An Entrepreneur’s Testimony
BIR BAHADUR GHALE
LEARNING ABOUT MICRO-HYDRO
In 1989, when talks on the Trade and Transit Agreement between Nepal and India were being held, the Agriculture Development Bank of Nepal (ADBN) organised an exhibition in Kathmandu.1 Its aim was to promote alternative sources of energy such as biogas, solar, and MHP. At the exhibition I saw a notice that said that the government would provide a subsidy of 50 per cent to those interested in installing an MHP. I did not know then what a subsidy was, but later I learned that it was money that the government would provide to anyone interested in setting up an MHP and that the ADBN managed these subsidies. I thought this was a very good policy.
I was then based at Naubise in Dhading District, working as a petty contractor to the Chinese, who were constructing a section of the Prithvi Highway. When the talks between Nepal and India failed, trade between the two countries came to a halt at the end of March. The import of petroleum via India also stopped and construction activities came to a standstill. The Chinese contractor prepared to leave, and I had no reason to stay in Naubise either. On the evening before I left, as I was having dinner in a roadside hotel, I noticed to my surprise that the fluorescent tube light in the hotel flickered constantly. The hotel owner told me that the electricity was generated at a nearby multipurpose water mill and that when the mill was used to grind maize or rice, the power supply became erratic. Once the grinding was complete, the light stopped flickering.
Naubise, it seemed, had electricity even before it was connected to the Integrated Nepal Power System (INPS). Out of curiosity, I visited the mill the next morning. It had a small dynamo coupled to a water turbine. The whole arrangement did not look complicated at all and I became excited at the thought of installing a similar system in my village, Barpak, in Gorkha, the district with the largest community of Gurungs and Ghales in Nepal.
A month later, with the thought of generating electricity there, I returned to my village. Barpak proper consists of about 786 houses clustered together and strikes one as a small town. It is situated south of Manasulu Himal at an elevation of about 1,900 metres. It takes nearly two days to reach it on foot from Pokharithok, the district centre of Gorkha. The major trail to other villages in North Gorkha passes through Barpak. Many people from the village are employed in the Indian and British armies and some work in other countries doing blue-collar jobs. In fact, foreign remittance is the primary source of income for many families. The main crops grown in the village are corn, wheat and rice, but the income generated from farming is not enough to sustain most families. With money sent home from abroad, however, families in Barpak live a comfortable life. One unique characteristic of Barpak is that unlike in many other Nepali villages, where economic disparity is stark, one cannot differentiate between the poor and the affluent.
Barpak is rich in natural beauty. The village has abundant water resources but is seldom affected by floods or landslides. The Daraundi River flows about 1,000 metres below Barpak, and many streams around the village eventually join this river. I had studied hydro-electricity in the ninth grade and remembered that the greater the head of water, the greater is the quantity of electricity that can be generated. I wondered if it would be possible to generate electricity in the streams in my village and whether the electricity thus generated would be enough to supply the whole
� Barpak, Gorkha District
village. Though I had little money, I was interested in finding out the cost of setting up a hydro plant and generating electricity.
While visiting the exhibition in Kathmandu, I had asked how much it would cost to set up an MHP. I was told that the cost would be between 500 and 600 thousand rupees, of which 50 per cent would be subsidised by the ADBN. I thought that getting a loan of 300 thousand rupees would not be a major problem for such a novel cause and resolved that I would pursue the idea of establishing a hydropower plant in Barpak. I approached the ADBN for a loan, but since these were the early days for MHP development, there was confusion among the bank staff about how to sanction a loan. It was unclear, for instance, whether the bank would provide a loan for transmission lines or for generating equipment or for both. The bank advised me to contact one of several private and public companies which could undertake a feasibility study and estimate the cost. The report would help the Bank determine how much to provide as a loan and how much as a subsidy. The list of companies included Balaju Yantra Shala (BYS), Kathmandu Metal Industries (KMI), Vikash Consultancy Services (VCS), and Khawa Engineering (KE). Since BYS had already supplied turbines to Barpak on earlier occasions and was familiar with the area, I decided to contact it.
