I. IDENTIFICATION
The United Mission to Nepal (UMN), an international NGO,
coordinated the creation of a technical institute with the
government of Nepal. The Butwal Technical Institute (BTI)
manufactures and installs hydroelectrical systems in rural Nepal,
providing an appropriate, environmentally friendly, electrification
source. One of the unmet goals of this project was to reduce
deforestation. However, the project does offset the air and noise
pollution that might otherwise have been created with diesel or
gasoline generators. Electricity has improved the welfare of those
people and communities with access to it.
2. Description
The UMN is a Christian Protestant organization formed in 1954. It
now represents churches from about twenty countries. The UMN has
worked in health, education, engineering, industry, and rural
development.
The UMN, with the cooperation of the government of Nepal, created
several private companies. In the early 1960s UMN located a
technical institute at Butwal (BTI). They formed the Butwal Power
Company (BPC) to construct a 1 MW hydro-electrical plant for the Institute and the
surrounding area. Named the Tinau Khola plant, it was completed by
the late 1970s. The experience convinced UMN that hydropower was worth further involvement.
Hydropower was chosen because it was the most cost-effective
option. Grid extension is prohibitively expensive. Remaining
options include gas or diesel generators, photovoltaics (solar
energy), wind energy, or hydroelectricity. Renewable-based
electricity is usually much more reliable than gas and diesel
generators, eliminates the need to continually purchase and deliver
fuel, and eliminates the pollution associated with gas and diesel
generators.
Transport of goods to and from villages is severely restricted by
the mountainous terrain and lack of roads. The villages have
learned to be as self-sufficient as possible. Their electrical
systems need to be similarly independent if they are to be
appropriate and sustainable.
Nepal is blessed with many streams. The larger ones have sufficient
flow to power a turbine year-round. The smaller streams can be used
for 6-9 months per year.{1} The theoretical hydroelectric potential of Nepal is
83,000 MW. Of this, to date approximately 42,000 MW has been
determined to be economically feasible.{2} Nepal
currently has a total installed electrical production capacity
of 282 MW, 235 MW of that from hydropower.{3}
Many villages already had extensive hand-
built irrigation systems that diverted water from nearby mountain
streams. Thus the Nepalese were already experienced and comfortable
with the concept of using water and with the creation of simple
civil works to divert it.
BTI began designing micro-hydro (5-15 kW) turbines and
associated hardware for farmers in the 1970s. BTI decided to sell
complete water-powered grain mills to farmers for the establishment
of new milling businesses. The systems were deliberately designed
to be produced in Nepal, requiring as little importation as
possible.
A Nepalese grain mill typically consists of a primemover (either a
diesel engine or a water turbine) and three milling machines, a
flour-grinder, rice-huller, and oil-expeller to produce cooking
oil. BTI was able to produce the turbine, penstock, and belt-
transmission components, but the grinder, huller and expeller were
purchased ready-made from India. The design was kept as simple as
possible to allow untrained farmers in remote areas to operate and
maintain them.
The turbine type used is called a crossflow. Crossflows are popular
in developing countries because they are easier to manufacture than
other types, requiring only cutting, welding, and grinding. Other
turbines require more complicated, precise placement of the
components to work properly.
The total cost of a water-powered mill ranges from $1,400 to $8,000
depending on size, location, physical terrain and equipment
quality.{4} The
Agricultural Development Bank of Nepal provided subsidized
loans that allowed the farmers to finance their systems.
If a farmer was interested in a water powered mill a survey team
would visit the site and prepare a preliminary design. The design
would be costed out. The farmer would then apply for a loan. If his
collateral and credit eligibility were in order, the bank would
issue a "coupon" to the company, with the bank guaranteeing payment
to the value of the coupon. This avoided the misuse of cash, a
frequent problem in Nepal.{5} Once a loan was approved, the mill would be
assembled and tested. The farmer arranged for transportation,
usually by truck and porters. The farmer also transported all
necessary materials (cement, sand, gravel, rocks) for the
construction of the mill foundation, forebay, and penstock support
blocks. If an existing irrigation canal was not available, the
farmer would construct a canal to bring water from the stream to
the forebay.
