. Erratic weather patterns are lessening agricultural productivity and a hailstorm had recently ruined vegetable production. This is a story repeated along the trail.

The most awaited speech was that of Apa Sherpa. Climate Change destroyed most of Apa’s properties back in 1985 during the Dig Tsho Glacial Lake Outburst Flood (GLOF). He succeeded in climbing Mt. Everest for the first time in 1990, and since then he has climbed it 21 times in 21 years.

Tourism gave his life back. Apa Sherpa had come to the Annapurna Range some 27 years ago. He said tourism is doing extremely well in this part of the region; however, there are certain threats. A glacial lake has formed above Siklish at the height of 2500 meters. People are scared as they think that the lake may burst anytime soon.

Next morning, I sat with Saurav Dhakal (British Council International Climate Champion and Journalist) to get his insights on climate change issues in the region that the team has covered so far. He mentioned a massive landslide in “Rasuwa District,” a central region in Nepal. He said roads are being constructed in the region without properly testing the structure of the soil. Such haphazard development is creating landslides. These are affecting transportation to Dunche, which is a tourist region and thus requires regular supply of commodities.

He also mentioned the closure of water mills in several areas due to reduction in the supply of water. Such water mills are important for villagers to husk and grind rice, millet, corn, and barley and can save them much physical labor.  Such a simple but time saving technology is at threat if the river dries out.

My two days in Beni were vital for me to understand the complexity and dynamism of the problem that the Himalayas are facing. On one hand I have many reservations. Will any sort of development keep the villagers especially youth in the village? The lure of the urban life style and the challenges of rural life seem to have drawn them into the cities. Are they willing to go back and save the Himalayas? Will they show motivation to help their community adapt to climate change? Will tourism and agriculture be enough to attract them them? Can Nepal draw enough tourists to sustain the local economy without destroying the peace and tranquility that attracts them there in the first place? Is Apa fighting for a cause that  will never catch on with today’s Nepali youth?

On the other hand, something needs to be done for these rural communities where the reach of government and development sector is all but invisible. Such enormous challenges that need to be answered to preserve the aesthetic beauty of the Himalayas will remain a herculean task for all.

Watch out for the second in this series of blogs from the Great Himalayan Trail when I will be reporting from the Western Region of Nepal on how climate change is affecting this remote part of the country.

http://cdkn.org/2012/04/the-human-side-of-climate-change-in-the-himalayas/?loclang=en_gb

