Alternative to Petroleum Crisis in BME52

----- Original Message -----
To: bme52 Group
Sent: Monday, July 16, 2007 9:40 AM
Subject: Re: Alternative to Petroleum Crisis

Hi!

I must say Great comment! Actually, I was expecting similar comment from experts in another forum and my article was just to provoke the thought of the like minded people in that group. But I am surprised that you have also similar thought and interest in this regard. Why can't be after all we are nepalese and will be nepalese no matter what!

Now, coming back to your comment, I fully agree on your international pricing mechanism not going to be affected by electricity consumption in Nepal. Very true, how can one control the international price even from exporting electricity from Nepal where the electricity price is one of the highest in Asia. Well, probably my article is not able to point out clearly that the article is in the present context where people are finding hard to accept the price hike. Government and intellectuals like you, me and others fully understand that the price hike with automatic pricing is the only solution in the long term. But my question is what now? Till when...one more price hike..Nepal bandha starts again. We already faced it...what do you expect from this government in transition...wait till CA... 2/3 months from now. As somebody said, the petroleum issue has been a hot potato now. Who is going to put the bell on cat's neck? Who is going to convince the general public? Till when the public like you and me will face the stringent problem like this. Who is in loss now? I am sure that if this continues for 2/3 months more, it is going to be the catastrophe now. Everything will come to a stand still. I think government is waiting for this to come and make people feel that the last option is price hike. I would say, if this is true and the govt is awaiting then I think it is inviting more anger from the public. It is not able to feel the public's sentiment and this may fire another Janaandolan III with more public with real concern in the street and imagine what would happen! If you would have seen the queque and the frustration of the public while lining up, I would say this is fatal. I used to be one of the victim so far.

Now what then? this is what my article tries to address it. Come up with policy that strongly make public feel that the price hike (or some other indirect taxing policy) you can have a safe landing in the present context...Just not simply a price hike only. People will feel that the higher price is for them not for NOC or whatever. This is the only bold step or I must say an active step rather than passive step (hike in price).

Now I must say, everybody should have felt that the country's dependency upon petroleum products can go to what extent! Can you imagine, transport takes up 100% petroleum products consumption in the country leaving few standbay generators and this is increasing day by day. Other developing countries are now taking a U-turn and trying to address their energy policy with more home grown energy mix. At least they started from some point. But for us, its not fossil fuel but it is hydro power. Make the hydropower in priority projects. Issue electricity bonds....Assure/guarantee the banks so that they give project loans to hydropower. Probably the project loans in USA is simple like our personal loan here. You won't believe we do have provision for project loans but non of the bank want to go for it or they have so stringent rules that it is non other than collatoral loan system. Now what to do in this context. I am not trying to address here subsidy and others, these are there and bring other issues too and I don't think this is that simple again. Because some subsidy has to be there like in kerosene. You cannot totally neglect its use in rural area where 100% lighting is dependent upon kerosene. But we are lacking good policy and at the same time we are lacking monitoring mechanism too. And on top of that, the policy never addresses till when the rural people will have to depend upon kerosene!

Now question arises, why only govt why not us. I am not talking about implementation here. I am just talking about policy and this is where the government can play a large role. There should not be doubt on that. For the cost meeting this, the ways I have suggested could be one part in several other ways.

