For the third time in eight years, the government has declared energy emergency with an ambitious target to end power crisis within two years.

The National Energy Crisis Reduction and Electricity Development Decade plan endorsed by the Cabinet on Thursday aims to add an additional 839 MW of electricity in the next one year during the dry season. The country’s daily power output currently stands at 780MW which drops to 300 MW during the dry season. Likewise, the plan also envisages generating 1,339 MW during the wet season in the second year.

Interestingly, the plan says more than 50 percent of the country’s electricity requirement would be fulfilled through imports from India in the first year. If the government’s plan is anything to go by, the country, which is currently facing 13 hours of outage a day, will be free from load shedding in next two years as “it will have 1,850MW of electricity flowing through the national grid”.

The assumption is based on generating additional 400 MW from run-of-the-river projects, importing 92MW from India and producing 200MW through solar and wind power plants and 930 MW from Kulekhani 1 and Kulekhani 2 reservoir projects.

As per the plan, 100 MW of electricity will be generated in the first year by harnessing solar and wind power and the capacity will be doubled in the next year.  As of now, there has not been any proper feasibility study for big-scale wind energy projects, and the country lacks policy and regulatory frameworks.

The plan has laid emphasis on immediately constructing five reservoir projects—Budhi Gandaki, Nalsingadh, Sunkoshi, Uttar Ganga and Sarada-Babai—under the “electricity development decade plan” that aims to produce 10,000MW of energy.

With works on Budhi Gandaki and Nalsingadh moving slowly, the government has announced two separate companies to expedite these two projects.

The plans also talk about extending licences of quake-hit projects and facilitating loans to them.

“The decision to announce energy emergency is aimed at reducing the woes of energy crisis,” said Energy Minister Top Bahadur Rayamajhi at a press meet on Thursday.

Giving a major boost to foreign investors, the government has also announced to sign power purchase agreement (PPA) with hydropower developers in US dollar terms until the loan payback period.

Signing PPAs in US dollar terms has been a controversial issue in Nepal as the Nepal Electricity Authority has been incurring losses from the 60MW Khimti and 36MW Bhote Koshi projects.

In a bid to mobilise more domestic resource for the hydropower projects, the plan has eased lending criteria for banks and financial institutions (BFIs) to provide loans to hydropower projects. Now, BFIs can inject 50 percent of their total lending into hydropower projects.

The other major highlight of the plan is mobilisation of security forces for the security of hydropower projects with developers bearing the cost. This provision has been brought as number of hydel projects have been facing obstruction from political parties and locals.

As land acquisition and compensation remains a major problem for hydropower developers, formation of a special tribunal has been announced.

Similarly, a high-level energy coordination panel will be formed under the chairmanship of the prime minister to ease the structural and procedural hassles.

Independent power producers have welcomed the government decision.

“We welcome the announcement. But there are doubts whether the announced programmes will be sincerely implemented,” said Khadga Bahadur Bista, president of Independent Power Producers Association Nepal (IPPAN). Bista described the announcement as the need of the hour.

According to Bista, there are number of positives in the plan. “The removal of conditional PPA, exemption of value added tax (VAT) till 2026, allowing quake-hit projects to exercise force majeure and allowing private sector to construct transmission line are welcome initiatives,” he added.