Though I did not know what this visit would bring in the end, I thought that it would be a worthwhile investment. I was interested in bringing new ideas to Barpak, not simply in repeating what others had already done. The situation in my village, however, was not conducive to change. Partisan politics had pervaded all aspects of social life and individuals with vested interests dominated village politics. As a consequence, I had to be very careful that my initiative was not politicised before it even took shape. Also, I was young, just 22. On many earlier occasions, I had had to pretend to agree with the elders just to show them respect. It was important that I have a strong case before I told them of my plans.
I asked BYS technicians to visit Barpak, paying them a daily allowance of Rs
450. I pretended that they represented the Water and Energy Commission of the Ministry of Water Resources and had come to undertake a feasibility study of MHPs. I had to do this because Barpak had had an unpleasant experience in the past. The Resource Conservation and Utilisation Project (RCUP), a USAID-funded natural resource conservation project, had undertaken a similar study in the early 1980s and had destroyed a large tract of forest but built no hydropower project. The people of Barpak, obviously, were unhappy about what had happened.
Their experience with the RCUP had made a very unpleasant impression and since then the villagers had been unwilling to allow any feasibility studies for MHPs to be conducted. In order to regain their trust, I had to create a legitimate façade. My approach seemed to work. The villagers were curious about the technicians and asked them a lot of questions. Before things could go wrong, I intervened and told them a story about how I had met them on the way and accompanied them. I said that since there were no hotels in the village, I had offered to let them stay at my house. I explained that I would take them to the different sites they were to investigate. At that time, no one in the village, not even my family members, had the slightest knowledge of my true intentions.
After they had completed the survey and feasibility study, we returned to Kathmandu, and the technicians prepared a report. It included the cost, which they had estimated at between 2 and 2.5 million rupees. I was stunned. The cost was four times higher than originally predicted. The shock did not, however, deter me from pursuing my dream of establishing an MHP. I would need to answer one major question, though: if I ever set up a plant with a bank loan, would I be able to repay it? The first thing I had to find out was how much the villagers were willing to pay. I also had to find out if the revenue the villagers would generate would be enough to pay back the loan and keep the plant running. I was convinced that even if the villagers did not have much money, if they had a strong desire to use electricity, they would pay for it and sufficient money would be raised. With this conviction, I decided to begin my MHP investigation in Barpak. The next challenge was to read the people’s minds about their willingness to pay for electricity without telling them that I was going to establish an MHP.
During the 1989 monsoon, I went home and began to ask the villagers how they felt about having electricity in the village and whether or not, if it ever came, they would pay for it. Their response was positive. I discovered that kerosene, which they used for illumination, was in short supply because of the Indian trade embargo. The District Panchayat2 sent a limited quota to each village and people paid as much as Rs 50 for half a litre of kerosene, which lasted for only two weeks. This rate gave me an idea of how much villagers were willing to pay to illuminate their homes.
In Barpak, as is the case elsewhere, the monsoon is the season for planting rice. Many farmers in Barpak practice perma, a system in which each farmer helps others to sow their fields free of charge in return for help in his own field. Some comparatively rich farmers hire poor people such as local tailors and blacksmiths on a daily wage basis. Thinking that the views of these poor people would provide a good benchmark, I asked them if they would use electricity to illuminate their homes if it became available in the village. They replied that they would pay Rs 40-50 a month for the privilege. I realised then that the desire to use electricity among the villagers was strong and that they were willing to pay for it. The willingness of the villagers to pay for electricity made me confident that I could sell electricity, raise revenue locally and pay off a one-million-rupee loan.
I was happy to learn that people would pay for electricity. For home illumination, however, electricity is used only at night; in the daytime, lights would not be needed and the generating plant would remain idle. There would be no additional revenue unless the electricity generated by the MHP was consumed during the daytime also. I began to explore how electricity could be used. I collected information about how much milling would be possible using daytime electricity. It became clear that grinding corn and other cereals would indeed both consume electricity and generate revenue.
