<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101140/63720d7f9c7e80680e0b78cbjpeg.jpg" alt="" width="3019" height="2104"/><figcaption>Illustration: RABINDRA</figcaption></figure>On 8 March, international crude oil prices hit a record $139 per barrel due to the Ukraine crisis — nearly double the value last year.The longer the war drags on and sanctions tighten, the higher the prices are expected to go, with a domino effect on economies around the world, including Nepal.Being the world’s second largest producer of oil, Russia’s inability to export petroleum products has created a big gap in supply. Europe’s reliance on Russian gas has also made the Ukraine conflict a <a href="https://www.nepalitimes.com/here-now/ukraine-climate-and-nepal/" target="_blank" rel="noopener noreferrer">‘fossil fuel war’</a>.Nepalis are now paying Rs150 for every litre of petrol and Rs133 for diesel and kerosene at filling stations. And the graph is still going up.The state-owned Nepal Oil Corporation (NOC) is losing Rs16 for every litre of petrol and Rs12 for diesel it sells, raking up losses of Rs5 billion every month, which means further price hikes are a certainty.What’s more, Nepal is yet to be hit with the full impact of increasing oil prices internationally. The Indian Oil Corporation, which sets a new price for petroleum every 15 days, adding processing, administrative and other charges, is yet to set a new price tag to NOC. India is expected to hike fuel prices after last week’s state elections.“Frankly, we are scared to even estimate our next month’s loss,” says Sushil Bhattarai of the NOC, which has already incurred Rs28 billion in losses in the past six months against last year’s import bill of Rs132 billion.The longer <a href="https://www.nepalitimes.com/here-now/nepalis-flee-ukraine-as-russians-advance/" target="_blank" rel="noopener noreferrer">the Russo-Ukraine war</a> drags on, supply bottlenecks will remain leading to rising prices at the filling stations. At this rate, the NOC will be unable to pay its bills on its own, and will have no recourse but to further increase the price of petroleum.The government is already under pressure to manage funds for upcoming elections with limited revenue as a result of recent policies aimed at discouraging imports. The NOC is therefore unlikely to be able to dip into foreign exchange reserves to foot the bill.But the hike does not only apply to petroleum. Every hike in the price of <a href="https://www.nepalitimes.com/banner/from-a-fossil-past-to-an-electric-future/" target="_blank" rel="noopener noreferrer">fossil fuel</a> has a knock on effect on the cost of production and transportation. This means consumers have to pay more for all goods from food to gold, and everything in between.Coal, which cost $67 a tonne until a year ago is now at $400. Iron ore was priced at less than $100 per tonne last November, but is now $160 a tonne. A tonne of soybean costs $1,800, up from $1,150. Wheat prices have gone up by 45% in the past month.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101140/63720d829c7e80680e0b78ccjpeg.jpg" alt="" width="1500" height="1000"><figcaption>Photo: AMIT MACHAMASI</figcaption></figure>Petroleum products make up 13% of Nepal’s total imports. Next in the list of high imports are iron and iron products and food grain. In the first six months of this fiscal year, Nepal spent about Rs58 billion on iron and iron goods, Rs77 billion on vehicles and spare parts, Rs64 billion on soybean and palm oil, Rs23 billion on gold and Rs17 billion on coal.As the price of these commodities increase in the international market, Nepal has to dig into its <a href="https://www.nepalitimes.com/latest/nepals-remittances-forex-reserves-drop/" target="_blank" rel="noopener noreferrer">foreign currency reserves</a> to pay for imports.Another notable impact of the Ukraine conflict is on currency depreciation. The exchange rate of the Nepali rupee against a US dollar dropped to a new record depreciation of Rs123.44.Although this means remittance sent by Nepalis abroad will increase in rupee terms, as will the competitiveness of Nepali goods abroad, we are unlikely to benefit because Nepal does not have much to export.Alternatively, as the value of the dollar rises, so does the Nepal’s debt burden, putting additional burden on the state exchequer.To be sure, even before <a href="https://www.nepalitimes.com/latest/trapped-in-ukraine/" target="_blank" rel="noopener noreferrer">the Russia-Ukraine war</a>, inflation was at a record high. In fact, the prices of crude oil, metals, food grains and other intermediate commodities have increased sharply in recent years.Moreover, increased demand for goods in countries that had just recovered from Covid-induced recession is leading to supply chain disruptions and a further increase in prices.The war is just adding fuel to the fire, and as result the prices of all essential goods have skyrocketed. Traders and local businesses are also using the crisis to their full benefit."Our market is not competitive as it is and weak regulation means traders set new prices indiscriminately on the pretext of the international price hike," says economist Dadhi Adhikari.For example, soybean oil, which cost Rs120 per litre last year, is now priced at Rs255. Sunflower oil is Rs280 per litre, having seen an increase of Rs40 for a litre.“Prices of most consumer goods in the past month have gone up by 15-20%. When the international market has seen price hike of 30% on average, it is sure to affect our market too,” says Subodh Kumar Gupta of the Association of Nepalese Rice, Oil &amp; Pulses Industry.This price hike also applies to <a href="https://www.nepalitimes.com/banner/are-you-sick-of-chicken/" target="_blank" rel="noopener noreferrer">poultry and eggs</a> even though Nepal is self-sufficient in both products because soybean, wheat and corn used in the feed are imported.