Once this was in place, an installation team would build the
foundations, install the equipment, and provide basic training to
the farmer.
One such system was installed in Khaireni. Khaireni is located in
the midlands, approximately 190 km west of Kathmandu, the nation's
capitol, and has approximately 100 households, shops, and offices.
While electrical production is less profitable than milling, it
provides the owner with a constant source of income, whereas
milling is seasonal.
The crossflow turbine powers an 8 kW, 220 V synchronous generator.
"Electricity has been provided regularly for five hours each
evening (aside from periods of required maintenance) since July
1983."{6} Electricity is provided to 62 homes, businesses, and
offices.{7} Users desire electricity during early morning pre-dawn
hours but the mill owner refuses to provide it.
The mill is operated by a paid employee. During the loan repayment
period, the ADBN collected monthly fees for electricity from the
users, but this task is now performed by a friend of the owner.
When there have been conflicts between the users and the mill
owner, the ADBN manager often assumes the role of arbitrator.
Benefits:
Hydroelectricity provides an environmental benefit chiefly by
offsetting the use of gas or diesel generators which are not only
less reliable but create air and noise pollution.
In rural Nepal, electricity is chiefly used for radios and
lighting. Although electricity costs more than kerosene, it
provides superior quality light, safer use, convenience, and
cleanliness. The people report the benefits of electrification to
be greater personal satisfaction, enhanced local prestige, improved
study habits of children, and less crime and littering.
3. Related Cases Key
words Keyword
Clusters 4.
Draft Author: Gwendolyn S. Andersen (August, 1996)
II. LEGAL Cluster
Nepal has several pieces of legislation protecting its water
resources. The one most relevant to this program is The Canal,
Electricity and Related WaterResources Act of 1967. The act
explicitly prohibits any activity which adverselyeffects the
environment during the production of electric power or utilization
of water resources.{8}
6. Forum and Scope: NEPAL,
UNILATeral
7. Decision Breadth: 1 (NEPAL)
8. Legal Standing: NGO
III. GEOGRAPHIC Cluster
9. Geographic Locations
10. Sub-National Factors: no
11. Type of Habitat: Tropical [TROP]
IV. TRADE Cluster
This program "imported" technical expertise. Two European
technicians spentapproximately 5 man-years developing an
appropriate turbine.
Foreign technical assistance was also used to develop a loadcontroller.Electric loads vary throughout the day, the
week, and the year. Increases in load are increases in resistance,
and slow generators down. Decreases in load cause generators to
speed up. If the load drops too low or disappears, a generator can
run so quickly that it runs out of control and eventually flies
apart. "Electric only" turbines needed a hydraulic governor to
maintain a steady load on the generator in spite of fluctuations in
load. Importedhydraulic governors were too expensive. When one was
eventually produced, it opened up the possibility of electrical
installations with capacities up to 50 kW.
Although it used foreign technical assistance, UMN believed
developing indigenous capability was preferable to relying upon
overseas consultants. UMN therefore, in partnership with the
government, established several local companies to supply
engineering and industrial services and training.
The basic hardware issue was to design a reliable turbine that
could bemanufactured in Nepal, with locally available components.
This was important for affordability, sustainability, and job
creation. It was critically importantthat untrained farmers in
remote villages be able to operate and maintain the turbines.
Therefore, very little international trade resulted from
thisprogram. However, European bearings were initially imported.
Suitable Indianbearings were eventually substituted.
While rural electrification has increased rural production, it is
unclear whether it has increased exports. "Approximately 49 percent
of the respondents at Khaireni noted...increased working hours in
the bazaar's one large dhaka (cloth) factory that employs a
considerable number of local persons."{9} Furthermore,
nearly 20 percent of the Khaireni survey respondents report an
increase in income. Given the transportation difficulties, it is
unlikely that the factory is able to sell the cloth, directly or
indirectly, outside
the country.
