Obituary: in memory of Akkal Man Nakarmi, who designed ground breaking water turbines

Article originally published in the Kathamandu Post on 21.02.2017

Feb 21, 2017- Not known to many outside the renewable energy fraternity, Akkal Man Nakarmi was a prominent innovator in conserving, protecting, and modernising traditional water harvesting technologies and the most influential individual contributor to micro-hydro development in Nepal. Mr Nakarmi passed away earlier this month at the age of 71. People who knew him in the renewable energy circle have posted messages of condolence in remembrance of his services to the sector. It was his design of the Multi-Purpose Power Unit (MPPU) that improved on traditional Pani Ghattas; with the use of metal buckets, a metal shaft, and a pipe in place of the chute, his innovation tripled the output efficiency of traditional ghattas. This was the first major upgrade for this ubiquitous grain grinding technology, also known as the Norse Wheel, which spread from West Asia to Southeast Asia starting around the seventh century BC.

Mr Nakarmi was an extraordinary individual who paved the way for innovations in the design and application of water turbines in Nepal. He was also pivotal in preserving and upgrading traditional technology practices that carry value and wisdom passed down from generation to generation. With the skills and wisdom inherited from his forefathers, Mr Nakarmi linked his classical modern education with indigenous knowledge—both of which played an equal part in his work and success. Today, thousands of Improved Water Mills and micro-hydro power plants are a result of the lifelong work of Mr Nakarmi.

Modernising what was traditional

In March 2012, I was writing a conference paper on the role of traditional knowledge systems on climate mitigation in Nepal. It occurred to me that having a personal conversation with Mr Nakarmi on the evolution of traditional water mills would be helpful. One of my friends gave me his contact details. I dialed his office number but it was his son, Tirtha Man Nakarmi, who picked up the phone. He runs Kathmandu Metal Industries that his father established. I asked if he could connect me to his father. He agreed to arrange a meeting at his residence. However, upon arrival I was told that the older Mr Nakarmi was bedridden with severe back pains and could not meet me. I didn’t insist on meeting him. Instead, his son volunteered to answer my questions.

Arguably, the first attempt to radically innovate and enhance traditional technology practices in Nepal was made by Akkal Man’s father Gopal Man Nakarmi, who designed the first metal water bucket wheel in Nepal in the early 1940s. Like father, like son. With a Swiss engineer, Andreas Bachmann, Akkal Man explored ways to upgrade traditional ghattas by varying heads and flows. That is when he successfully designed a low-cost multi-purpose power unit in 1967. Together with Surendra Mathema, Akkal Man also developed the Peltric set—a compact electricity-generating unit made by fitting a small diameter Pelton Turbine runner on the shaft of an induction generator. A prolific inventor with tremendous ingenuity, Akkal Man made scores of innovations to the cross-flow turbine and small propeller turbines. The 50 years he committed to his work is also a testimony of his concerted efforts to safeguard and modernise intrinsic traditional technologies that were the culmination of centuries of practices and experiences.

Easy technology, hidden dangers

The history of diesel operated agro-processing mills in Nepal is not more than 70 years old. It was only introduced after 1956 when Nepal’s first highway—Tribhuvan Rajmarg—was constructed. This highway gave the Tarai motorable access to Kathmandu, thereby instigating a new era of consumerism in Nepal. Consequently, the state assisted the proliferation of new diesel operated machines and systems in the 70s and 80s without investigating methods to modernise local resources and indigenous technology. This move caused many people to abandon traditional water mills and resulted in the exponential use of oil products by many (previously) self-reliant rural societies of Nepal. Today, it is remarkable that almost half of Nepal’s 25,000 ghattas have been upgraded to the Improved Water Mill using the MPPU design, enabling them to additionally drive rice hullers and oil mills, and generate electricity. This was a significant intervention to combat the proliferation of diesel mills in the rural hills.

Today, many traditional technologies and practices still run the risk of disappearing due to the use of modern technology that is more easily available and efficient. While the merits of modern science are undeniable, unchecked proliferation of western machines that give no regard to preserving and improving indigenous practice should be curbed. By doing so, the self-reliant and resilient nature of traditional rural societies of Nepal can be preserved to some degree. The disadvantages of these modern technologies were shown when our society had to return to basics for survival when all modern facilities became dysfunctional during the recent blockade. The prevalent method of bringing new western machines to Nepal—entailing a mere transfer of technology without weaving them into the fabrics of traditional society—is wrong. Akkal Man’s work was groundbreaking in the way he managed to intertwine modern science with traditional technology. Many will miss this prolific inventor.