I then forwarded a detailed proposal to the ADBN. The Bank was reluctant to process my proposal because it was an expensive proposition and if I failed to pay back the loan the ADBN would lose a considerable amount of money. The officials at the ADBN suggested that I seek quotations from other companies also. I contacted Kathmandu Metal Industries (KMI), which is owned by Akkal Man Nakarmi, the pioneer of peltric turbines in Nepal. This company provided the lowest quotation, 1.9 million rupees for a 40-kW plant. The general manager of ADBN liked the new proposal based on KMI’s quotation and asked me to present a detailed feasibility report prepared by a team of technicians and a loan officer within 15 days. A team of four, including an overseer from the ADBN, a loan officer from its field office in Gorkha, Akkal Man Nakarmi and me, went to Barpak and prepared a detailed study. The villagers did not know that I was behind the study.
LOCAL REACTION
It took a lot of walking back and forth between Barpak and Kathmandu to reach this stage. The ADBN had little experience in providing loans for micro-hydropower development and I was so young and inexperienced that people found it difficult to trust me. After the detailed report was approved, the Bank granted me a subsidy of Rs 491,350 and a loan of 1.1 million rupees. Since I still needed more money, I sold a small plot of land in Kathmandu that I had bought a few years earlier. (Perhaps I am the first person in Nepal who has sold land in Kathmandu to open an industry in a village: everyone else sells village property to buy land in Kathmandu.) At this stage, the villagers had to be told. I told them that not only was I personally involved in the project but that it had been my initiative from the start. Some villagers resented my involvement. They could not believe that I had ventured into something the government itself had abandoned after conducting several studies in 1980s. I was called an ignorant and arrogant boy. However, I stuck to my convictions, and, after nearly four years of hard work, I brought electricity to Barpak in 1992. My dream had been realised.
In 1992 a hailstorm badly damaged the crop in Barpak. Had the devastation occurred in another village the people would have suffered more, but the people of Barpak were able to cope with the disaster because of the village’s relatively strong economic base. The construction of the MHP proved to be a great relief for those who had no other source of income to make up for the bad harvest. I did not accept any free contributions of labour as many other development projects do; instead, I paid the workers high wages. I was happy, though, when some people voluntarily transported a few loads of stones from the quarry to the construction site. Villagers also provided encouragement in the form of moral support. Except for the ADBN, no institutions or agencies helped me with the work. I did not get any help from the local VDC either. Without the keen interest of the General Manager of the ADBN, it would not have been possible for me to complete the project.
When the plant came into operation, the villagers were happy. Even those who had been sceptical initially began to appreciate that the effort was indeed worthwhile. Their joy was understandable: no progress had been made in hydropower development after the feasibility studies of the 1980s, when suddenly a young man from the village took the initiative to introduce electricity. Normally people talk about doing a lot of big things, but do not accomplish anything. In this case, they saw results. There was lighting in houses and grinding maize was easier since there was no need to travel to the ghatta located at the base of the mountain. The villagers said they were proud of me. During the construction period, I came across two types of people: my peers, who were unappreciative, perhaps because they felt out-classed; and the larger majority, who were grateful for my work.
ECONOMY OF MICRO-HYDRO
I set the price of electricity initially at Rs 15 per month for using a 25-watt bulb and later increased it to Rs 19. For every household in the village, electricity became a cheaper, easier and cleaner way of lighting than kerosene had been. The village could not, however, consume all the power generated, and, in order to sell surplus power, I had to reduce the cost for those who consumed more and paid in advance.
The main problem during the plant’s operation was technical. Since no one in the village had any experience in generating hydro-electricity, we damaged two generators in the first two years. They were expensive to replace and put a great financial burden on the plant. With more experience, however the machine operator and I got more used to these technical matters.