12. Type of Measure Subsidy [SUBSIDY]
The provision of loans at below commercial
ratesrepresented a substantial
subsidy. Actual cost of loans to rural customers is generally much
higher than commercial rates. This is because the costs involved
(credit checks,administrative costs, collection costs) are
significantly higher as a percentageof the loan amount. In fact,
"...average programs will have to charge around 36 to 48 percent in
annual interest...to breakeven."{11}
However, there was no study done to
determine whether farmers would purchase the systemswithout the
subsidies, so it is not possible to know their actual impact.
13. Direct vs. Indirect Impacts: INDirect
14. Relation of Trade Measure to Resource Impact none
15. Trade Product Identification: Bearings
Fees are essentially based upon an honor system, where consumers
pay monthlyaccording to the number and type of appliances they
use. 17. Degree of Competitive
Impact: none
18. Industry Sector: FABMET, EMACH
19. Exporters and Importers: NEPAL, ENGLAND, INDIA
V. ENVIRONMENT Cluster
One of the chief uses for firewood in Nepal is for cooking. A low
wattage cooker has been developed. However, electrical energy costs
more to theend-user
than collecting firewood. Furthermore,
the bijulidekchi still costs about $30 per pot and requires a
change in cooking style.{15} For electricity to displace fuel wood, one of
two things must take place. Either the cost ofelectricity must drop
relative to the cost of firewood (for example, bysubsidizing
electricity or the electric cookers) or the per capita incomes
of the rural population must rise so that the convenience of
electricity becomes the dominating factor in decision making.
Another source of deforestation is a result of population
pressures. The ever growing population (present rate of growth is
2.6percent{16}) has increasedpressure to cultivate more lands for by
felling forests. Hydropower is notdirectly effective against
population growth. Indirectly, electricity could spur development,
reducing poverty and the need to use natural resources in an
unsustainable fashion in order to survive. Unfortunately, there is
a dearth of examples of income-generating activities made possible
byelectricity.
If or when electricity reduces deforestation by reducing the use of
fuelwood for cooking and/or by alleviating poverty, the
accompanying problems oflandslides, erosion, sediment transport
into the hydroelectrical system,decreasing yield of forest products
(ex. construction timber, wild fruits and vegetables, resins and
saps, nuts, and extracts for medicines) and loss of biodiversity
would also be reduced.{17}
-Air pollution [POLA]
-Global warming [GWARM]
-Consequences of hydroelectrification [BIODIV]
21. Number of Species NA
22. Resource Impact
Because the hydroelectrification plants are small, dams and
therefore floodingare usually not necessary. Even when dams are
used, the flooding is not extensiveand does not require social
relocation. In some locations however, the damsnecessary would be
so high that construction of fish ladders would not befeasible.
This would inhibit the migration of certain fish species on
thosewaterways.
23. Urgency of Problem: low
24. Substitutes Other options included:
VI. OTHER Factors 25.
Culture
Culture and deforestation:
Culture and electricity:
The economic impact of electrification would surely be greater if
the electricitywere offered throughout the day, instead of only
five hours in the evening.
26. Trans-Boundary Issues NA
27. Human Rights NA
28. Relevant Literature Economic and Social
Commission for Asia and the Pacific. Towards
an Environmentally Sound and Sustainable Development of Water
Resources in Asia and the Pacific. Water Resource Series No.
71. New York: United Nations, 1992 Jantzen, Daniel E. and
Koirala, Kiran. 1989 Micro-hydropower in Nepal.
A study for AGKED, Stuttgart, Germany.
Nafziger, Dale Lee. "Impacts and Implications of Rural
ElectrificationIdeology in Nepal's Domestic Sector." Thesis.
Cornell University, 1990 Inversin, Allen R. New Designs for
Rural Electrification: Private-SectorExperiences in Nepal.