Now to your question on 8 hrs loadshedding and all. To tell you honestly, I would like to remind about the article about Abdul Kalaam as Poudel has forwarded some days ago. You need to believe on your strength and your capability. Have a long term vision. Rome was not built in one day. Petroleum economy did not come over night. I am not trying to put the things such a way that you can do it over night. Its a long prospect. If you don't act then probably you won't even act in the long term. This is where policy matters. Making an environment fostering enough so that private investors like you and others (of course BME52) can come into play. Policy give them a level playing field. I will give an example of Delhi where Supreme Court has to rule that the city has to be converted to CNG vehicle. Now, I don't believe that there is no intellectuals like you and others who never thought about it in Delhi. But circumstances and on top of that as in the case of Delhi,investors/technocrats/intellectuals do need policy to support their endeavours. And this is 100% true in the case of developing countries like in Nepal and others. If it was in USA then probably government only need to come up with stringent measures like emission standards and fine the public for their emissions or whatever just control it no matter what they do. But can you do the same thing in Nepal? Probably not then what can you expect then? At least some measures in policy that even as you said some investors like Manakamana Cables come infront and take their stake in the development! This is what I am expecting once there is policy. But if you ask the owner of Manakamana Cable then you will understand the story he has to go through. Luckily it is surviving even after going through a number of hurdles. If it was not the case, then probably by the time, we should have seen cable car in Muktinath, Naamche etc. Without government policy, non of the investors would like to even think about it rather seeks personal backing from policy makers and this is profitable for handful of people and it is good neither for public nor for the independent market. So, putting a long term prospect and keeping good track of hydropower development in planning process, it should start from some point at least. Why not metro in outer ring at least! But to tell you honestly, if you come over this 8 hrs load shedding, then you will have surplus amount of hydro energy that you will find hard to even take up in the grid. On top of that NEA will be paying for that spilled energy on the other hand and this is the reason that NEA is putting off some IPPs even though it has to go thru load shedding. It is in loss in this cases.

Best regards,

P.S. some of the personal notes are removed!

Update:
Nepal government has successfully hiked the petroleum products price once but it has faced a severe resistance from the public against its decision for the second price hike. As a result, the government has annulled the second price hike and now the government is seeking experts' advice for smooth supply of petroleum products.

Alternative to Petroleum Crisis published in CE Newsletter

Clean Energy NEWS Vol. 7, Number 34, July 17, 2007
CE News is published weekly by Clean Energy Nepal.

Alterantive to Petroleum Crisis

By Shreekar Pradhan

Some People are of in favor of price hike as the only solution for current fuel crisis in Nepal. But, in the current situation, this bold step will have to go through a difficult resistance which we have already faced earlier too. Will the current transitional government have that courage? Or will it wait till Constitutional Assembly?

I strongly believe the government of Nepal along with Nepal Oil Corporation (NOC) is not able to come up with strong reason for price hike till date. They are not able to convince the people that the price hike is not for the bonus/revenue for the government/NOC. The critical question is, “How can people be assured that the price hike is for them and not for government/NOC?"

In the current context, the government should come up with a strong policy which provides relief to the people from dependency of petroleum products. A number of policies have been taken in other cities to relieve them from pollution and promoting energy security. Good examples can be found in neighbouring countries like India and Pakistan, where millions of CNG vehicles are running. Pakistan is considered as number one CNG vehicle user in the world. They are using their own resources and also relieving people from air pollution. In our context, we have hydro resources and we have already developed electric vehicles. So the government should come up long term strategy on cleaner electric vehicles. The strategy should not be isolated strategy as we see in the past. The promotion of electric vehicles should be for limiting the use of petroleum products. The current policy of government is more focused on managing the demand and supply of petroleum products and it does not consider the alternative way of limiting the petroleum demand by promoting electric vehicles in the long run. The government should start consider the following implementation strategy without any delay:

a) East to West Electric Train: It will relieve pressure on urbanization and tourism can be boosted in other parts of the country. Expenses relevant to road maintenance, vehicle maintenance, health can be lessened to larger extent. On top of that, a larger rural mass can be employed

b) Electric Train that links India to Tibet through Nepal: This has been thought for long time as this would boost the economy of country as two Asian giants will start trading with Nepal as transit point.

c) Electric Train in Outer Ring Road: A huge relieve from city centered urbanization to rural satellite towns. It will reduce the vehicle activities in the Kathmandu valley and reduce the pollution.

d) Electric Vehicles like safa temp, buses: It can be used in the central city and can be used as feeding vehicles in every route.

