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Nepal’s hydropower sector has started witnessing an undeclared power generation holiday with around 900 MW of electricity likely to go into wastage this rainy season.

The Independent Power Producers’ Association Nepal (IPPAN) has made a forecast that the private sector will be facing a loss of the aforementioned amount of electricity during the peak production season this year. Speaking at a program organised by the Hydroelectricity Investment and Development Company Limited (HIDCL) on Sunday, IPPAN President Mohan Kumar Dangi said delay in construction of transmission lines has caused heavy losses to the power producers almost every year.

As per the government records, the country’s installed hydropower capacity has reached 4,300 MW. Similarly, the hydropower plants with a capacity of 5,700 MW are under construction. “Although the sector now has investment of around Rs 68 billion, more focus has been made in power production than construction of related infrastructure for utilization,” said Dangi.

Niranjan Phuyal, chief executive officer of NRN Infrastructure and Development Limited, said the infrastructure of hydropower has been facing challenges of capital injection as the sector is mostly relying on equity investment rather than the idea of capital mix. “As a result, the hydropower companies have been witnessing a production holiday with the concerned authority asking them to cut down their electricity generation during the peak production time,” said Phuyal.

After being unable to evacuate all the produced electricity by the hydropower plants, Nepal Electricity Authority (NEA) is reported to have been giving priority to its own production plants and its subsidiary companies. The NEA is found to have asked private sector producers to produce electricity only based on their consumption.

The NEA has started instructing private sector hydropower projects to reduce production, citing the fact that transmission lines are not ready, substation capacity is not sufficient, problems in the grid and electricity supplied is in excess to demand. The NEA has been compelling mainly those hydropower projects that are in 'contingency' to reduce production as needed.

In the past few years, Nepal has transformed to energy sufficiency from an energy deficit country. The government has planned to generate a total of 28,500 MW of electricity by 2035. Out of the generated electricity, 13,500 MW has been aimed for domestic consumption, while the remaining 15,000 MW will be exported to neighboring countries.

Prajesh Bikram Thapa, chief executive officer of the HIDCL, said an investment of around Rs 7 trillion is needed to meet the government target. “For this purpose, there must be diversification in financial instruments, development of risk sharing mechanisms and proper institutional setup,” Thapa said.