Washington, D.C.: National Rural Electric CooperativeAssociation,
1994 Glossary FOOTNOTES********************************
CASE NUMBER: 355
CASE MNEMONIC: NEPPOWER
CASE NAME: Nepal Hydro-Power
1. The Issue
Although one of the development goals of the UMN was to reduce
deforestation, in practice, electrification has not yet achieved
this goal. Deforestation is the result of population pressure,
which electricity does not directly affect, and the use of fuelwood
for cooking. Fuelwood costs less than electricity and is therefore
preferred for cooking.
XCalak; GEYSER;THREEDAM; HUNGARY; MEKONG; COLORADO
GEYSER case
ATATURK case
COLORADO case
THREEDAM case
MEKONG case
HUNGARY case
5. Discourse and Status AGReement and COMPlete.
The United Mission to Nepal is an NGO, but the Butwal Technical
Institute and the Butwal Power Company are companies set up for
development purposes. These private, limited companies were
organized under the Companies Act. Shares are held by the UMN,
government departments and semi-government agencies.This allowed a
development agency and the government to work together in
a way that encouraged efficiency and businesslike operation. The
company board, representing each shareholder, set company policy
and hired a General Manager.
Mountainous with a large number of streams and
rivers.
a. Geographic Domain: Asia [ASIA]
b. Geographic Site: South Asia [SASIA]
c. Geographic Impact: NEPAL
The climate varies from subtropical summers and mild winters in
south to cool summers and severe winters in north. Most of Nepal
receives monsoonal rains. Nepal contains three distinct
geographical zones. The southern lowland is called the Terai and is
a mixture of forested and cultivated land. The central section has
mid-altitude hills and mountains. The Himalayas run acrossthe
northern section.
Of great importance to the success of this program was an alliance
formed with the Agriculture Development Bank of Nepal (ADBN) The
ADBN is asemi-governmental organization with offices spread across
Nepal. The bank agreed to promote water powered mills to farmers
and finance mill investments on attractive terms. These terms
varied but typically a farmer could finance 80% of the cost of the
mill over seven years with slightly less than commercialinterest
rates. The bank accepted land and gold ascollateral.{10}
The presence of the subsidy made it easier to purchase a system,
and may have increased the number of systems bought. This in turn
may have resulted in the importation of greater numbers of
bearings.
a. Directly Related: NO
b. Indirectly Related: YES EQUIPment
c. Not Related: NO d. Process Related: NO
16. Economic Data
Due to their expense, the Khaireni electrical system does not
use meters to determine how much electricity a household uses and
to charge accordingly.Initially, seven circuit breakers were used
to both protect the system andprovide a form of load control.
However, when they wore out they were also too expensive to
replace. Now, solid-state current-limiting devices are used,serving
groups of three or four households. While an individual household
can use more than its share of electricity, the amount used by the
group at any one time is limited by the devices.Device Monthly Charge (Rs){12} 15 watt
incandescent bulb 10 40 watt incandescent
bulb 16 20 watt fluorescent
light 18 40 watt fluorescent
light 20 radio 5 16
BTI initially imported bearings from England but then substituted
them forbearings from India.
20. Environmental Problem Type
-Deforestation [DEFOR]
One of the goals of the UMN was to reduce deforestation.
Deforestation is the greatest environmental problem Nepal faces.
The UN, in its report, "Towardsan Environmentally Sound and
Sustainable Development of Water Resources in
Asia and the Pacific" states that hydropower could serve as an
alternative to fuelwood.{13} Over 75 percent of Nepal's total energy
requirements are being supplied with fuelwood.{14}In practice,
electrification has not yet been effective.
Hydroelectricity provides an environmental benefit chiefly by
offsetting the use of gas or diesel generators which are not only
less reliable but create air and noise pollution and contribute to
global warming.