Now the question arises how to meet the cost for the infrastructure. Government should come up with strong policy with a committment that the revenue generated from petroleum products will be spent for building cleaner vehicle infrastructure and for limiting petroleum product dependency in the long run. A price hike with this reason may have soft resistance from the people. Rather than direct price hike, the government can levy certain emission tax, energy tax, congestion tax and carbon tax on these petroleum products or vehicles using it. This way, in one part, the government is limiting the petroleum product use and in other hand it will be showing the government's commitment towards promoting cleaner vehicles in the country. But importantly, these taxes need to be spent for the development of the cleaner electric vehicles in the country. If every citizen feels that the money he/she has been charged is for the purpose of clean transportation, then he/she may not be hesitant to be charged at all. They will be more assured once the development starts to take place and it should be a pride for every citizen that it is his/her contribution that has made it possible.

(In response to article "Alternative to petroleum Crisis" by Ganesh Regmi-Kathmandu Post-July 9, 2007, CE News Vol 7, No. 33)

Alternative to Petroleum Crisis

I would like to share some of my articles (correspondences in forums and e-mails to the listserv) about emerging issues like petroleum crisis and loadshedding in Nepal.

Posted to Clean Air Network Nepal (CAN-N)
Date: Sun, 15 Jul 2007 02:09:52 -0700 (PDT)
Subject: Re: Alternative to Petroleum Crisis

Hi to all!

I would like to draw your attention on the issue raised by "Alternative to petroleum Crisis" (by Ganesh Regmi-Kathmandu Post-July 9, 2007, CE News Vol 7, No. 33)

Quoted here:

"Hence, the government should boldly hike the petroleum price adjusting to the international rate in order to facilitate a smooth supply of the same to the people and create a mechanism of automatic pricing so that international pricing is balanced by internal pricing in the future. If NOC comes with crystal clear pricing methodology, people will not hesitate to pay a higher price for petroleum products that would be available without any hassle."

in which the author tried to advocate price hike as the only solution in current situation. In my personal opinion, in the current situation, this bold step will have to go through a difficult resistance which we have already faced it earlier too. Current transitional government will have that courage? or it will wait till Constitutional Assembly?

We need to understand what went wrong in the past and why people were not agreeing to the price hike as the solution in the current context even though people have to queue up long for petroleum products for days and weeks. If we do not understand this and we think that the price hike as the only solution, then in my opinion it will not only invite more difficult consequences but also it is not complete solution in itself for the future of Nepal.

The author even mentioned that the crystal clear of pricing mechanism would make people pay even higher price. I do not see any strong ground on that in the current situation. But I agree that it will help people aware about the pricing mechanism but NOC has to go through the people's anger first once the price hike is carried out. Because the reason that fueled anger of the people on pricing of the petroleum products is not pricing mechanism or price of petroleum products as such. I strongly believe the government of Nepal along with Nepal Oil Corporation is not able to come up with strong reason for every price hike till date. They are not able to convince the people that the price hike is not for the bonus/revenue for the government/NOC that it used to enjoy earlier but instead it is a need in the current context. Currently I see NOC as the merchant who took high profit in the past and now going under loss and it is trying to put the loss to the head of each citizen. People are not aware of these in the past and they were compelled to get quiet in many occasions. Now the political situation is different than in the past. Every citizen can raise his/her voice on autocracy and the current transitonal government has no other option but to listen and address it. In my opinion, in the current situation, if one thinks that the people are not aware of the need of price hike and hike in international prices, and this is the single reason people protesting price hike then, in my opinion, I would say, it will be no other than a grave political mistake.

In the history of petroleum products pricing, every price hike has the following reasons:

a) To maintain the higher price from other side of the border
b) To minimize the price disparity in international price.

In the past, non of the Nepalese saw any problem with these because these were obvious reasons. But this situation did not stay long when they became aware about past deeds of NOC involved in sharing (i would say amassing) huge revenue as a consequence of price disparity in international fuel pricing. How would a citizen can digest that their hard earned money was enjoyed by handful of opportunists taking advantage of a loop hole in the policy? How can the people be assured that the past reasons for price hike will not repeat the same story in some other way?