“Responsible Youth: Prosperous Nepal” Winner of USAID-Nepal Essay Competition

On a learning mission about how the pond irrigation scheme helped farmers, I knew Ganesh Thapa Magar,a 21 year old father who grows vegetables for livelihood in rural Dailekh. Laxman, a good volley ball player from the same village,is a 17 year old boy who will soon leave his 15 year old wife to go to India to make ends meet.Ramesh, a 27 year old graduate has been looking for a job in Kathmandu for the last two years. There is Ashim, around 21 year old tech entrepreneur, who is also involved in facebook movement “Common Youth Stand Up” to pressure the government for timely constitution. There are youths in organizations such as Association of Youth Organizations Nepal (AYON), who have done an incredible job of helping the government collect the new upcoming census. There are youth from political wings of CPN (UML) who are holding bandas (shut down of cities) these days, and there are youth such as the 16 year old Kushal KC from Baglung who just madea Solar Car. The list of youth engaged in good, evil or beyond is much longer in the context of Nepal. How to promote good and how to eliminate evil within youth who have lost track are important questions in a country where about 38% of the youth are currently unemployed and each year 400,000 young people enter labor market(Youth Survey of Nepal 2011). How should Nepal engage labor force where 46 percent of young people aged between 20-24 years are highly underutilized and remain outside the formal economy? (Nepal Labour Force Survey 2008)We all know, this year 47.16 percent of the 419,049 of students who appeared in this year´s SLC examination passed. Last year the percentage of students who passed the examination was 55.5 percent. What happens to youths who do not pass the exam?Furthermore, same issue arises on students are involved with undergraduate and graduate studies. There are youth who cannot complete education or the ones that spend a year or two looking for jobs after university have to be engaged. Is the rote learning culture instigated in these youth enough to make them adequately prepared for the job market? Furthermore, the society, including the parent who sees their kids as chickens that had better lay golden eggs rather than individuals who can think for themselves is not helping the youth from designing a sustainable future for themselves and the country. Amongst the youth as well, the blind imitation of the west and their values, without a proper self-introspection on its implications for our own cultures is confusing them. If we are to promote youth to be champions of reform, then these youth along with other fortunate youth should be empowered. For that we need to provide them with practical opportunities that have remained beyond the interests of academic institutions, many of which seem more of a business than temples of learning. We need to give youthopportunities that are pragmatic and outside the domain of formal education. So far, the existing system has failed the youth, because it is broken. Therefore, a systemic reform to create a conducive /enabling environment for youth empowerment is an immediate urgency. To do so there are many policy approaches.This essay elaborately speaks why youth empowerment via institution creation is vital for Nepal, and how that could be done. For the purpose for youth empowerment, a new semi-autonomous center under the Ministry of Youth & Sports with a name “Youth Empowerment Center (YEC)” with a working mechanism similar to that of “Alternative Energy Promotion Center (AEPC)”has to be created.AEPC function as an independent body of the Government of Nepal,and receives basket funds from the donors to promote renewable energy. Similarly, YEC will be created under the Ministry of Youth and Sportsin coordination with youth agencies such as Association of Youth Organizations Nepal (AYON). Youth between the age of 18-30 are eligible to run this center. Government officers, politicians and other stakeholders who are above that age can only sit inthe board of this center for mere guidance. Youth who are already affiliated with the youth organizations of the existing political parties are barred from taking any responsibilities in this center, to prevent politicization of YEC. However, the youth who have worked with the center are free to join any political parties after their departure. Apart from running Social Year Program which will be discussed elaborately in this essay, the center will support any innovative ideas of any young person. The Center will also have a leadership development department to improve leadership skills amongst the youth. Social Year Program (SYP) Social Year Program (SYP) will be one of the core objectives of the YEC. Under this program YECselects youth between the age of 18-30, who care to devotetwo yearsof their time for the overall development of Nepal. YEC will issue them a two year work program. These youth are selected from all over the country. With the presiding youth unemployment, we can be certain that there will be innumerable applications.So when the application is received, youth selected by YEC after fair evaluation process,will be placed in any organizations working onsocial or development work or a private company, at a place different than their hometown. So a youth from Dailekh, who could hardly afford to come to Kathmandu can come and serve the old people shelter home or work with the first goat cheese factory of Chitlang in Makwanpur to learn how to make cheese. A youth from Kathmandu if interested can go to Dailekh and learn how to grow vegetables while teaching the cons of early marriage. A youth from Terai can go to the mountains to learn about tourism. A youth from mountains can come to Terai to learn about paddy farming. Under SYP, participants receive a three months training program before their placements to make them aware of their role and responsibilities. In the first pilot project, certain number of youth maybe 500 can be engaged for a year to see the effectiveness of the program. Voluntary Social Year in Germany and organizations such as Peace Corps of the United States of America, are great ones to learn from if we seek to create a blue print for the program. At the end of the period, each participant will be asked to present a paper about his experiences and a review of his work