Rural Electrification in Nepal
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Rural Electrification in Nepal

Co-operative Concepts In Rural Electrification

             By Er.Prabal  Adhikari





               About 88% of Nepal’s Population remains in the villages and only about 15% Nepaleses have become fortunate to use the electric power so far. As such, the focus on effective measures to be galloped in the rural electrification can hardly be deprecated.

              Although we have spent a huge quantum of money in rural electrification, we must accept the bitter truth, though unwillingly, that we have become unable to address the real problems of commercialization in this field so far. Long distribution lines in rural areas beyond standards, direct hooking and other fraudulent practices of energy pilferage have made our whole episode of endeavour in rural electrification starkly weak and unproductive. If we are about to develop suitable and sustainable models associated with electric distribution in villages, we must be very careful that our models are neither too detailed  and sophisticated nor too simple for reliable and qualitative performance.

        If we are committed to rural electrification, the only excellent choice is the implementation of co-operative concept, which can ensure the benefits of electricity to rural people as well as the utility.

          Funding these co-operative projects and giving them all sorts of technical assistance and legal support will certainly encourage the rural people to use electricity as a means of enhancing the quality of life and the well-being of the society.

        The co-operative model is extremely required to draw good outcome from the rural electrification so that it would take its course in the genuine favor of public health, education, industrialization and job opportunities leading to the elevation of the rural living standard.

         Rural electric co-operative models should be, beyond doubts, an integral part of the national energy policies and distribution system.


What is electric co-operative Concept, in fact?


           In fact, it is a socialistic approach to make people responsible for local management of electric energy distribution by the process of “participatory management.”


         The co-operative concept in energy management may also be called democracy partnership comprising of diverse civil societies scattered throughout the villages of the country.

           Unlike other co-operatives, electric co-operatives are not profit-driven basically. They exist primarily to provide service to their consumers. In fact, it is not merely a users’ organization, but it is a way of life in which economic activity attains momentum by self-managing and distributing the electrical energy for their own benefits.

         It is also a concept of competitive marketplace particularly in the distribution sector of electricity. It should operate on sound business policies and practices although it is basically a not-for-profit organization as already mentioned above.


Essentials of electric co-operatives


1.     Financial sustainability

2.     Open and voluntary membership to power consumers.

3.     Transparency and accountability

4.     Democratic control or mutually agreeable decisions

5.     Return of surplus or savings, if any, to members

6.     Subjective and field-oriented trainings on electricity distribution system and general safety rules.


Urgent need of its implementation in Nepal


          All our activities in power sector reform are lying in cold storage due to lack of proper punishment-reward scheme. In our present case, both are equally right: we are honest at the work  assigned and yet nobody encourages; we are fraudulent and still nobody bothers. This trend has completely eroded the work culture in Nepalese offices and so is the case with our electrical sector also. A work culture cannot be established without motivating components involved with it. The co-operative model deserves the capability of self-motivation and the system of reward and punishment will automatically be set up to come into effect since all its consumers are the genuine bearers, and the bearers know where the shoe pinches.

        Use of ABC cables in rural electrification to control direct hooking from LT lines has been a subject which is proposed a lot and practiced very little although there may be many reasons after it. However, it is true that electricity business cannot be elevated without reducing system loss to an acceptable limit. Reducing the loss will ever be an uphill task to the Nepal Electricity Authority (NEA) unless the village people wake up themselves with a sense of collective responsibility for constant vigilance.

        Lack of honesty at work and the financial indiscipline within the organization is the major cause to degrade the fate of any utility. To certain extent, even we are afraid of being exposed. The practice of co-operative models in rural electrification immediately flourishes an era of transparency and public exposure in all activities related to the power distribution. Certainly, time has come to introduce effective reform programs associated with rural electrification for the sake of corruption control. This is possible by means of co-operative societies only and it’s high time to launch them.