As far as financial returns were concerned, I was running at a loss. Even if the electricity charges were increased from 19 rupees to 25 rupees per bulb, I would raise only about Rs 40,000 a month, and I had to pay Rs 10,000-12,000 to my staff and Rs 12,000 to the bank every month. On top of that were the costs of maintenance and repair. I also had to consider the interest on my own investment plus some additional return on it. Had I kept the land in Kathmandu and sold it a few years later, it would have fetched me more money than what I was making from the hydro plant. It became clear that I would have to use daytime electricity for other purposes in order to maximise my returns. The grinding mill consumed only 5 kW and earned me about Rs 25,000 per month, while the 40 kW that I sold for illumination at night fetched me only Rs 35,000 per month. I invested another nine lakh rupees in a handmade paper industry to use the daytime surplus power with technical help from ITDG-Nepal office. The MHP also generated employment for the young people of the village, and encouraged other villagers to invest in rural enterprises. Subsequently, a bread factory, a paper industry, several grinding mills, and a furniture factory, all of which used the daytime electricity were established. People thought about establishing stone cutting and candy industries and I planned to set up an aromatic oil extraction plant. Then, another set of events led us to opt for a ropeway instead.
BARPAK ROPEWAY: FROM IDEA TO REALITY
In 1986, long before establishing the MHP, I had visited Hong Kong and been fascinated by its cable cars. I had wondered when we might have such facilities along the steep trails in Barpak. I had said to myself then that it was not God who had made the cable cars but people who were no different than those in my village. That was the beginning of my interest in ropeways.
Later, when German Technical Development (GTZ) planned to undertake feasibility studies to develop micro-hydro projects in Gorkha, Akkal Man Nakarmi, a member of the study team, invited me to join the group. During the fieldwork, I raised the question of installing a ropeway. I
thought that if a ropeway were established, it would change the way of life in my village by facilitating the transportation of goods, promoting the establishment of industries and, at the same time, helping me use daytime electric power. Akkal Man said it was possible to use ropeways in Nepal but asked who would undertake such a venture. I requested that he design a ropeway for Barpak. On my insistence, he prepared a design and cost estimate in 1992.
I wanted to pursue ropeway development in Barpak, but this time I planned to inform the local people and get their views from the outset. Having people supporting me would save a lot of trouble. Besides, the villagers had already developed confidence in me. When I talked about the ropeway with them, I found them interested and supportive.
Encouraged by the villagers, I went to meet the former General Manager of ADBN Srikrishna Upadhyaya, who was now a member of the NPC and had more authority than before. I handed over Akkal Man’s design and cost estimate to him and requested that he extend any help he could. He assured me that he would get the Canadians to help. Unfortunately, ropeways were not in any government programme so nothing happened. Then I contacted the Director of ITDG-Nepal Bikash Pandey, who was interested in developing techniques to enhance the load factor of MHPs. A ropeway was something that could enhance load factor very easily. When they came to Barpak, I guided Bikash and an expatriate friend through the area and apprised them of my plan. This meeting also came to a dead end.
Then, in 1996, Akkal Man called me and suggested that I meet a Swiss volunteer who was coming to Nepal. Meanwhile, the President of the Federal Republic of Germany, who was on a state visit to Nepal, came to Barpak to observe projects implemented by GTZ. In Barpak, the villagers formed a committee to welcome him and made me the chairperson. The President came and took part in the official rituals, but unfortunately he left before I even had a chance to discuss my new project with him. I decided to take the Swiss volunteer to Barpak with me. He told me that a ropeway was suitable for Barpak and that he knew about second-hand Swiss Army ropeway equipment which was for sale.
Upon learning that ITDG-Nepal had conducted some studies on ropeways, I went to ITDG-Nepal, where I met Bhola Shrestha, who at that time headed its end-use project. I told him about the Swiss volunteer and the ropeway equipment on sale for about 2.5 million rupees, less than half of what a brand-new, tailor-made ropeway would cost. To get detailed information, Bhola examined the report from the Swiss volunteer. Everything looked fine except for funding. The ADBN had expertise in financing and encouraging the growth of MHPs but there was no agency which promoted the installation of ropeways. Because the government had no clear plans or policies regarding the promotion of ropeways, there was no place I could turn to.