“It cost Rs47 just to bring 1kg corn to Kathmandu this time, the highest so far, the price has doubled in a year,” says Rabin Puri of the Grain Producers' Association. Nepal has already imported maize worth over Rs12 billion in the last seven months.Even so, the real effect of the price hike in the international market is yet to be seen, warns the former president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka."The goods in the market currently are from stocks. So we are yet to experience a full-scale impact," he says, adding that the cost of construction materials like cement, iron road and plastics will also soon increase. Iron rod has already registered its highest ever price at Rs135 per kg.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101140/63720d859c7e80680e0b78cdjpeg.jpg" alt="" width="881" height="537">Nepal has been experiencing moderate inflation in the past six years. It rose to 7.11% in November but came down to 5.66%. However, the NRB estimates that the inflation rate could reach double digits this year. The monetary policy for the current fiscal year had set a target of limiting the inflation rate to 6.5%.Former Executive Director of NRB, Nara Bahadur Thapa, says that there is indeed a risk of double-digit inflation. "Consumers have been hit hard again by inflation, with the poorest and most vulnerable bearing the biggest burden," he adds.On the other hand, rising prices of petroleum products and raw materials in the international market will also increase the production cost of Nepali industries. This means a higher cost of development projects, which in turn will force the government to increase the budget allocation for such projects.This worsening war also has far-reaching consequences for Nepal’s balance of payments deficit which will widen in the coming months, putting more pressure on foreign exchange reserves.In recent months, Nepal’s foreign exchange reserves have been depleting fast with <a href="https://www.nepalitimes.com/here-now/nepal-living-beyond-its-mean/" target="_blank" rel="noopener noreferrer">imports exceeding earnings</a>. Nepal has lost about 23% of its foreign exchange reserves in the last year.In January 2021, Nepal had enough foreign exchange reserves to import goods and services for 12 months and 18 days at $12.77 billion, primarily due to reduced consumption during the pandemic.But as the Covid-19 subsided and imports rose again, its <a href="https://www.nepalitimes.com/business/economic-downturn/" target="_blank" rel="noopener noreferrer">foreign exchange reserves dwindled</a> to $9.88 billion by January this year, enough to pay for only six months and 18 days worth of imports.In the same period, Nepal's balance of payments deficit stood at Rs241 billion, which is a record high. Such a sharp decline in foreign exchange for a country like Nepal, which does not have a reliable and sustainable source of hard currency earnings, spells disaster.As commodity prices rise in the international market, Nepal will also have to pay more for the same amount of goods. As of February, the import volume of petrol has increased by only 24% as compared to the same period last year, but due to the increase in the price in the international market, Nepal has to pay 110% more.Likewise, the import volume of diesel has increased by 10%, yet the cost of its import increased by 84%. While the import volume of coal decreased by 3%, the amount to be paid increased by 38%.Even though the import volume of iron and steeel products remained the same as last year, the price to be paid by Nepal has increased by one-third.Nepal has already incurred Rs1 trillion in trade deficit in the first seven months of this fiscal year. While the country spent Rs11.47 trillion in <a href="https://www.nepalitimes.com/latest/nepal-less-and-less-able-to-feed-itself/" target="_blank" rel="noopener noreferrer">importing goods</a>, it has exported products worth only Rs131 billion.In response, the NRB in recent months has been deploying various measures to discourage imports. But it is ineffective in the face of international price hikes for commodities. Even if Nepal drastically reduces imports, it will not be able to reduce the amount it is due.Another major impact of this will be felt in the <a href="https://www.nepalitimes.com/banner/nepals-precious-electricity-going-waste/" target="_blank" rel="noopener noreferrer">power sector</a>. Nepal Electricity Authority (NEA) has been importing 600MW of electricity from India. But due to the increased price of coal and supply bottleneck, India has started cutting 200MW that it has been providing to Nepal at a concessional rate. Moreover, Rs3 per unit that Nepal has been paying India has now increased to Rs7.If India further cuts power export due to an energy crisis, Nepal risks going back to electricity rationing. Although the installed capacity of Nepal's electricity generation now exceeds 2,000MW, it falls to one-third during the dry winter months when river flows is low. The rest has to be augmented with imports from India.Translated by Sonia Awale from the <a href="https://www.himalkhabar.com/news/128766">Nepali original</a> at <a href="http://himalkhabar.com/">himalkhabar.com</a>

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Ukraine crisis hits Nepal economy hard

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161156/636d1f909c7e80680e0af470jpeg.jpg" alt="" width="2000" height="2625"/><figcaption>Photo: AMIT MACHAMASI</figcaption></figure>On Thursday morning, Nepali Times photographer Amit Machamasi was greeted with a shocking sight when he drove up to Nagarkot to take pictures of overnight snowfall. Below him, dozens of <a href="http://archive.nepalitimes.com/news.php?id=2498#.Yc5xVy2B2t8" target="_blank" rel="noopener noreferrer">brick kilns</a> were spewing out smoke and steam into the city’s air (photo).The rain had washed down suspended particles, but the brick kilns were pumping more smoke into the air we breathe. There have been attempts to relocate brick kilns away from the densely-populated capital, but political patronage means owners are still fouling the air.After the 2015 earthquake damaged most of the Valley’s brick factories, <a href="http://archive.nepalitimes.com/article/nation/brick-factories-still-using-old-polluting-technology,2078" target="_blank" rel="noopener noreferrer">some adopted cleaner technology</a> to reduce emissions. Public pressure and urban growth then pushed most brick factories to the city’s fringes, and they are now  concentrated around Bhaktapur – most of those in the photograph are traditional dirty chimneys.After two years of forced closure during the pandemic, the brick kilns are once more working overtime to fill a backlog of demand from builders. But with politicians bogged down in power struggles, local leaders are too distracted to address the pandemic and pollution crises – both of which affect the human respiratory system.In a public opinion poll in this newspaper just before the 2017 elections, most respondents said <a href="https://www.nepalitimes.com/banner/dirty-politics-dirty-air/" target="_blank" rel="noopener noreferrer">air pollution</a> topped their list of concerns. Pollution has gotten worse since then, but it is unlikely that dirty air will figure in election speeches in 2022.