           In Nepal’s present context, a rural electric co-operative’s concept will also help combat domestic violence and develop village-level alternative dispute resolution trend by providing them a joint forum to work together for the common cause of local development. Rural electric co-operative will be very poplar program in Nepal because people of all political spectrums can work together in such co-operative models by calling it whatever they prefer like “Abhno Gaun Aphain Banaun ( United Marxists & Leninists’ Let’s- Make -Our –Villages- by -Ourselves Program)”, “Garibsanga Bishweshwar (Nepali Congress’s popular  program , Bishweseshwar Prasad Koirala- with- the- Poor)” or “Gaun Pharka Abhiyan (Old partyless Panchayat System’s slogan-based program Let’s- Turn- to- Villages)  ”. For all this to kick off, the nation should not only advocate the need of such co-operatives, but also devise good legislative and administrative strategies required for their smooth operation.


Reasons for co-operatives in rural electrification


       Rural electrification in Nepal should go ahead with the co-operative concepts as practised by other developing countries with backgrounds similar to Nepal and also in the developed countries like the USA, because -

(a)       Rural electrification has been a sad experience in Nepal with high investment and low return, thereby not operating in a financially sustainable manner in itself.

(b)      There are high distribution losses since rural feeders are normally too long with enough voltage drops below the standards, backed by undue political pressure to stretch them farther and farther. Implementation of the rural electrification design is usually guided by the exciting political mathematics rather then by the engineering mathematics.

(c)       Direct hooking from the nearby LT lines and other kinds of electricity theft have caused rural system loss to be quite formidable to fight.

(d)       Difficulty in periodic vigilance due to remote and uncomfortable location of villages has revealed the necessity of local electric co-operatives.

(e)       Revenue collection percentage is very poor in rural sectors.

(f)        Ordinary rural people are economically, socially and even politically suppressed and hence they are not involved in the decision-making roles in key processes of social transformation. Electric co-operatives may serve as their homes where all of them are treated as equally rightful members and hence discharge their duties seriously as their own household tasks.

(g)      All consumers involved in the co-operative service will develop corruption-free system due to well-coordinated check and balance.

(h)      Our movement in the business of electricity so far is like that of a ship in stormy ocean, knowing no destination where to harbor. Modern electric co-operatives follow a straight-forward path only, since they are chosen to work upon the performance target basis, a concept which the NEA is about to practice in some of its distribution branches as Distribution Centers with a certain degree of autonomy to them.

(i)         Present procedural measures to receive electricity connections have added much to the inconvenience for villagers. For example, we ask them to submit the attested copies of certificates pertaining to land, citizenship, etc. to get new lines. An Illiterate villager may choose better not to take a meter connection than to undergo all such difficult tests.


Learning from Bangladeshi co-operatives and others


        Bangladesh has achieved a grand, admirable success in rural electrification by adopting US-based co-operative models upon the consulting services provided by the NRECA International.

          It led to the creation of a Rural Electrification Board (REB), which forms the co-operative Board of Directors (PBS Board) from the locals of various sectors including two women advisors also. REB has the right to dissolve the PBS Board at any time for its non-performance or fraudulent practices, if any. There are 67 rural electric co-operatives, called the Palli Bidyut Samities (PBS), instituted to function in different rural areas of Bangladesh. REB invests in transformers and transmission/distribution lines. In PBS, all consumers are its members. Nevertheless, employees are employed on annual contract basis and there is the total ban on the formation of Trade Union / CBA since such activities are believed to destroy the working environment of the co-operatives.

         Since too many cooks may sometimes spoil the food, REB always stands with the role of a watchdog to confirm that nothing wrong has gone with the PBS anywhere. More then 60 lakhs rural people are benefited from the PBS services and system loss has significantly fallen down.

            NRECA’s other example of success in rural electric co-operatives can be observed in Guatemala, where the co-operative was developed as a pilot project, “Electricity for Progress.”

          In Sri Lanka, all village hydro development units are operating as co-operatives without any concern to the Celon Electricity Board. They take membership fees and distribute the power generated to its members on no-tariff basis.

     In India, 33 rural co-operatives, called RECS, are operating quit satisfactorily.

           Before replicating any models, it will be wise to visit and study them to find whether they will be applicable to our country or not.


Pico/Micro/Mini & Small hydro in Co-Operative ring


           Large hydro projects, as experience has taught, cannot be judged as suitable models of power exploitation for us as per Nepal’s economic status, security measures and difficulty in national grid extension. All small-scale generations, at some particular phase of the development, should be allowed to enter into the ring of electric co-operatives. The Government of Nepal is required to issue clear guidelines and streamlining processes regarding it. Besides such guidelines and policy-framings, there must be a workable understanding among the Government, the co-operatives and the local power producers.