by the institution where he provided his service. At the end their term, selection committee will select top 5% (depending upon the total numbers who decided to enroll in the program) of the total participants who perform best in their work. These top 5% will receive education scholarship, priority placement in jobs or some interest-free fund to start their own business. Furthermore, all youth who have participated in the SYP are eligible for a very low-interest loan to fund their education if they seek to further study. Henceforth, even youth from poor background can afford education even if they cannot win a scholarship. This model somewhat resembles a model used in the medical services exams of Nepal by Bir Hospital. Government doctors who decide to go to rural areas to work for two years get some extra points when they apply for graduate school of medicine at Bir Hospital, thus increasing their selection possibilities in scholarship quota (Poudel 2012). Youth can win these incentives by fulfilling various criteria such as rural/urban placement, nature of work, and performance indicators which will be developed by YEC. The youth who go through SYP should be given priorities in college, government jobs, private sectors, and INGO(s) and NGO(s) placements as these institutions can find experienced individuals to carry on their policy agenda. Of course, all of these sound rosy, but what will these youth exactly do and how will SYP help them is a great question? How will such program become a game changer?If the government or affiliated institutions guaranteesa stipend for the participants on a monthly basis, then it will provide much need employment or a career break through for young people. In addition to that, the program will help familiarize participants with new cultures, traditions, and development challenges of the country. It will expose them to different ethnicities, their culture and history. It will help them see the differences in urban and rural life. Out of almost 100 ethnic groups present in Nepal, participants can go and live in the house of some other ethnic groups. This will harness ethnic sentiments and understandings, a much needed factor in today’s Nepal. A Brahmin who stays at a Dalits home, and Dailt who stays at a Brahmin home can perhaps understand where each other’s bias comes from and how can they be tackled. Such creation of loose network can play an important role to tie the nation. Furthermore, the exchange of perspective and understanding onissues directly relevant to Nepal will make them aware on the areas that need reform. An urban youth who familiarizes himself with the harshness of rural life may be inspired to focus his career on rural development. For youth who have just finished SLC and high school, they can foresee their future not only in the much hyped areas such as doctors and engineers but also in agriculture and animal husbandry. Furthermore, it is well known fact that many youth are dependent on their parents up until they are married or till they finish graduate schools.SYP will harness early working culture for young people. Inscribing working culture via a proper mentoring canteach them responsibilities and respect for work.Furthermore, familiarizing the youth on issues such as climate change, health, banking and giving them real responsibilities in these fields can instigate career aspirations and develop leadership skills. Apart from the youth, families that host the participants of SYP would have to be incentivized.First of all YEC will be provide the cost of living of the participant along with a small stipend to the participants. Secondly, urban parents will have a tax incentive. If they are involved in the program, some portion of their tax can deducted as reward for their help. Thirdly, their own children can live with the parents of the youth whom they are hosting so there is a sense of security of their children welfare during the stay. For rural parents, they will get cash voucher for being a host. This can provide them with much needed extra cash for poverty alleviation. A portion of Youth Self-employment Fund that was established by the UCPN (Maoist) three years ago along with some cooperation from donors operating in Nepal can provide initial fund to set up YEC and run SYP .For families whose children decide to join the program, it will be mandatory that they also host someone in their home. Since parents may feel insecure about letting especially female members go far away. Therefore, provisions can be made where female can seek to work near their home or they can stay with their relatives if they have one in the place of their preferences. Nevertheless, options will be given to the participants so they can decide to either to stay with a family or rent their own place. Youth can leave the host family if they seek to change the family. They can also quit the program if they see it unfit for their career aspirations. Organizations that seek to provide opportunities and mentor these youth for skill development should be given incentives by the government. The organizations that participate in SYP are eligible for competing in yearly grants which has a high lump sum. They can win such grants if they become the best place to mentor youths. For example, if someone wants to work with physically challenged people, organizations working in that area not only have a passionate follower but they can also compete for grants to scale up their program. Thus, NGOs and private companies who are in need of money have incentive to participate in SYP. Furthermore, the supervisors of these youth are given promotion incentives and “mentor of the year award.” In conclusion, SYP will giveyouth a firsthand exposureto various areas of development needs of Nepal. With such exposure and the insights that will come about in youth can hold a huge potential to push this country forward. Empowering the youth at the local and national level, but also mainstreaming them in the task of nation building via SYP holds a better dawn for Nepal. Elbert Green Hubbard, an American writer, publisher, artist, and philosopher once said, ““Progress comes from the intelligent use of experience.” I presume giving an intelligent experience to youth could immensely help in their empowerment and personal development, thus, enabling them to be the champions of reform and a better adult in the near future.