“We have cleaner options like <a href="https://archive.nepalitimes.com/article/nation/earth-bricks-for-cleaner-and-healthier-kathmandu,4161" target="_blank" rel="noopener noreferrer">interlocking earth bricks</a>, so we just need public pressure to make it an election issue,” says environmentalist Bhushan Tuladhar.A pre-pandemic research showed that 40% of suspended particulates in Kathmandu’s air was from brick kilns, 30% from vehicular emissions, and 20% from open burning of trash and biomass. With the exponential increase in cars and motorcycles, the concentration of vehicular pollution at street level is now 70%.“<a style="letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/breathing-is-hazardous-to-health/" target="_blank" rel="noopener noreferrer">Hazardous pollution levels</a> in winter have become the norm, yet the government is not doing much to control it,” says Shilshila Acharya of the Avni Centre for Sustainability. “The public should demand action from our leaders.”Although public awareness about <a href="https://www.nepalitimes.com/banner/how-weather-elevates-air-pollution-in-kathmandu/" target="_blank" rel="noopener noreferrer">air pollution</a> is at an all time high, it has not translated into action by municipalities or the federal government – even though in a democracy elections would be the way to force accountability from public officials.Says Tuladhar: “Campaigning in 2022 for elections, particularly for local government, will give us a platform to build political will to reduce air pollution. People have to be outraged, and the good news is that we have some young and educated leaders taking the lead.”In 2019, <a href="https://www.nepalitimes.com/banner/nepal-is-going-up-in-smoke/" target="_blank" rel="noopener noreferrer">air pollution</a> resulted in the deaths of 42,100 Nepalis, according to one research. Many more were indirectly affected. Vehicular emission, garbage and agricultural residue burning and brick kilns were the main sources of toxic ambient air.Besides shifting to cleaner and greener brick-making technology, controlling garbage burning, and a rapid transition to electric vehicles with government investment in electric mass transit, would be steps that would quickly improve air quality in Kathmandu.Air pollution is leading to the <a href="https://www.nepalitimes.com/latest/double-whammy-air-pollution-and-covid-19/" target="_blank" rel="noopener noreferrer">premature death of Kathmandu’s citizens</a>. It has a huge impact on the economy. The solution is political, and elected officials need to respond to the crisis.Adds Shilshila Acharya: “Politicians as always are big on promises but we demand that they first protect our health by cleaning up the air we breathe. It is a basic right guaranteed by the Constitution. Don't talk about more grandiose plans, just clean up our air first.”

Sonia Awale

Happy New Air

<img width="1000" height="772" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141136/636cfe849c7e80680e0a0c42jpeg.jpg" alt=""/>Nepal’s economy has hit the iceberg, but you wouldn’t know it from the <a href="https://www.nepalitimes.com/latest/nepals-post-breakup-politics/">politicians fighting it out</a> on the deck.
A serial prime minister <a href="https://www.nepalitimes.com/latest/what-is-delaying-nepal-cabinet-expansion/" target="_blank" rel="noopener noreferrer">cannot form a functioning coalition government</a> even after 6 weeks of assuming office, his coalition partners are too faction-ridden to be a countervailing force, and the main opposition has just split.
All this is nothing new, of course. It has been the way things have been ever since the 1990 changes when democracy was supposed to unleash prosperity. Three decades of political infighting, neglect, conflict, a rent-seeking state and governance failure have left the <a href="https://www.nepalitimes.com/latest/instability-to-cost-nepal-dear-in-2021/" target="_blank" rel="noopener noreferrer">economy in tatters</a>. And now <a href="https://www.nepalitimes.com/banner/behind-the-masks/">we have the pandemic to contend with</a>. 
If the <a href="https://www.nepalitimes.com/latest/old-wine-in-old-bottle-in-nepal-politics/" target="_blank" rel="noopener noreferrer">political battles being played out</a> in the parlours of power were inter-generational or about ideology, something good might have come of it. But such personality driven one-upmanship means that the current crop of ageing politicos has neither the time nor competence to deal with the emergency at hand.
The malaise runs deep. Despite gains in literacy, the <a href="https://www.nepalitimes.com/nepali-times-search/?q=lessons+notlearned" target="_blank" rel="noopener noreferrer">poor quality of education</a> drives young Nepalis to seek salaried jobs. The <a href="https://www.nepalitimes.com/banner/first-drought-then-downpour/" target="_blank" rel="noopener noreferrer">yield from agriculture</a> is so low it does not make sense to farm. Government investment and market support for agriculture are ineffective. Every year, 700,000 youth join the <a href="https://www.nepalitimes.com/editorial/mayday-mayday-mayday/" target="_blank" rel="noopener noreferrer">labour market</a> but there are jobs in Nepal for only 15% of them. The rest seek their fortunes abroad by selling ancestral property, fallow farms, lower food production, increasing poverty, and completing the vicious cycle. 