         Local generations should come up to form a separate rural grid as far as possible so that rural co-operatives would find it easy for control. If we aim at extending the national grid only to all our rural areas, we will simply reach the goalpost of fiasco.

             Cost-effective and environment-friendly electricity generations at Pico / micro / mini or small scale need to be prioritized in villages and operated as franchise-full co-operatives to distribute the power to the people of such remote areas. So far in Nepal, we have practiced various combinations such as grid-connected rural electricity generation and distribution as well as off-grid rural generation and off-grid integrated supply system. There are quite a large number of micro hydro projects currently functioning for villages and thus the scope of electric co-operatives in rural areas is certainly very wide.


Proposed Electric Models for Nepal


        The co-operative concept in Nepal’s rural electrification is suggested to be implemented and completed in the following three phases, each of them as a model in itself:


1.         Phase I:  Selling bulk power to registered co-operatives:


                   NEA reserves the right of generation, transmission and distribution with itself and only sells the bulk power to a registered electric co -operative at a suitable rate. The co-operatives issue the membership to its villagers and power is sold to them at reasonable rate as per guidelines provided. However, major maintenance works of the distribution network are to be performed by the NEA itself.

        In this first phase, co-operatives are not allowed to look after the distribution network because they are still raw and not experienced, lacking adequate technical knowledge, trainings or the efficient workmanship. We may even call it a warm-up period, requiring a lot to acquire and observe. However, NEA treats it as a bulk consumer, and all our consumers of that particular area then maintain the commercial relationship with the co-operative only.

            Villagers themselves will be active to eliminate direct hooking and other types of energy thefts. Consequently, the system loss will be decreased. Still another significant achievement for the NEA will be increase in revenue collection which helps to boost its economic status.

       New service connections, metering, billing, revenue collection and theft vigilance in the rural areas take place smoothly under the co-operative’s management. The era of the old and long-existing mentality that consumers should run after us for their grievances gets virtually terminated and the consumers’ satisfaction comes out.


2.        Phase II : Handing over LT tines and distribution system along with bulk power sale: 


                        There should be some mechanism through which the rural electric co-operatives are adequately funded. The Government should allocate the budget directly to reach the co-operatives and the donors’ assistance may be very helpful for it. This second model gives the franchise to sell the electric power purchased from the NEA to its member and to perform all necessary works of maintenance regarding lines and transformers. The Government may nominate its representative also for these co-operatives. Part of the funds available needs to be spent in the trainings of their employees and these co-operatives are not expected to produce the electricity by themselves or buy it directly from the IPPs.


3.        Phase III:  Offering greater autonomy to electric co-operatives:


                    The rural electric co-operatives will be assigned the following franchises:


(a)  Construction of new distribution liner or extension of the existing ones with prior approval from the concerned authority.

(b) Maintenance of the electric network within their areas.

(c) Purchase grid power from the NEA or off-grid power directly from IPPs.

(d) Generate electricity up to small scale by themselves.


          If more then one co-operatives are formed in the same rural area, there will take place an internal competition based on locking in prices, service conditions etc. among all such market participants and the access to the transmission and distribution network is ensured to them on a non-discriminatory basis.

           Government should develop funding strategies to these co-operatives and there should be formed Bangladeshi Rural Electricity Board-like body to assist them in fulfilling their primary requirement.

              However, the Government should be prepared to take new responsibilities them such as providing necessary information to these co-operatives and guarding the rural people against the abuses of marker power.

          These proposed models may anytime be viewed as independent models and my even be applied without the sequence above if we are sure that we can succeed directly at the higher stage.

        Studies of south Lalitpur Rural Electric co-operative and Lamjung Electricity Association may be quite relevant to earn some Nepalese experiences in the concerned field.




         Nepal shouldn’t blindly replicate the foreign electric cooperative models without any suitable modification in them. It is advisable to implement the concept of rural electric co-operatives as pilot projects in some districts only at the first trial. After they are known to have achieved success as per targets, they should be carried out in other districts of the country to make rural electrification really a fruitful experience in Nepal.

















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