“End of a long Journey”

A four month trek along the Great Himalaya Trail in Nepal, led by the world record holding mountaineer Apa Sherpa and in partnership with the Government of Nepal, is raising awareness of climate compatible development in this highly vulnerable region.  A local journalist, Saroj Dhakal, reports for CDKN on the reflections from the team as they complete their journey.

When they set off in January, the ‘Nepal Climate Smart Trek’ team expected to be walking 1500 Km in 120 days. In fact, the team led by the world record holder mountaineer Apa Sherpa, actually completed the trail early, in 99 days, despite having to walk an extra 55 Km.

A tired but proud team gathered on 25th April 2012 to update the Government, donors, and the media, about their journey along the Great Himalaya Trail in Nepal.

Anil Chitrakar of the Himalayan Climate Initiative (HCI), the organisers of the trek, opened the ceremony by highlighting the scale of the achievement; “If we calculate how much height the team walked it comes to about nine and a half times the height from sea level to the top of the Everest.”

However, the achievement of the team went beyond the physical stamina required. They succeeded in their objective of raising awareness about the effects of climate change in the Himalayan Region and promoting responsible and sustainable trekking and tourism.

The team has been blogging regularly, and capturing what they see and hear about climate compatible development in photographs and videos and through social mediaLocal and international media have picked up their stories and have been highlighting the risks of climate change for the region.

For example, a warning from Apa, whose own village was destroyed by a flood in 1985, about the dangers of glacial lakes in Nepal got widespread coverage. Twenty such lakes are reported to be at risk of bursting and causing cataclysmic flooding.

However, the story was not all negative. Mountaineer Dawa Sherpa highlighted three areas where the team could see that rural Nepal has significantly changed, and for the better. In terms of telecommunications, energy and access to roads, development is going in the right direction.

Villagers are now highly aware of what is happening in Kathmandu via local FM stations that they listen to on their mobile phones. Access to solar, biogas, and micro hydro is lighting new homes every day. Girls who used to spend several hours of their day fetching firewood can now save that time to read or attend classes. Lastly, roads have now reached many villages helping them to link with the market.

All three areas of development are vital in ensuring rural Nepal enjoys the benefits of development. Dominic O’Neil, Head of DFID Nepal which supported the trek, explained how such progress is also needed for the security and stability of the region; “Now the peace process of Nepal is about to conclude, the rural community is looking for dividends of peace – which only comes from development.”

The team also discovered how the risk of climate change in rural Nepal has implications beyond the country. British Council Director to Nepal Dr. Robert Monro said, “This is a means to an end. Let us be clear the end is to save Himalayas not just for Nepal but for the world. We need to save the unique people of Nepal in the remote areas. We need to save the fresh water supply.”

The Ganga-Brahmaputra-Meghna river system is shared between Nepal, Bangladesh and India and supports the largest number of the world’s poor in one region. For example, major rivers of Nepal (upper riparian) contribute almost 40% of the total flow of the Ganges which supplies water to India and Bangladesh. The river system serves fresh water for almost 1.2 billion people and has huge hydropower potential.

In 2008, the vulnerability of the river system was tragically highlighted. Due to reported mismanagement, a flood in Koshi affected the livelihood of 50,000 people in Nepal and a staggering 3.5 million people in Bihar, India with an official death of 240 people.

Apa Sherpa closed the event by thanking all the supporters and the people on the trail for opening their homes to the team. He reflected on the fact that when he was climbing Mt. Everest for the 21st time, he saw the thinning of glaciers in the Himalayas. However, it was only during this trip that he realized what impact this is having on human lives and development.

The trip also showed him that Nepal needs to take responsibility for climate change: “Even though education, energy infrastructure, and road access is improving in rural Nepal, we need to do more. We cannot only blame the polluting countries; Nepal needs to take initiatives on its own.”