Nepal’s trade deficit has averaged $10 billion a year for the last three years. It only went down in 2020-21 because lockdowns reduced fuel imports. Newly released Nepal Rastra Bank trade figures show that the country is, to put it bluntly, bankrupt. The only reason we have not gone completely belly-up is because of remittances, which pumped $8 billion into the economy this year. 
Nepal’s biggest import item by far is petroleum and in the past fiscal year it hit Rs175 billion — compared to Rs90 billion the country earned from all other exports combined.
You could say that we are buying oil with the sweat of Nepali <a href="https://www.nepalitimes.com/here-now/job-seekers-now-also-jab-seekers/" target="_blank" rel="noopener noreferrer">migrant workers</a>  With tourism receipts and fees from mountaineering and trekking nearly zero, the economy’s reliance on remittances is even greater than before.
This is obviously unsustainable: economically, politically and environmentally. Nepal needs to make good on its target to <a href="https://www.nepalitimes.com/nepali-times-search/?q=lessons+notlearned" target="_blank" rel="noopener noreferrer">switch to renewable energy</a> for transportation by 2030 — not just to do our bit to save the planet, but to reduce our economic and political dependence on the outside.  
Other interesting things stick out of the NRB trade data. Curiously, Nepal’s biggest item of export is soybean oil when the country is not any major grower of soya. The answer can be seen in the graph for imports: the fifth largest item there is raw soyabean oil. So, we import soyabean oil in bulk from Argentina, Brazil and Malaysia and re-export it to India.Even more interesting is that the money Nepal earned from exporting refined soybean oil (Rs53.6 billion) is exactly what we spent on importing the stuff (Rs53.3 billion). Our entire foreign trade system seems to be based on a product that we do not even manufacture ourselves. There is almost no value addition, it does not create jobs, and only provides the government about Rs5 billion a year in tax revenue.The government’s neglect of agriculture means that imports of staple items, vegetables, and fruits have soared in the past decade. The country spent Rs130 billion on importing food items in 2010-11, but Rs323 billion this fiscal year. Of this one-third was spent on rice imports alone.Partly, this is due to agricultural productivity not being able to keep pace with <a href="https://www.nepalitimes.com/banner/everybody-counts-in-nepal/" target="_blank" rel="noopener noreferrer">population growth </a>and growing demands of the middle class. Two-thirds of Nepal’s 30 million people are theoretically engaged in agriculture, but they are not producing enough to even feed themselves.We are living way beyond our means, and the only reason we can do that is because of those remittances. The buck stops at Singha Durbar.

Blood, sweat, tears

<img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141128/636cfd179c7e80680e0a0bc6jpeg.jpg" alt=""/>In 1911, Nepal became the second country in Asia to install <a href="https://www.nepalitimes.com/banner/nepals-1st-hydroelectric-plant-is-a-museum-piece/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/banner/nepals-1st-hydroelectric-plant-is-a-museum-piece/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNGTfe_ElDUnDBA5y1fWiNeNMmj3iw">a hydroelectric plant</a>, and was a pioneer in  electric transportation with the opening in <a href="http://archive.nepalitimes.com/news.php?id=1651#.YREMFtMzbRY" data-saferedirecturl="https://www.google.com/url?q=http://archive.nepalitimes.com/news.php?id%3D1651%23.YREMFtMzbRY&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNFCMXd7Cwgzp9Nvx_5uv6jjxw5VdA">1922</a> of a ropeway connecting Kathmandu to Dhorsing and <a href="https://archive.nepalitimes.com/article/business/ropeways-connecting-nepal,1749" data-saferedirecturl="https://www.google.com/url?q=https://archive.nepalitimes.com/article/business/ropeways-connecting-nepal,1749&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNFoAmTmRhO8F_jUynodP4VGdDGB2g">later to Hetauda</a>.  The Chinese gifted an <a href="https://www.nepalitimes.com/banner/kathmandu-bhaktapur-trolley-bus/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/banner/kathmandu-bhaktapur-trolley-bus/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNEJ0EZMCfEEa7kLPULhzZRB_DGcng">electric trolley bus line</a> from Kathmandu to Bhaktapur in 1975, which provided valuable commuter service for nearly 30 years. In 1995, the government replaced polluting diesel three-wheelers with electric ones, and 700 of the <a href="https://www.nepalitimes.com/opinion/12-full-opinion/how-to-get-things-done-in-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/opinion/12-full-opinion/how-to-get-things-done-in-nepal/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNHCvZcncwin-QX5AckUaljaRos77g">Safa Tempo</a> are still running on 28 routes, serving Kathmandu’s public transport needs. However, despite these milestones in electric transportation, Nepal has not taken the leaps it could have in powering mass transit with the country’s plentiful renewable energy potential.“We missed the bus on electric buses,” says environmental expert <a href="https://www.nepalitimes.com/here-now/cleaner-air-with-greener-buses/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/here-now/cleaner-air-with-greener-buses/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNEl_IlhZ7KVICnzsc-SRPKQHCTwSQ">Bhusan Tuladhar</a>. “We could have taken e-vehicles to the next level much earlier.”Indeed, the Safa Tempo now faces competition from diesel buses on trunk routes, and government policy on replacing larger diesel buses with electric ones has been erratic. Daily commuter volume in Kathmandu today now needs larger mass transit modes, but Safas are ideally suited for narrower streets of the inner city.“After the diesel three-wheelers were replaced by Safa Tempo, the government adopted a contradictory policy of promoting micro-buses,” explains Dharma Kumar Shrestha of NEVI (Nepal Electric Vehicle Industry).  <figure><img width="1435" height="1845" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141128/636cfd1b9c7e80680e0a0bc7jpeg.jpg" alt=""><figcaption>There are 700 electric Safa Tempo running in Kathmandu, serving an important public transport function. Photo: BHUSHAN TULADHAR</figcaption></figure>Sadly, in the early 2000s, the <a href="https://www.nepalitimes.com/banner/kathmandu-bhaktapur-trolley-bus/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/banner/kathmandu-bhaktapur-trolley-bus/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNEJ0EZMCfEEa7kLPULhzZRB_DGcng">trolley bus system</a> and another cargo ropeway to Hetauda were closed due to losses and mismanagement. Although private electric cable cars are coming into operation nationwide for tourism, there is still no strategic solution in sight for electrified public transportation, particularly electric buses.<a href="https://www.nepalitimes.com/banner/nepals-electric-transport-future-is-here/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/banner/nepals-electric-transport-future-is-here/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNEluSwdpWldVQB8IdEn83UBiR6-RQ">Electric vehicles</a> still have problems with carbon emission during production and battery disposal, but they will help improve the air quality and reduce Nepal’s petroleum imports which have more than doubled in the past 10 years. Some <a href="http://www.mofe.gov.np/downloadfile/E-mobility%20Assmnt%20NDC%202020_1623998131.pdf" data-saferedirecturl="https://www.google.com/url?q=http://www.mofe.gov.np/downloadfile/E-mobility%2520Assmnt%2520NDC%25202020_1623998131.pdf&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNE2VntIF8kJ7PIXXcPqAHkOF4QTHQ">12%</a> percent of the greenhouse gas emissions from the energy sector in Nepal comes from transportation, with heavy vehicles like fuel-run trucks and buses being the main polluters. There are now about 6,000 battery two-wheelers, over 27 thousand electric three-wheelers, and 1,000 electric vehicles in Nepal, but this is still only 1% of the total, according to a <a href="http://www.mofe.gov.np/downloadfile/E-mobility%20Assmnt%20NDC%202020_1623998131.pdf" data-saferedirecturl="https://www.google.com/url?q=http://www.mofe.gov.np/downloadfile/E-mobility%2520Assmnt%2520NDC%25202020_1623998131.pdf&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNE2VntIF8kJ7PIXXcPqAHkOF4QTHQ">Ministry of Forests and Environment report.</a> <figure><img width="1000" height="589" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141128/636cfd1e9c7e80680e0a0bc8jpeg.jpg" alt=""><figcaption>Consumption of diesel and petrol in Nepal. Source: NOC</figcaption></figure>“Since transportation contributes a significant amount of Nepal’s total greenhouse emissions, a shift to electric is essential to achieve the country’s goal of being carbon-neutral by 2050,” says Radha Wagle, Chief of the Climate Change Management Division under the Ministry of Forests and Environment. Electric Vehicles are initially more expensive, but in the long run not are not just less-polluting, but will also help improve Nepal’s balance of trade deficit with India. While production and battery cost of electric bus makes them more expensive than a new diesel bus of the same capacity, running costs, maintenance and repairs means that for every kilometer travelled, an electric bus will be <a href="https://www.nepjol.info/index.php/jiee/article/view/34321" data-saferedirecturl="https://www.google.com/url?q=https://www.nepjol.info/index.php/jiee/article/view/34321&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNHvg12N6jF8_nWl4dVJoCTHjzyUSQ">Rs14 cheaper to run.  </a> “The operational cost of a diesel bus is high,” says Tuladhar, who is also a board member of Sajha Yatayat, where 40% of the running cost is diesel. “If we switch to an all-electric fleet, we will have significantly lower costs that will let us provide better service. But because of the higher initial investment necessary, a government subsidy is necessary for the purchase of electric vehicles.” In this year’s budget, the <a href="https://www.nepalitimes.com/latest/new-nepal-budget-sparks-electric-comeback/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/new-nepal-budget-sparks-electric-comeback/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNGOdQbO8PkEMjBfZpNw847NLJ3Q-w">government reinstated tax rebates</a> on electric vehicles which now makes their cost comparable to 4- and 2-wheelers of the same capacity. However, the capital cost of electric buses is still more than double the cost of diesel-run buses, which is why further subsidies are needed. The government can easily recoup the lost tax revenue from reduced petroleum import bills, experts say.  NEVI’s Shrestha agrees that government subsidies would inventivise buyers for electric vehicles, and also setting up charging stations across the country.  Among all registered vehicles in Nepal, nearly 80% are privately owned two-wheelers, but they contribute only 8% to total emissions from transportation. Trucks and public buses emit 57% of CO2.  The demand for electric vehicles is highly sensitive to government policies. With the taxes imposed in 2020, the import of electric vehicles in the first 5 months of the fiscal year at the start of 2021, <a href="https://www.nepalitimes.com/latest/how-much-will-electric-cars-cost-now/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/how-much-will-electric-cars-cost-now/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNFvouUWmKFkrMCzKw9Z2vqYQ76y_g">declined by 88% compared to the previous year</a>. However, sales are expected to pick up again after the tax reversal. Electric rickshaws are gaining popularity in the Tarai, with over 26,000 registered  –- making up 0.82% of all vehicles in the country. <figure><img width="1588" height="946" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141128/636cfd219c7e80680e0a0bc9jpeg.jpg" alt=""><figcaption>Types of vehicles registered in Nepal. Source: DoTM</figcaption></figure>“A transition towards e-transport will reduce our trade deficit massively and further ensure green economic growth,” says Rajan Thapa, a climate change expert. Over the past decades, successive governments have taken pro-electric policies. The National Transport Policy in 2001 was developed to make the transportation sector environmentally friendly, and the Environmentally Friendly Vehicle and Transport Policy of 2014 calls for diversifying vehicles to run on electricity, hybrid, and gas. The government also is going to open 50 charging stations across the country and announced that it is buying 