Article originally published in The Kathmandu Post on 21.02.2017. Author appreciates the inputs of Mr Bikash Pandey, Director of Winrock International, Washington DC, to this article.

Renewable Energy Subsidy: Incentive or an Opium?

Not all bright and Sunny: Article originally published in The Kathmandu Post on 12.12.2016

Dec 12, 2016- It’s no more a secret that a falling out between state-run Alternative Energy Promotion Centre (AEPC) and key aid partners due to a trust deficit has led to new forms of alienation between them. The sour relations between these long- time partners threaten to overshadow the achievements and successes made in the sector so far. However, preparations for a new phase of the National Rural and Renewable Energy Programme (NRREP) where old and new industry partners are coming together are being seen as an opportunity to mend the trust divide and save the sector from further decline. An understanding of past events that led to the current impasse is necessary to develop new tactics and approaches aimed at reinvigorating the ailing industry.

Cartels and collusion

For more than two decades, the government of Nepal, together with various aid partners, has been using subsidy as a tool to stimulate demand for off-grid renewable energy in the country. This fiscal tool coupled with community mobilisation practices, helped the uptake of various renewable energy technologies that have transformed the lives of millions of poor households by providing them cooking, lighting and other energy-induced income-generating solutions. Two decades later, the context has changed. Regardless of how well these models worked in the past, they have become costlier today. Subsidies, which used to be an incentive to fix market failures in valuing the social benefits of renewables, are today at risk of becoming a new opium in the sector in the absence of proper application.

The lure of subsidies has drawn a bunch of incompetent companies to the alternative energy scene. Instead of making the sector competitive, some companies and traders are creating a strange form of market failure through cartels and collusion that has crowded out innovative and competent players. There are more than 100 solar installer companies in Nepal working with AEPC that set up approximately 100,000 subsidised solar installations annually. In contrast, there is the example of Infrastructure Development Company Limited, a Bangladeshi energy and infrastructure financing company, which runs one of the largest off-grid solar installation programmes in the world. It works with half the number of partner companies in Nepal and sets up seven times more installations. The AEPC’s failure to dump incompetent companies and tardiness in penalising fraudulent ones was the beginning of a trust gap with its donors.

Tardy bureaucracy

The NRREP, when it was launched in 2012, was largely built on the rules and structures of previous donor-funded projects and programmes run by the AEPC. After it became a nationwide programme, its centralised functioning required rigorous bureaucratic procedures. The cost of administering subsidies and managing compliance and system verification proved very burdensome. For example, a typical micro hydro project takes more than three years to leverage all layers of subsidy procedures. Meanwhile, a solar company takes more than a year to go through technology testing and procedural compliances before getting its subsidy request approved. Bureaucratic hurdles are another reason why companies cut corners to compensate for payment delays. The lengthy paperwork that may lead to end users being forced to buy high priced systems needs to be seriously reviewed.

Decentralising some of the AEPC’s approval and system monitoring functions to local partners or local district authorities can eliminate the red tape to some extent. Additionally, full public disclosure of installation data including where subsidies are going and vendor contracts can eliminate duplication of resources, false contracts and fake claims. Since the public will be able to monitor factual information on vendors, subsidies and technologies, the AEPC will be freed of some costly field verification measures.

The only choice

While the NRREP’s compliance unit was effective in identifying instances of subsidy breaches and cases of collusion and cartels, the current compliance structure proved to be a bit controversial. Sometimes, good intentions do not necessarily result in desirable outcomes. The way compliance findings were handled led to a serious trust gap between the AEPC and donors as many stakeholders saw the compliance unit as a policing unit where alleged wrongdoers were brought and penalised. Instead, this function could have been used to identify lapses and fraud risks at the roots by confirming internal controls and procedural checks. There was over-policing by the compliance unit that harmed the sector. Sometimes, funding was held up on mere suspicion and doubt without conducting a complete investigation.

Acknowledging these systemic lapses and working together to fix them can be an opportunity for course correction. Many developed and developing countries still turn to Nepal to learn and replicate the work the country has done in off-grid electrification. There are still many success stories waiting to be shared with the world. As we move ahead, the will and desire to come together, stay together, work together and learn together by embracing both the successes and failures can revive the glory of Nepal’s renewable energy sector. This is the only choice that lies before us.

 

How will European foreign aid policies impact Nepal’s renewable energy sector?

Article originally published in The Kathmandu Post on 27.09.2016

So far in Nepal, the renewable energy sector has mostly been an aid-backed industry, where the Europeans have traditionally played the leading role. For nearly over a decade and half, the sector saw a steep increase in foreign aid support. But this might not be the case anymore. Political and economic changes taking place in Europe are driving the countries to adjust their foreign aid policy, both in size and purpose, to adapt to the new context.

