Call for more private sectors’ investment alternative energy promotion

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The government giving continuity to its priority on the alternative energy as in previous years has maintained the similar ritual also for the fiscal year 2017-18. Through the annual budget, the government has allocated a total budget of Rs 5 billion for this year, for the promotion of alternative energy run under Alternative Energy Promotion Center (AEPC), the main government body working in the sector.

This year, the government is launching ‘Smoke Free Lighted House’ programme. The programme has targeted to make available solar power for the poor, disadvantaged, Mushahars, Haliya, Doms, Dalits and other marginalized communities. These people will be given subsidies to construct biogas plant and will be provided with improved iron oven.

Likewise, the budget also talks on installing solar pumps for irrigation purpose. Installation of renewable energy at the birthing centers, snake bite treatment centers, health centers and government or community hospitals are among the government’s priority for this year.

For the last few years, the government has been focusing to harness the solar power, biogas and micro hydropower. In the annual budget last year, the government had come up with the programme named ‘Every House Energy House’ targeting to expand it as a campaign to reduce dependency on traditional and imported energy and to increase the access to renewable energy. Installation of Domestic Solar Electricity, Electricity Generation from Micro and Small Hydropower, Construction of Bio-gas Plant for Household Use and Improved Stove were given priority.

Under ‘Every House Energy House’ campaign, the government had run programmes such as lights for education, solar pumping system for farmer’s irrigation, one farmer one biogas plant and rooftop solar programs. Along with increasing the subsidies for the programme, the government had allocated Rs 6.10 billion for subsidy and promotion of renewable energy. The programme had called on for setting 100,000 biogas plants, 90,000 improved ovens and solar lights on 100,000 households in 2016-17.

This year’s budget has remained silent largely on bringing in the concrete programmes in renewable energy. AEPC Executive Director Ram Prasad Dhital however claimed that the government had continued priority to solar, biogas and micro hydropower related programmes in this fiscal year too. According to him, the reduction in the government budget for the renewable energy promotion is due to shortfall of the fund support by the donor countries– Norway and Denmark—in particular, with the project being terminated by the last year end. These donor countries had been helping Nepal run projects in renewable energy for the last five years. They had jointly supported Nepal with Rs 16 billion in total over the period. At the time, the government has started seeking support of Department for International Development (DFID), a United Kingdom government department responsible for administering overseas aid, for promoting alternative energy related programmes, as per Dhital.

Of Rs 5 billion allocated for alternative energy promotion this year, Rs 4 billion has been separated for solar, biogas and micro hydropower. Dhital said about 80 percent (Rs. 3.20 billion) will directly go to the hand of people. The rest will be spent on quality assurance, training and administrative purpose.

With the donor countries taking out their hands, the government has also reduced the budget by Rs 1 billion, though the government has assured that it would compensate the reduced budget by providing technical assistance needed in the sector. The government has targeted to operate the programme in all 75 districts across the country. The areas that are deprived of the electricity facility are likely to be given more priority.

This year, under environment protection programme, the government has given continuity to the programmes being implemented to develop environment as the foundation of sustainable development including the promotion of the solar power, biogas and micro hydropower. For the purpose, the government has allocated Rs 7.65 billion.

Last year, the government came up with various loan and subsidy programmes in its Renewable Energy Subsidy Policy 2016 with the aim of providing clean, reliable and accessible energy using renewable and alternative energy technologies.

According to the policy, the government would offer the cash subsidy of Rs 20,000 for the installation of solar energy system with the capacity of 200 watts or above. For the households that wish to install a solar energy system with the capacity of 500 watts or above, the government would offer loan without collateral and an exemption of interest by up to 75 percent.

The policy has targeted to mobilize the subsidies amount both in rural and urban areas will be mobilised through the Central Renewable Energy Fund administered by the AEPC. The policy has also envisioned reducing the overall subsidy to 40 percent from the existing 80 percent provided by the government, and encouraging private sector’s investment and soft loans from the banking sector, along with resource mobilisation from the community, to fulfil the shortfall in developing projects. According to the new policy, 30 percent of the cost will be provided as soft loan while the remaining 30 percent will be mobilised by the communities or private sector. Though the maximum participation of the private sectors and the reduction on dependency over the donors’ fund could much result in the most fruitful outcomes in achieving the goal, it is far from reality as of now.

AEPC Executive Director Dhital blamed the poor outcomes of the renewable energy related programmes to the lack of capacity within many of the partner organisations, including the AEPC. “Another challenge has been the irregularities and mismanagement, especially in the private sector in matters related to procurement of energy technologies and appliances at local level including cumbersome subsidy administration at the centre.”