300 electric buses. The second Nationally Determined Contribution (NDC) that Nepal submitted to the UN last year pledges a 200km electric railway network, increasing the total sale of private e-vehicles to cover 90% and public transport (besides three-wheelers) to 60% of imports by 2030. This is expected to reduce carbon emission by 28% and <a href="https://www.nepalitimes.com/here-now/green-sticker-green-light-to-pollute/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/here-now/green-sticker-green-light-to-pollute/&amp;source=gmail&amp;ust=1628960160899000&amp;usg=AFQjCNE3Q7u9yrExf3zy5U0L51alzQDptQ">lower pollution levels in cities</a>. “The government of Nepal is being more ambitious and committed to ensuring net-zero emissions ahead of 2050, " says Prem Kandel, secretary of the Ministry of Forests and Environment (MoFE). “We have made a long-term strategy that will provide us with evidence and policy choices to look at potential ways of reducing carbon emission. E-mobility is one of the means of achieving our ambitious target.”Diya Rijal is a communication consultant for the UK government-funded Policy and Institutions Facility.

The road to electric transportation in Nepal

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109141112/636ba7a79c7e80680e073796jpeg.jpg" alt="" width="1500" height="1000"/>It has become a cliché to say that every crisis comes with opportunities. But that does not mean it is not true. It is up to us to grab that chance.The 2015 earthquake gave Nepal the opening to build back better, and the reconstruction of monuments did revive traditional building practices. The five-month blockade forced Nepal to look for alternative trade routes, even though the trans-Himalayan corridor is mostly confined to rhetoric so far.The COVID-19 crisis is also an opportunity for a ‘new normal’ in agriculture, food self-reliance, more sustainable tourism, and reduction of urban air pollution. But the temptation is to go back to business as usual -- and we probably will. But this crisis is a wakeup call.As dark monsoon clouds gather over Kathmandu this week, we are reminded of another cliché – that behind them there is a silver lining.Nepal’s imports have fallen by 15.6% this year compared to the same period last year. The import bill went down to Rs1.12 trillion, saving the country some Rs120 billion. Most of this was because of a reduction in petroleum imports, which made up 15% of all imports last year.Nepal imported Rs160 billion worth of petroleum products in 2020, a Rs52 billion drop from the previous year. Imports of steel, textiles, machinery and other commodities have also dropped sharply.The lockdown has also resulted in 41% in savings for the treasury from Nepalis not travelling abroad, either for holidays or education. Nepalis spent Rs89 billion for travel abroad last year, and this year this figure has dropped to Rs53 billion. The amount of hard currency Nepalis exchanged to pay for school and university fees abroad also dropped from Rs46 billion last year to Rs26 billion in 2020 – a reduction of 44%.Earlier this year, amidst uncertainty about the pandemic, there were <a href="https://www.nepalitimes.com/editorial/high-risk-remittance/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/high-risk-remittance/&amp;source=gmail&amp;ust=1598527146223000&amp;usg=AFQjCNHf0lFzIi_PySYU9UWCe8o3TsjhBg">dire predictions about a drastic drop in remittances</a> that Nepal gets from its workers in India and overseas. The World Bank projected a 14% decline in remittances this year, the Asian Development Bank (ADB) had a worst case scenario of a 28.7% drop, and Nepal’s own Nepal’s Central Bureau of Statistics forecast an 18% decline.There was indeed a drop in March and April when banks and money transfer agencies closed down. But there has been a rebound, and remittances so far this year have already hit Rs875 billion, which is only 0.5% less than the preceding year.The drop in outflow of hard currency and a rebound in remittances has had a positive impact on Nepal’s balance of payments which improved from minus Rs67 billion last year to plus Rs2.8 trillion this year. Nepal’s hard currency reserves now stand at $2.15 billion – enough to pay for 14 months of imports.To be sure, we have to wait and see if the remittances remain steady August onwards. The record high Rs101 billion for July was largely due to a backlog from previous months, workers bailing out families back home whose incomes had declined, as well as US dollar appreciation.The global economic downturn is expected to hit the economies of destination countries hard, and this will inevitably affect their <a href="https://www.nepalitimes.com/latest/cash-flow-crisis-for-migrants-and-families/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/cash-flow-crisis-for-migrants-and-families/&amp;source=gmail&amp;ust=1598527146223000&amp;usg=AFQjCNExCIbZRo4zeFdlYSyi0IOE22Uibg">migrant workers</a>. However, there are positive signs. China’s petroleum imports have almost hit pre-pandemic levels, and this will shore up the economies of oil and gas exports from the Gulf and Southeast Asia. In addition, employers hit by economic slowdown will want to also scrimp on salary costs by hiring cheaper essential workers from abroadEconomists like former finance secretary Rameshore Khanal are not so pessimistic. <a href="https://www.nepalitimes.com/banner/economic-cost-of-5-months-of-nepal-lockdown/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/banner/economic-cost-of-5-months-of-nepal-lockdown/&amp;source=gmail&amp;ust=1598527146223000&amp;usg=AFQjCNHU4tyv8beehTVc-SGjNiL7ZweFOQ">He says in our analysis</a> that Nepal may be shielded from the full impact of the crisis because ours is still largely a subsistence economy, and people have traditional coping mechanisms.All this is not to discount the seriousness of the health and economic emergencies we face. The most serious is the looming crisis in the banking sector, as lenders put up collateral assets of defaulters up for auction. What will happen if there are no buyers?About 500,000 young Nepalis enter the labour market every year, and nearly that number is expected to return to Nepal in the coming months from abroad. Where are the jobs for them? Even if the macro-economic indicators are good, there is a real socio-economic and political crisis on the horizon.