The largest ever renewable energy undertaking of the government of Nepal, initiated in 2012—National Rural and Renewable Energy Programme (NRREP)—is currently supported by multiple donors like the Asian Development Bank, the World Bank and many European partners like Germany, Norway, Denmark and Britain, with as much as 50 percent on-budget support of $170 million coming from these international partners. As a substantial drop in European development assistance to Nepal is expected to take place in the coming years, it will be a new testing time for the renewable energy sector of the country. There already are growing concerns about the impact that will have and the solutions the Nepal government will adopt.

Denmark, Norway, UK

Denmark, a long-time collaborator and a major contributor to the renewable energy sector of Nepal, is already diverting its aid to other countries and to their new priority areas, the recent one being hosting Syrian refugees. Denmark’s draft finance act 2016proposes as a sharp reduction of 2.6 billion Danish kroner (DKK) on its spending for development cooperation compared to its previous year’s budget of DKK 16.8 billion, including a full withdrawal plan of its development cooperation in Nepal.

Denmark contributes roughly 20 percent of the budget support to the on-going Nepal government’s renewable energy initiative and until recently was the lead donor in the sector. Though the Danish embassy in Kathmandu has been calling the decision to phase out a political one from Copenhagen, this can also be partly understood as another gross foreign policy failure of the Nepal government. It is still unknown if the Nepal government did anything to continue with any form of bilateral engagement with them. But it is not my intention to explore it here.

Following Denmark’s plan to exit, Norway, another generous partner to renewable energy, became the lead donor for this sector. Its support currently constitutes another 20 percent of the sectoral budget. But here’s something new to worry about. Norway’s support can visibly diminish soon as it has a lot of things to fix on its own soil.

Petroleum accounts for half of Norway’s exports. The oil industry plays a vital role in its economy and in the financing of its public services and foreign assistance. The global downturn in oil prices has created a massive pressure on the Norwegian economy, forcing the country to directly or indirectly reduce its spending on foreign assistance. With the decrease in oil prices, StatOil, a state owned Norwegian Oil Company, reported a massive drop in revenue, revealing its second quarter earnings as $913 million in contrast to $2,883 million in the same period in 2015.

With this drop in revenue and the diversion of a big chunk of its foreign aid money to support Syrian refugees, Norway seems constrained in its ability to offer sufficient resources to its aid receiving countries. While Nepal remained the fourth largest Norwegian aid recipient country in 2015, with the support amounting to 492 million Norwegian kroner, a significant drop in its assistance in the coming years should not be surprising. As the low price oil regime is anticipated to continue for a few more years, Norway’s aid to Nepal and therefore its support to the renewable energy sector in the country can be expected to decline further.

Now, with one big donor leaving the country and another one expected to slash its support heavily, the new situation has invariably created a strange fiscal environment in the heavily donor-backed renewable energy sector.

The first phase of the current renewable energy undertaking of the Nepal government, NRREP, expires in 2017. In the light of these new fiscal constraints, the government of Nepal is now considering to partner with the Department of International Development of the United Kingdom (DFID), which has for long remained one of Nepal’s major donors in the area of energy and climate change. Despite the UK being a generous aid provider and its continuous willingness to support the second phase of the Nepal government’s renewable energy undertaking, the structure and the scale of its support, however, remain uncertain.

No surprise here as well—the dust of Brexit has not yet settled. The new uncertainty that has arisen due to Brexit is already affecting the UK’s aggregate demand, causing the British economy to shrink further. At the same time, the falling exchange rate of the pound could also swing things in an adverse manner. There is no guarantee that Brexit-induced scenarios will not lead DFID to make cuts in its development assistance to Nepal and reduce its ability to support renewables in the country.

Sustained pathway

Development assistance has thus far played a vital role in the development of renewables in the country. Unfortunately, the large asymmetry between high donor funding and extremely low private investment in renewables has hurt the sector at large. Nepal needs to carry out a systematic evaluation of the current growth model to pave new ways to transition from subsidy-driven to more private sector-led technology promotions. While the new renewable energy subsidy policy 2016 has, to some extent, opened some avenues for private sector investment, the harsh reality has been that except for a handful of private sector firms, the majority of those working in the renewable energy sector seem content with the flow of aid.

Unfortunately, access to an easy resource has largely kept them from innovating new business models in the sector. So it is yet to be seen how much leeway the new phase of the government’s renewable energy initiative, when it comes, can catalyse the new breed of energy entrepreneurs less affected by these dramatic policy shifts on foreign soils. It is to be hoped that the recent political changes in the European countries will provide an incentive to bring in more private sector money into the renewable energy sector and persuade the government to seek some home-grown revenue sources.

