“It is not energy production that will make us rich; it’s rather energy consumption” An interview with Mr. Kulman Ghising; MD of NEA

-Dheerusha Tiwari

Mr. Kulman Ghising; the person to transform ashes into light, the power fighter of the country; the person leading the nation from dark to light; the person who brought back light into the energy starved economy. There is no one such definition that can complement the works done by Mr. Ghising. “Kulman Ghising” has not remained simply a name anymore in the Nepalese society; it has been metamorphosed for leadership, heroism and devotion.

It had been a decade since the millennial had adopted their life living in dark from 2006. Little did the agrarian economy know, the power cut problem was meant to be solved by the son of a farmer. Mr. Kulman Ghising did his primary schooling from his village however, he accomplished his SLC from Kathmandu. The availability of only civil engineering in the country paved his way towards India for his Bachelors in Electrical Engineering from Regional Institute of Technology. Having said so, Mr. Kulman Ghising did not even apply in the College Placement Event in India as he was determined to put in his learning in the energy sector of Nepal itself. Mr. Kulman Ghising entered NEA in 1995 and grabbed Masters Degree from Pulchowk College of Engineering in 2002. Kulman Ghising further understood the need to integrate technical knowledge with management studies so, he joined Executive MBA at Ace Institute of Management.

The 24 years of professional experience served him well in the energy sector while in the upcoming two years, he is aspirant for further upliftment in the energy sector of the country.

Further paragraphs in the words of Mr. Kulman Ghising:

Are we the second largest country in water resources?

The measurement of water resources should be done considering several criteria such as potentiality of hydropower, volume of water, economic potentiality, per capital water consumption and per capital water availability. Among seven regions, Nepal might come after Bhutan in terms of per capital water availability. However, in contrast, if one observes generation of hydropower, China generates 4 lakh MW and India generates 1.5 lakh MW of hydropower. The ranking as of where do we stand is not easily quantifiable but we have enormous hydro potentiality keeping the demographic landscape into consideration.

It has been come into notice that the demand and supply of power for dry and supply of power for dry season and wet season is not matching and continuous supply is done from India. What is the current status and how will it be fixed?

The variation of energy demand and supply are of two kinds: seasonal variation and daily variation. During wet season, the hydro powers are run in full capacity whereas during the dry season, hydro powers are run only in one third capacity. As a result, both energy and capacity decline during the wet season. In wet season, there is an excessive leftover energy whereas in dry season, the energy is not sufficient. In context of daily variation, the load pattern of energy consumption changes with the change in time. For instance, a higher load is seen in the morning i.e. from 5 AM and reaches to peak at 6 AM. Post the time period, the load remains flat in the noon whereas it shoots up from 5 PM to 8 PM and reaches to minimal after 10 PM. In such cases, energy supply should be done depending upon the load pattern of every single hour.

Keeping the issue into consideration, Nepalese energy sector requires two kinds of projects: peaking run of the river projects and storage projects. The peaking run of the river projects will be designed such that they meet the daily variation whereas storage projects will be designed such that they meet the seasonal variation. For peaking run of the river projects, Nepal already has 300 MW to 400 MW projects. Post completion of Tamakoshi, it will add more to the project as its nature is peaking run of the river.  Similarly, in order to meet the seasonal variation, storage projects should be initiated. For instance, projects such as Kulekhani may not be used in the monsoon season and be used only in other seasons. However, it will take 7 years for many other storage projects to be completed. This will match the demand and supply variation.

Load pattern of energy sector keeps on varying. However, current status of hydropower can’t meet the variation. So, import has been used as the reservoir to meet the seasonal variation and only peak for the daily variation.

How much MW is deficit today? Will we be self-reliant any day near?

We are aiming to be self-sufficient within 3 years or so. The target has been set considering few factors. For instance, at the moment, we are importing from India. However, post the arrival of Tamakoshi, we will be doing nominal export of energy. We will also be doing energy banking. Here, we will import in dry season whereas export in the wet season. After few years, we might still require to import during the peak hours. So, considering the issue, reservoir construction will be taken forward. After the reservoir construction, we will be self-sufficient.