Electrifying revelations

APR 25 – Speaking on a programme titled Nepal Sandarbha, which aired on April 17 on BBC Radio, journalist and social worker Rabindra Mishra asked Chief Secretary Lila Mani Poudel about one of the most pressing issues related to Nepal’s future energy market, “the corruption within the Nepal Electricity Authority (NEA), one of the biggest institutions when it comes to pubic finance and cash flow.”
One must congratulate the chief secretary for coming out explicitly on issues within the NEA. He said he had left the board because of a lack of experience in primary energy issues and a lack of time. The reason was a bit surprising, especially the lack of experience part, because his answers to Mishra’s questions spoke volumes of his knowledge of the sector. So the question remains if it was a personality clash with the current Energy Minister Umakanta Jha or rather the minister’s new strategy to have a few new faces sitting on the eight-member NEA board.
The interview touched upon such a sensitive topic as corruption within the NEA, and mentioned several areas where one can get kickbacks, the first area being procurement of transformers. Transformers using aluminium wire were found to have been used rather than those with copper wire. Since aluminium is cheaper than copper, procurement details are important to see who were involved in this case, which is currently seating with the Commission for the Investigation of Abuse of Authority (CIAA). According to the chief secretary, this could pose to be one of the biggest scandals in Nepal’s corruption history. A big layer of the NEA will be exposed if this case is investigated seriously. The risk of compromised transformers is immense as Nepal is moving from smaller energy systems (peak system loads below 1,000 MW) to larger energy systems. With the commissioning of more energy projects which will be integrated into the national grid, a poorly designed transformer can create malicious and accidental threats to the whole transmission system.
The second issue the interview led to was theft, which accounts for a major chunk of the losses in the NEA. Why was the NEA administration less willing to tackle the issue of energy theft until the chief secretary joined the board, despite its repeated pledges to reduce losses in its annual reports? Why has electricity supply not been shut down in areas from where there is maximum stealing? This is an area where the new board has to be very vigilant.
The third area that the interview covered was the massive corruption surrounding the transfer of employees. What could be the most sought after areas after procurement? The chief secretary mentioned that meritocracy was something he tried to introduce into the transfer policy. Priority has been given to public notice, and the track record of the person has to be well analysed for performance measurements. This policy which is in limbo right now has to be continued by the current board. The fourth area where there is corruption is hiring of consultants for projects.
The chief secretary was also clear on his position on foreign investment, contrary to media reports which said he was against it. He challenged the media to do a better study of energy issues before putting down their reports on paper. Since the source of such information lies within the bureaucracy or the private sector, there could also be a huge possibility of playing with media reporting to serve one’s interest. So unless the Right to Information Act is enforced and the presence of civil society at such negotiations is ensured, these shady deals will continue.
The chief secretary spoke at length on the area of exchange rates and its implication on energy development in Nepal. Let us assume that the NEA takes a loan in foreign currency to develop a project or signs a PPA in foreign currency at the exchange rate of Rs 87 per $1. If the dollar appreciates to, say, Rs 120, and if the NEA has to absorb all that risk, it is not a good deal. It depletes the government’s foreign currency reserves more quickly. Since the volatility of international markets affects the loan, the clause on who absorbs the risk of currency volatility is very important when business is being done in foreign currencies.
In many cases, the volatility of exchange rates can prevent projects from being completed. According to the chief secretary, the NEA, which has already incurred huge losses, has no clear strategy to absorb this sort of exchange rate volatility risk, and the lure of kickbacks could lead to signing hasty deals. So unless both parties agree to bear some risk, the NEA will bleed further. This is the lesson learned from Khimti and Bhote Koshi, both of which can be deemed to be “weak negotiations.” As per the secretary, Khimti supplies about eight percent of the total electricity in the grid and takes around 12 percent of the NEA’s revenue. The Bhote Koshi  supplies five percent of the electricity and takes seven percent of the NEA’s revenue. They are amazing deals from the point of view of the company, investors and shareholders; but from the national, governmental, institutional and finally, the taxpayers’ point of view, they are disasters. Who is accountable for such energy deals?
The most important part of the interview is the chief secretary’s willingness to be accountable for all the decisions that were made under his purview, if they are deemed to be not in the national, institutional or business interest. There is much to be discussed about the energy future of this country and the role of NEA, and the media has a crucial role to play. In the meantime, what is worth admiring is the statement from the chief secretary, “If I did something not to legal requirement, I can also be prosecuted.” He also challenged the NEA to release all documents that note the key decisions and signatories. Perhaps he was also hinting at the need for careful scrutiny of all the decisions being made on the NEA board and other departments of related ministries. But if the chief secretary, the man with the utmost power in the NEA, gives up, who is going to step forward to reform the NEA?