Now the question is again, how to solve this status quo? In my opinion, if this question "How can people be assured that the price hike is for them not for government/NOC? ", then any policy on pricing of petroleum products will not have to go through difficult time as it has faced earlier if political vested interest is not considered here!

In the current context, the government should come up with strong policy which should relieve the people from the dependency of petroleum products. If this is achieved, then I think it is win and win situation for both. A number of policies has been taken in other cities to relieve them from pollution in one hand and in other stepping in energy security. To name a few, a good example can be found in neighbouring countries like India and Pakistan, where CNG vehicles are running in million with fuelling stations in thousands. Pakistan is considered as number one CNG vehicle user in the world. They are using their own resources and also relieving people from air pollution. In our context, we have hydro resources and we have already developed electric vehicles to much greater extent. Much of hydro power projects are in pipelines. So, in my opinion, the government should come up with strong policy on long term strategy on cleaner electric vehicles. The strategy should not be isolated strategy as we see in the past. The promotion of electric vehicles should be for limiting the use of petroleum products. The current policy of government is more focussed on managing the demand and supply of petroleum products and it does not consider the alternative way of limiting the petroleum demand by promoting electric vehicles in the long run. In my opinion, the government should start consider the following implementational strategy without any delay, if not else:

a) East to West Electric Train (Cross Country Train linking Mechi and Mahakali): With this train, I don't think I should write more on the advantages of the development of rural areas. In the cities, it will relieve pressure on urbanisation. People can live in Achham (Far Western region) and come for office Narayanghat in half and hour. Tourism can be boosted in other parts of the country. Expenses relevant to road maintenance, vehicle maintenance, health can be lessened to larger extent. On top of that, in my opinion, a larger rural mass can be employed. A huge population will be engaged in business activities that should reduce the political unrest to larger extent once people feel they are busy.

b) Electric Train that links India to Tibet through Nepal: This has been thought for long time as this would boost the economy of country as two asian giants will start trading with Nepal as transit point. A lot of has been already discussed on this regard for quiet some time.

c) Electric Train in Outer Ring Road: A huge relieve to city centered urbanisation to rural satellite towns. At the same time, it will reduce the vehicle activities in the Kathmandu valley and reduce the pollution.

d) Electric Vehicles like safa temp, buses: It can be used in the central city and can be used as feeding vehicles in every routes. A huge relief to the city people in air pollution.

Now the question arises how to meet the cost for the infrastructure! This is very pertinent issue in the current context when the government is in loss in petroleum products and facing a stiff resistance from people on price hike.

In my opinion, the government should come up with strong policy with a committment that the revenue generated from petroleum products will be spent for building cleaner vehicles infrastructure and for limiting petroleum product dependency in the long run. A price hike with this reason may have soft resistance from the people. Rather than the direct price hike, the government can levy certain emission tax, energy tax, congestion tax and carbon tax on these petroleum products or vehicles using it. This way, in one part, the government is limiting the petroleum product use and in other hand it will be showing the government's committment towards promoting cleaner vehicles in the country. But importantantly, these taxes need to be spent for the development of the cleaner electric vehicles in the country. I think if every citizen feels that the money he/she has been charged is for the purpose of safa tempo, electric bus and for electric train, then he/she may not be hesistant to be charged at all. They will be more assured once the development starts to take place and it should be a pride for every citizen that it is his/her contribution that has made it possible.

With this, I would rather conclude that instead of easy (so called bold step) solution, the government should take bold steps for the betterment of the country and even if the price hike is taken due to various reasons, the hike should couple with strong commitment towards the promotion of cleaner vehicles in the country that would lessen the problems each citizen is facing in the current context and this is the only win and win possible solution for all in the present context.

Comments are highly appreciated!