ADB_book_18 April.qxp - Himalayan Document Centre - icimod

indoor air quality, with a positive impact on humanhealth.Having micro-hydro or solar electricity isimportant for rural villagers. It provides light forstudents to study, and powers TVs and radios thatbring news and can be an important means of familyentertainment. Substituting traditional biomass fuelswith electricity has a number of advantages: (i)Improvement in indoor air quality by reducing oreliminating smoke, (ii) Reducing pressure on forestand saving time spent collecting firewood, and (iii)Electric light allows household families additionalworking time.Where electricity and biogas are not practical,technologies such as improved cooking stoves canbe promoted in rural areas. This will not onlyincrease efficiency and reduce firewood consumption,but also reduce indoor air pollution and lead topositive health impacts.Energy Policy and PlanThe Tenth Plan (2002–2007), HydropowerDevelopment Policy 2001, Renewable EnergyPerspective Plan of Nepal 2000–2020, PerspectiveEnergy Plan 1991–2017, Water Resources Act 1992,and Electricity Act 1992 are the main policy, planning,and legislative documents guiding the energy sectorin Nepal. These policies aim to attract local andforeign private developers to the hydropower sector.The Tenth Plan (NPC 2002) emphasizes ruralelectrification and has a target to increase nationalelectricity coverage from 40% to 55% over the planperiod. The major strategies to be followed arepromoting private sector participation, institutionalreforms, establishment of a Power DevelopmentFund, initiating an explicit subsidy policy for gridbasedrural electrification, and creation of anindependent regulatory body in the power sector.The highlights are summarized below.(i) No license is required to generatehydropower up to 1 MW capacity, butprojects must be registered with the DistrictWater Resources Committee, and theDepartment of Electricity Development hasto be informed.(ii) A 35-year license will be provided forhydropower production for domesticconsumption; 30 years for export.(iii) Royalty rates will be based on projectcapacity and be higher for export-orientedprojects than for domestic uses.(iv) Institutional reforms will allow operating thegeneration, transmission, and distributionsystems separately through autonomouspublic institutions, local bodies, and theprivate sector.(v) A rural electrification fund to promote anddevelop rural electrification will beestablished, using a portion of royaltiesreceived from hydropower projects.(vi) Various subsidy and incentive schemes willbe established for alternative energydevelopment, including micro-hydro, biogasplants, and solar-based electricity.The Way ForwardEnergy affects livelihood, wellbeing, and developmentin multiple ways. As population increases andthe economy expands, people need energy inincreasing amounts. How the present and futureenergy needs are met affects not only theenvironment but also overall development. Energypolicy and strategy are linked with sustainabledevelopment approaches and environmentalstrategies.The industrial world has already shown that itstraditional mode of industrial development andenergy consumption is not sustainable. Indiscriminateuse of fossil fuel is leading to globalenvironmental threats such as global warming andclimate change. Industrialized nations need tochange current practices to those using energy fromcleaner and sustainable sources, and moreefficiently than in the past. This shift will be difficult,costly, and painful for them as their currentindustries, economies, and lifestyle depend heavilyon the use of fossil fuels.Nepal is at a low level of industrialization. Thisprovides an opportunity to learn from the alreadyindustrialized countries and to pursue a path thatutilizes cleaner energy in an efficient manner. Thisshould not be as difficult for Nepal as it would be foralready industrialized countries, as Nepal does notneed to shift from an already existing system to anew one, but to choose a more sustainable andbenign path. Nepal therefore needs to pursue anenergy policy and strategy that can supply energy forpresent and future use from sources that aredependable, affordable, safe, and environmentallysound. Nepal’s energy development should thereforebe guided by the following three basic principles.Self-reliance in Energy and Promotion ofIndigenous Renewable SourcesA massive promotion of indigenous renewableenergy sources will be necessary. Nepal’s indigenousenergy resources—hydro, biomass, solar, andwind—are renewable, and their combined potentialexceeds current demand as well as demand for theforeseeable future. In theory, therefore, energyshortages should not be a problem for Nepal, andChapter 6: Energy Resources77