If electricity provision eventually reduces deforestation, more
forests willremain to serve as a carbon sink, ameliorating global
warming. Also, bydisplacing the use of firewood, electricity
provision would reduce theaccompanying emissions of carbon dioxide,
a greenhouse gas.
However, there is a potential for loss of fauna and flora if too
much water is diverted from natural waterways or if the water flow
is obstructed to such an extent that the lifecycle of local fish is
affected. Where dams arebuilt, the creation of an artificial body
for water storage could encourage the breeding of certain disease-
carrying insects.
The Terai is the home of numerous subtropical species, including
water buffaloes, hyenas, leopards, deer, and tigers. The Himalayas
also have diverse plant and animal species.
Many villages already had extensive hand-built irrigation
systems thatdiverted water from nearby mountain streams to village
fields. There wastherefore little additional environmental impact
resulting; water was simply used first for electrical generation
and then for irrigation.
Conservation and the judicious use of natural resources are deeply
rooted in Nepalese culture, tradition and religion. Bathing in
rivers, worshipping and planting trees are examples of people's
positive attitudes towardsmaintaining a healthy environment.
However, in recent years the ever increasingdemands by a growing
population have imposed immense pressure on the naturalresources,
particularly land, forests, air and water...People driven
by the necessity to survive, have foregone the traditional way of
life as
regards resource conservation and use.{18}
A survey at Khaireni conducted by Dale Lee Nafziger for his thesis
at CornellUniversity found that the most dominant response to an
open-ended questionregarding changes attributable to
electrification was of "achievement and/orpersonal satisfaction."
With more specific questions, almost 82 percent of all electricity
users indicated change in local prestige as a result of
electrification. Over 60 percent noted improvement in children's
study habits.Almost all respondents indicated greater cleanliness.
Due to electric lighting,people are more hesitant to litter and
pollute. Respondents also reported fewer petty crimes than before
electrification. Finally, outmigration from Khaireni was
reduced.
Jantzen, Daniel E. "Energy for Sustainable Village-Based
Development: Two Case-Studies From Nepal."
{1} Jantzen, Daniel E. "Energy for
SustainableVillage-Based
Development: Two Case-Studies From Nepal." p. 3.
[Return]
{2} Economic and Social Commission for Asia and
the Pacific. Towards an Environmentally Sound and Sustainable
Development of Water Resources in Asia and the Pacific. Water
Resource Series No. 71. New York: United Nations, 1992 p. 157.
[Return]
{3}
Heidarian,Jamshid, and Gary Wu. Power Sector Statistics
for Developing Countries, 1987-1991. World Bank, 1994, p. 233.
[Return]
{4} Jantzen, Daniel E. and Koirala, Kiran. 1989
Micro-hydropower in Nepal. A study for AGKED, Stuttgart,
Germany.[Return]
{5} Jantzen, p. 6. [Return]
{6} Nafziger,
Dale Lee. "Impacts and Implications of Rural
Electrification Ideology in Nepal's Domestic Sector." Thesis.
Cornell University, 1990, p. 35. [Return]
{7} Nafziger, p. 36. [Return]
{8} United
Nations, p. 165.
[Return]
{9}
Nafziger, p. 243. [Return]
{10}Jantzen, p. 6. [Return]
{11} Holt, Sharon L. "The Village Bank Methodology:
Performance and Prospects." The New World of Micro-enterprise
Finance: Building Healthy Financial Institutions for the Poor.
Ed. Maria Otero and Elisabeth Rhyne. KumarianPress, 1994. p.171. [Return]
{12} Nafziger, p. 63. [Return]
{13} UnitedNations,
1992.p. 157. [Return]
{14} UnitedNations, p. 159. [Return]
{15} Inversin,Allen R. New Designs for Rural
Electrification: Private-Sector Experiences in Nepal.
Washington, D.C.: National RuralElectric Cooperative Association,
1994, p. ii. [Return]
{16} UnitedNations,.p. 159. [Return]
{17} Inversin, p. 56. [Return]
{18} UnitedNations, p. 164. [Return]