Reform Nepal Electricity Authority

MAY 11 – Bureaucracy is often referred to as “the permanent government.” With frequently changing governments formed by politicians, bureaucrats in Nepal not only have experience working under various politicians but also under regime changes. Acclimatising to a new political climate and new political personalities has become the norm for Nepali bureaucrats. Thus, their capacity to adapt and understand the volatile governance system and their weak/strong affiliation with a party gives them enormous ‘soft power’ to influence incoming governments—either positively or negatively. My conversation with Chief Secretary Lilamani Poudel at his office dealt with some of these elements and the role of the bureaucracy in the governance of the energy sector, and in turn, its impact on the Nepali economy.
Obviously, as an entrepreneur, I had some institutional interest in the meeting which was to give a formal memo requesting the secretary to bring in wind power policies as soon as possible. The aim of such a policy is to allow Nepal to move towards energy diversification through renewable sources and reduce its imports of fossil fuels which costs almost one-sixth of the total annual budget of Nepal. Inevitably, our discussion headed to energy issues of Nepal and its overall impact on the economy. Despite preferential treatment for Nepali goods in many countries, can our goods really compete in global markets? Specially, given the irregular power supply and the need for many industries to rely on expensive diesel or coal (coal in Nepal is almost two and half times more expensive due to logistic costs). For example, tea farmers in Ilam can sell their tea for Rs 200 per kilo if tea is processed using electricity supplied from Nepal Electricity Authority (NEA). But the current retail price is Rs 250 per kilo due to the addition of diesel cost in the marginal cost of production of each kilogram of tea. To make Nepali goods more cost-competitive affordable energy is required to reduce the marginal cost of production which reduces prices for consumers, who to a larger extent bear the increased cost of production.
This is true for other small, medium or large enterprises that tend to either rely on diesel or expensive coal as well. The chief secretary clearly stated, “The cost of power from diesel generation is much more than Rs 35 per unit. If we take the fluctuation of diesel prices and depreciation of the diesel plant into account the cost can go higher than Rs 45. If, say, that diesel plant is connected to the grid, which has about 25 percent loss, the price can go even higher up.” He further explained, “In the proposal to establish a diesel plant in Hetauda, the rationale was based on a master thesis which was used to persuade then Prime Minister Baburam Bhattarai.” He had to cancel the proposal as its economic logic was astounding. The chief secretary clarified stating, “There is a lack of economists in politics, bureaucracy, as well as business houses in Nepal.” This impacts sound economic analysis; therefore, there is a high possibility of twisting facts to serve ones interest in a project.
The chief secretary also spoke of the institutional structure of the NEA. According to him, there are around 3,000 political recruitments in the NEA who are not properly engaged and often influence it negatively. Now, they are demanding permanent positions within the authority. Since this problem was created by the political parties, it is their responsibility to forge consensus on how to deal with this issue. The solution does not mean large-scale lay-offs, but with the commissioning of more hydro power, they need to be engaged more constructively in new jobs that will come about. Furthermore, if anyone goes through the NEA’s 2011 Annual Report, page 8 and 9 clearly shows 10 chief executives and 17 directors and department chiefs in the NEA. Hierarchical reform is vital in namely three areas: generation, transmission and distribution. Similarly, steps should be taken to ensure gender balance, the presence of an economist, a leader from civil society, the business sector and a media personality as a spokesperson in the eight seats of the NEA board. This can help make some performance-enhancing changes in the functioning of the authority. The minutes of NEA board meetings, which show which board member introduced/voted for what agenda and authorised what sort of deals, should be made publicly available, along with the bidding documents of all projects.
Energy is not merely a commodity that project developers sell to the NEA but also a catalyst for economic and industrial growth. Since energy issues affect the price of consumer goods, inflation and economic growth, initiating some reform within the authority can assist in easily achieving these economic objectives. The chief secretary perhaps agrees with the fact that 21st century management and institutional strategy can prepare NEA for the potential investment that may come if politics were to be more stable. Time has come about to put the house in order as Nepal prepares to welcome its neighbors in a sector that can be a game changer for Nepal’s economy.