Some silver linings

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22fd9c7e80680e0417c0jpeg.jpg" alt="" width="730" height="348"/>Naya Patrika, 14 JanuaryNepal imported 653MW electricity from India on Friday, the biggest amount so far since the country ended powercuts three years ago. The Nepal Electricity Authority (NEA) had to import because the total demand for electricity reached 1,243MW last week because of winter peak load and falling production from run-of-river schemes due to low water volume in rivers.“The amount we import depends on the total demand, so it keeps going up or down,” explained Suresh Bhattarai of NEA. But on Saturday a full 58% of the total electricity demand in Nepal was met from Indian imports, and this was unprecedented and unexpected. NEA’s Managing Director Kulman Ghising had informed that Nepal would be importing up to 500MW electricity this winter, but the actual import exceeded his estimate by 153MW. Last year Nepal spent Rs20 billion importing electricity from India, on top of the Rs90 billion in petroleum imports.According to NEA, the import is necessary to fulfill immediate needs and to prevent the economic cost of resuming power cuts. “If we compare the cost of importing 500MW electricity to the loss that Nepal’s industries would incur without that electricity, then the loss is much higher,” said Ghising. “It will take many years for us to construct 500MW hydropower plants. But the power is immediately available for import, which is economically more beneficial for us.”NEA has not declared resumption of load-shedding, but many areas have been facing electricity cuts since mid-December. “The distribution systems and transmission lines are overloaded, and that has led to transformers exploding and feeders catching fire. These incidents have led to electricity service being interrupted, it cannot be called load-shedding,” says Bhattarai.A working committee has been formed to address the problems in Kosi Corridor Transmission line. The Committee has been tasked with identifying the problem and recommending solution, and presenting the report to province Chief Minister Sherdhan Rai.

More than half of Nepal’s electricity imported from India

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107171132/636933419c7e80680e03df86jpeg.jpg" alt="" width="1400" height="1008"/><figcaption>PIPE DREAM: Part of a 69km petroleum pipeline connecting Amlekhganj in Nepal to an oil refinery in India, under construction in Patlaiya. The pipline is proof to many that the Nepal government has no intention of switching to renewable energy any time soon. Pic: Jiyalal sah</figcaption></figure>President Bidya Devi Bhandari will be leading the Nepali delegation at the Climate Summit (CoP24) in Poland next month, and environmental activists are lobbying with the Nepal government to get her to make a far-reaching policy statement on renewable energy.They say Nepal’s commitment of turning <a href="https://www.nepalitimes.com/banner/20-electric-by-2020/">20% public vehicles into battery-operated ones by 2020</a> is not ambitious enough, and the President can announce in Katowice more meaningful steps towards electric mobility.In a symbolic move to end Nepal’s fossil fuel addiction, President Bhandari is already riding an electric  but activists say that is not enough. She needs to create political momentum by getting her government to announce a cut-off date for Nepal to turn all public vehicles into electric ones.Manjeet Dhakal, adviser to the Least Developed Countries (LDC) support group at the UN Framework Convention on <a href="https://www.nepalitimes.com/banner/on-thin-ice-in-the-khumbu/">Climate Change</a> (UNFCCC), says: “Nepal can move towards electric mobility if its head of the state announces a goal to this effect at the international climate change conference in Poland.”Read also: <a href="https://www.nepalitimes.com/banner/electri-city-cars/">Electri-City Cars</a>, Sikuma Rai<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107171132/636933449c7e80680e03df87jpeg.jpg" alt="" width="327" height="327"><iframe id="datawrapper-chart-CZIOW" style="width: 0; min-width: 100% !important;" src="//datawrapper.dwcdn.net/CZIOW/4/" height="472" frameborder="0" scrolling="no"></iframe><iframe id="datawrapper-chart-2DG41" style="width: 0; min-width: 100% !important;" src="//datawrapper.dwcdn.net/2DG41/3/" height="472" frameborder="0" scrolling="no"></iframe>Last week, Prime Minister KP Oli flagged off Nepal’s first five electric buses in Kathmandu, and unveiled the country’s first National Plan of Action for Electric Mobility.Bhushan Tuladhar of Sajha Yatayat, the public transportation company that got the first lot of electric buses on loan from the Lumbini Development Trust for Kathmandu routes, says: “Public transport is directly related to public health, and it is also linked to Nepal’s economic well-being. This can be the beginning of a new era in clean transportation.”The National Plan of Action envisages a separate unit at the Ministry of Environment for the promotion of electric transport, but many are skeptical about