As of now, the demand of electricity is 1300 MW which has been met by import. We are also importing 300 to 400 MW at the peak time.

On this note, I would like to stress “Nepal won’t be rich through energy export, it will be rich through energy consumption”. Energy consumption will result in value addition through infrastructures development, initiation of startups, industrialization and helps in the economic growth through enhanced productivity. So, consume energy at the best possible way.

As we have come to know that due to the shortage of transmission line, total energy generated cannot be evacuated to the grid. In such case, how are you trying to manage this scenario?

There are problems at only few places which the team is looking into. The energy has not be spilled off excessively so, it will be solved at the soonest.

We have known you as a person who fought against load shedding, what is the next plan of NEA that will bring the same extent of change in favor of public?

It was a moment of pride for our team when we declared the end of load shedding. However, with the attainment of this achievement, we are also facing few challenges. Our further plans are to overcome these challenges. For instance, there are four major things that we are supposed to look into such as Reliability, Quality, Safety and Energy Management.

I am well aware with the problem of frequent technical interruptions resulting to power cuts. These occurrences are not load shedding but rather lack of reliable system. If we take Hong Kong as an example, the country suffers from power cuts of only 3 minutes throughout a whole year. In order to create such reliable system, I need booth time and effort. The technical interruptions are also the result of undergoing infrastructure construction. In order to reduce these problems, we need high voltage robust system. Therefore, we are trying to bring in 400 KB system, bigger substation and also create a reserve margin of at least 20 to 30% in supply compared to demand. The benefit of reserve margin is that we can substitute energy from other projects if one project gets shut down.

For quality and safety, we will be looking into the fluctuation of voltage. In terms of safety, we will be managing the naked wire which has resulted in death of many people. Similarly, for energy management, we will be conducting research that addresses concerns such as how to increase energy demand and consumption, how to acquire regional energy market, etc.

Kathmandu has now been turned into Wiremandu. Will your next projects solve these problems?

 Well, thoughtfulness to be applied but I believe it is rather “Telecom-mandu” than “Wiremandu”. The wires that belong to internet service providers and communication service providers have been tangled and piled up in the pillars with 80% of them not working. It has come to notice when a small glitch in optical fire comes up, the wires are replaced rather than repaired with the damaged wires left hanging in the same pillar. In order to manage this, we are introducing the under cabling system. However, there are certain issues related to procurement which is being looked after.

As far as I know, Nepal’s communication infrastructure is depended upon NEA. The industry has been utilizing the pillars from NEA at the minimum cost. This benefit should be utilized to maximize the value rather than taking it for granted.  

How was NEA able to profit with Rs 1 arba after being in loss for such a long period?

Now, that’s a long story. First and foremost, NEA was able to come into profit under my leadership. The profit was attained after 17 years of continuous loss. The major contribution in NEA’s profit can be attributed to the end of the power cut era. We initiated ending load shedding from urban areas. Urban consumers are the major consumers of NEA in terms of revenue. As a result of this, the unit consumption of electricity increased and the urban clients started paying for electricity bills of higher slabs. Secondly, NEA was able to reduce the loss reduction by 6% within two years which amounts to 4 and a half arba. Thirdly, the operational cost has been maintained within the targeted 10%. On the other hand, electricity sales have also been maximized. The team is also aware that the non-functionality of even one power plant will result in a huge loss to NEA. So, the power plants are being operated in an optimum capacity. Besides, financial restructuring and alternative to choose a cheaper import point have also maximized the profit in the financial statements. I believe, this will continue even in the days to come and NEA will be able to generate the incentives to further invest in hydropower sector on its own.

Twenty listed companies in NEPSE belong to Hydropower scrips are performing poorly in NEPSE and more in pipeline. Even the shares allocated to locals are being undersubscribed.  Do you think the general public has lost confidence on hydropower industry? Is corporate governance only the factor for this issue?