What Nepal’s new budget could mean to energy industry?

Sunshine and Clouds, Article originally published in The Kathmandu Post on 08.06.2016

Since the government unveiled its annual budget of Rs1.05 trillion for the upcoming fiscal year 2016/2017, there have been fierce arguments on what the budget should have looked like. While some have criticised it as being inflationary, overly ambitious and a gross violation of fiscal discipline, others have applauded it as being timely, pro-poor and pro-development. There is one common theme running in the budget every year: The government that presents it continues to defend it and the people are invariably sceptical. Considering the history of opaque bureaucracies, real as well as perceived misconduct and incompetence of implementers, clumsy service delivery and widespread corruption in the budget implementing agencies, the scepticism will continue unless the government comes up with concrete plans to address these shortcomings.

Like all past budgets, this one too has some good, bad and ugly aspects. Let me pick a few of them here to advance discussion on what the new budget could mean for the energy sector and its development. Expediting ongoing hydropower projects, generating 10,000 MW of hydropower in the next decade, studying and identifying multipurpose projects, prioritising reservoir-based hydropower projects, expanding transmission lines, etc are some almost-unavoidable clichés in every budget without much tangible reforms in the needed areas. These are the plans every government expects people to believe. But most people do not. Yet, all of them are possible if the state is sufficiently willing.

Key breakthrough

The major takeaway for me from the new budget is the provision of a surcharge of Rs5 on each litre of petroleum import. I take this as a fundamental breakthrough, something that no government should postpone, although some experts are calling it a measure that could cause inflation. I have argued before in these pages (see this and this) that if the government wants to pump additional resources in its home-grown energy projects, there cannot be any better time than now to place an energy levy on petroleum imports when the international oil price is running low. Historical price trends indicate that theinternational oil price is not going to increase anytime soon even though it recently saw an 80 percent hike from its February low.

Even if the government had to make an upward adjustment to bring in such measures, which the current budget fortunately does not say, I would still have called that a smart move. If a portion of the revenue was also allocated in relatively smaller projects rather than in one single larger project with many social and technical issues still unresolved like the Budhigandaki Hydropower Project (1200 MW), it could have yielded some early results. Besides, a serious reform to make Nepal Oil Corporation (NOC) more transparent looks urgent to make this revenue generation mechanism more productive.

In terms of electricity 

Talking of electricity market reform initiatives, the government has plans to unbundle the generation, transmission and distribution systems of its state-owned utility into separate legal entities. This is another encouraging mention in the budget. But since these reforms were also key items in the past budgets, speed of execution becomes more important here. The National Electricity Regulatory Commission (NERC), the independent entity envisioned a long time back that was anticipated to replace the Electricity Tariff Fixation Commission and create a level playing field for all the electricity sector stakeholders, is yet to be implemented. The government now plans to set up a mechanism with a team of experts to oversee and regulate these unbundled entities.  In the absence of a strong authority, they could end up turning into another toothless state body. Thus, the establishment of a strong regulatory authority might be more appropriate for a politically volatile country like Nepal.

The push for 300MW solar projects in the new budget could make one curious to pay closer attention to the details. However, without a commitment of resources and plans on when and how the projects will be delivered, they look nothing more than cosmetic measures. Thus, this provision will likely have a fate of the 25 MW solar utility project mentioned in the 2014/15 budget. That project seems to have disappeared now, despite the promises of bringing it to the grid by March 2015. Sadly, these are a few ways how our governments are feeding public scepticism.

More than policies

The government has given high priority to renewables, as the new budget includes all the aforementioned strategies to expand all forms of clean energy technologies in off-grid rural communities or to subsidise urban consumers for solar adoption. With an 11 percent increase from the previous year’s budget of Rs5.49 billion, the planned spending of Rs6.1 billion however depends largely on the effective implementation of the Renewable Energy Subsidy Policy 2016, which the government approved last month. More than that, its success depends on how the effective delivery instruments are designed, supply chain bottlenecks overcome, targeted beneficiaries reached, possible subsidy leakages checked and prolonged differences among the  various stakeholders bridged.

No doubt, the new budget signals a strong priority of the government to invest in the energy sector. And the initiatives are achievable, but energy production would require structural reforms and transformative governance to attract domestic and foreign investments in the sector. The government should be ready to free its institutions from the shackles of its notorious bureaucracy, as policies and targets would not deliver anything by themselves. Let us not get obsessed with the targets alone. With the country’s anticipated growth rate by the end of this fiscal year as low as 0.8 percent, most of our economic sectors are in shambles. There is little time to waste.