it, given Nepal’s poor track record in implementing commitments.A recent <a href="http://www.cansouthasia.net/wp-content/uploads/N-CANSA-State-of-Climate-Action-in-Nepal-FINAL-7-October-2018.pdf?fbclid=IwAR0IOLO0TREa5UjbdMLsBnUyTRyeaRfP-iDMW-bI2-tFyddYbj5KstNKOCI">report by Nepal Climate Action Network South Asia (N-CANSA)</a> says Nepal is actually moving in a reverse, non-renewable direction despite many past policies, strategies and international obligations to lower its dependency on fossil fuels – the biggest source of CO2 emissions.Read also: <a href="https://www.nepalitimes.com/editorial/climate-climax/">Climate Climax</a>, Editorial<a href="https://www.nepalitimes.com/opinion/decarbonise-now/">Decarbonise now</a>, Ajaya DixitNepal’s Climate Change Policy 2011 and the Environment-friendly Vehicle and Transport Policy 2014 aimed to reduce greenhouse gas emissions by steadily reducing imports of petrol, diesel and LPG. In 2016, Nepal passed its National Determined Contributions (NDC) aiming to turn 20% public vehicles into battery-operated ones.But since then, the country’s addiction to fossil fuel has only deepened. All the policies and strategies did not make a dent on imports. In 1993/94, the year Nepal ratified the UNFCC, Nepal’s total import of petroleum products was worth only Rs5 billion. By 2008, it had grown to nearly Rs40 billion, and in the past ten years it has more than tripled to an annual Rs150 billion. (See graphs)The reason is the explosive growth in the number of <a href="http://archive.nepalitimes.com/blogs/kundadixit/2018/01/24/electric-cars-shock-fossil-industry/">fos</a>sil fuel vehicles from only 84,000 ten years ago to 438,000 today. Most of the increase was during the tenure of Maoist finance minister Baburam Bhatttarai in 2008-9. Part of the reason for the growth in petroleum imports was also the corruption-driven artificial shortage of electricity which saw a proliferation of diesel generators. Import of diesel grew five times in the past ten years.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107171132/636933469c7e80680e03df88jpeg.jpg" alt="" width="640" height="848"><iframe id="datawrapper-chart-hKFc3" style="width: 0; min-width: 100% !important;" src="//datawrapper.dwcdn.net/hKFc3/4/" height="390" frameborder="0" scrolling="no"></iframe>For every Rs100 earned from its exports, Nepal spends Rs169 just to import petroleum from India. Nepal is now also importing half of its electricity need from coal-fired thermal plants in India. Although it went down slightly with monsoon supply and new hydro powerplants coming on stream, Nepal imported 424MW of electricity from India this summer, which was about 35% of peak demand.Says Durga Upadhyay, a co-author of the CANSA report: “If it was not for remittances, our foreign currency earnings from exports would not even pay for petroleum imports.”Read also: <a href="https://www.nepalitimes.com/here-now/the-cost-of-light/">The cost of light</a>, Om Astha RaiDespite policies and symbolic moves to reduce petroleum imports, Nepal’s consumption is growing as the road network spreads and vehicle imports increase. The government’s plans to build a 36km cross-border petroleum pipeline from India and storage stockpiles in each Province indicates that there is no end in sight to the country’s fossil fuel addiction.Manjeet Dhakal says these moves indicate that Nepal’s policymakers believe the cost of ending the dependence on petroleum is too high. “But that is an outdated concept,” he says, “it is now possible to drive a country’s economy without using fossil fuels. PM Oli should learn from Costa Rica, a country he visited recently.”<iframe id="datawrapper-chart-ny5IE" style="width: 0; min-width: 100% !important;" src="//datawrapper.dwcdn.net/ny5IE/5/" height="400" frameborder="0" scrolling="no"></iframe><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107171132/636933489c7e80680e03df89jpeg.jpg" alt="" width="351" height="555">Some argue that Nepal’s economy is so petroleum dependent that it cannot switch suddenly to renewable without assistance for the conversion of cars, and to add new hydropower plants. Nepal’s per capita <a href="https://archive.nepalitimes.com/regular-columns/half-full/A-carbon-neutral-Nepal-is-possible-clean-Nepal,1064">carbon</a> footprint is negligible, they add, so whether or not Nepal goes for electric mobility is not going to save the planet.However, former energy minister Dipak Gyawali says: “The volume of carbon emitted by Nepal might be small, but the rate at which we are increasing it is even higher than the industrialised West.”Gyawali says Nepal should immediately declare a peak emission year, pass a policy to gradually replace all government vehicles with electric ones and impose a tax on fuel that can be used to subsidise electric vehicles.Nepal needs to do this more importantly to reduce its balance of payment deficit, save the country from bankruptcy, and reduce its political dependence on India, than to save the world from <a href="https://archive.nepalitimes.com/article/nation/melting-mountains-shake,3073">global warming</a>.