Nepal’S Electricity Security: Using Political Economy Analysis To Illuminate The Reform Path

Electricity insecurity costs Nepal’s economy 6% of its GDP, annually, but efforts to invest $2 billion since the mid-1970s still had little impact on the problem. Specifically, the installed capacity of the grid has grown about 10% annually in that timespan, but this chapter finds that investment actually coincided with a detrimental impact on the country’s system losses, to the extent that they even fully negated any of the new generation investment to the grid. In Nepal’s case, this chapter shows that the growth in grid capacity and in the bureaucratic capacity to manage the new investment did not coincide with political support from the country’s leadership to provide more electricity. Consequently, Nepal’s political leaders undermined these new investments, deliberately or through corruption, reducing a large proportion of the country’s economic output in the process. By illuminating these constraints to electricity security, the model proposed in this chapter can help to better manage budgetary funds while increasing electricity access.