 I do acknowledge public’s trust towards hydropower sector is comparatively less than the other sectors. However, I do not blame the undersubscription completely towards the awareness level. In context of Chilime, public liked how well the company was and its benefits were realized so, the interest of investment arouse in the same proportion. Similarly, people are also interested in Tamakoshi project and the same craze is being witnessed. So, the subscription of a hydro project also depends upon the nature of the project. It depends on what image the hydro project has been able to create in the minds of the people. Public are investing for the capital gain. So, it is obvious, if the project is not appealing or creditworthy then the public won’t be interested. This can also be taken in a positive way. It is not that the public are losing confidence towards hydropower but rather the public have started to use judgmental abilities before investing in a certain hydro project. In public projects such as Sanjen, Rasuwagadhi, Tamakoshi, Chilime, there is transparency and guidelines of procurement, tender is followed strictly. The same components are missing among the private hydro developers.

I also acknowledge the absence of regulatory body in hydropower industry. Public’s investment in hydropower projects are riskier provided the absence of regulatory authority. With discussions related to introduction of the regulatory body, the scenario might change.

What should be considered before investing in a hydro project?

First and foremost, an investor should inquire upon the hydro developers: who are the hydro developers? Who are the promoters? What is their credibility? Secondly, the nature of project should also be considered: what is the project about? How is the nature? There are instances when even good projects with bad credibility have incurred heavy costing. Similarly, financial viability and time frame of operation should also be looked into.

Now that we have come into costing, let us discuss on Tamakoshi project. The initial budget was Rs 35 billion which was increased to 50 billion and now is estimated to around 70 billion. So, how do investors trust in such inconsistency? When will the project be completed?

In the initial phase, the cost was estimated to be around Rs 47 arba. However, this amount excluded IDC (Interest During Construction) cost. Later, the cost was estimated to be around 35 arba to 37 arba. However, even this was only base cost excluding IDC cost. When it comes to IDC, the cost is at a very higher range. The IDC cost stands at Rs 1 crore per day. Previously, we had estimated only the base cost. Had we included the IDC cost previously, the cost would have increased by 10 to 15 arba reaching to 50 arba. Besides, the incidents of earthquake, issues related to management, contractors, Nepalese currency devaluation in terms of USD, owners all might have contributed in the delay of the project so, the IDC cost has been escalated. The more delay in the execution of project, the higher the IDC cost. IDC cost of the project is solely 40% of the total project. Besides, NRs devaluation has also led to a straight currency exchange loss of 7 arba.

The project is estimated to be complete within a year.

NRB has directed banks to increase their loan in hydro from 5% to 10%. So, what is lacking for the development?

It is not yet enough. Not 5%, not 10% but hydropower deserves solely 15%.

Entrepreneurship is in a highlight in today’s context. However, our entrepreneurship is moreover temporary and inclined only on less productive sectors. What would you like to tell the youth looking forward to initiate hydro entrepreneurship?

 If you look into the present economy, hydro power sector has a greater prospect. When it comes to youth, hydro entrepreneurship can play a significant role as the investment is for a long term. Unlike other sector, hydro power does not require continuous intake of raw materials throughout its operation. Raw materials and investment are required during the construction period. Post the construction phase, it goes on smoothly.

Dear aspiring youths, make sure you choose the Right project with Right investment at Right time, success is all yours.

The months of continuous follow up, weekly coordination and confirmation, ShareSansar team (Sandeep Rana, Rachit Agrawal and Dheerusha Tiwari) is more than privileged to have interviewed Mr. Kulman Ghising who have been felicitated as the Infrastructure Contributor of the year, CEO of the year, Most popular CEO of the year, CEO of the year (public sector), GoGo Foundation Award 2016, Hydro Excellence Award 2017. We wish him and his team all the luck for the future endeavors.