On the one hand, I was excited that we could get the right equipment at a very good price, but on the other, I was sad that there was nowhere to look for funds. Acquiring funds for the ropeway seemed impossible until Bhola Shrestha approached the British Embassy in Kathmandu with the ropeway proposal. The British Ambassador generously granted us about 50,000 sterling pounds (about Rs 4,646,895) towards installing the ropeway. This was not enough money but construction began anyway. ITDG-Nepal later managed to provide an additional 600 thousand rupees and local villagers raised another 500 thousand. Still, there were unforeseen expenses such as redoing the ropeway alignment and paying for additional helicopter trips.
With the first hurdle of acquiring funds crossed, we thought that things would proceed smoothly. They did not. I personally had to manage everything in the field and coordinate the agencies involved. I did things like picking up the steel cables from the Birgunj Custom Office, looking after the logistics of everyone who came to Barpak and sending periodic progress reports to the British Embassy. ITDG-Nepal provided technical support and Himal Hydro supervised the construction, which was undertaken by a local NGO Northern Gorkha Development Group (NGDG). I had to coordinate the activities of all three. Working on a tight budget caused many problems. It did not take me long to realise that each organisation involved had its own rules, principles and demands, and that they sometimes conflicted with each other. Getting them to work together was difficult. There was a lot of paper work and a lot of talk but little work. Progress was slow.
Transporting equipment and construction materials from Gorkha to Barpak was a major problem. We had to rely on porters. Russian Mi-17 helicopters, which can carry large loads, were not available so we had to use the Royal Nepali Army’s Puma helicopters instead. Since they could not transport large loads, extra trips were necessary; this added expense
to an already tight budget. On the construction site, a major landslide occurred while the foundations were being dug, forcing us to shift the drive station and re-align the ropeway path. This, too, added to the cost. Housing the specialist from Switzerland was also very expensive.
We asked ITDG-Nepal to help us with funding to offset the unexpected expenses, but since ropeways were not an ITDG-Nepal programme, the agency did not have funds allocated for them. ITDG-Nepal, which looked after the overall supervision, argued that Himal Hydro should pay for the additional costs because its design had had to be changed. Tensions among the agencies
Ropeway in operation
involved grew. I felt it was better to bring the situation under control than let it flare up through finger pointing. I met the general manager of Himal Hydro and requested that he do a complete design and site survey for the ropeway. This organisation invested about 500 thousand rupees of its own. The new design included plans for expanding the ropeway to other villages as well.
For the villagers, building the ropeway was an exciting experience. It provided employment and it was something new. Unlike me, they were blissfully unaware of the many problems we faced.
After the commissioning of the ropeway in February 1998, the villagers asked me to take charge of running it, but I did not have the time. In any case, I thought that my working there as an employee would not look good. I decided to remain an advisor and formed a committee to operate it. My objective was to cultivate the capacities of other villagers; I would be involved only if there was a major problem. The committee consisted of the VDC chairman, villagers who had invested in the ropeway and Dalits from the village. The committee decided on the mode of operation and the fees to be charged.
The ropeway had an immediate effect on the people and the local market. Every day, goods such as rice, paddy, hay and wood were transported to Barpak by the ropeway. The selling price of these goods dropped by about Rs 2-3 per kilogramme as they had become cheaper and easier to transport. Merchandise such as soap became particularly cheap. The cost of sand, which had been five times what it was in Kathmandu, dropped from Rs 8 to just Rs 3 rupees for a pack of four kilogrammes. As a result, several cement houses were constructed. The time taken to transport goods to and from the village became shorter, and the market was now in close proximity to the village. The effect of the ropeway was felt not only in Barpak but also in Laprak and Gumda, two villages north of Barpak. The villagers appreciated the ropeway because their lives had become easier since they no longer had to carry heavy loads on the steep climb between Rangrung and Barpak.
THE ACCIDENT: LEARNING FROM THE TRAGEDY
The ropeway was so popular that it ran day and night. Fourteen months into operation, however, a major accident occurred that resulted in its being shut down. Four people who were riding in the ropeway car died when the hauling cable snapped on 7 May, 1999. I was in Barpak when it happened and felt both very sad and very angry when I heard about it. We had repeatedly requested people not to ride in the ropeway because it was not meant for transporting passengers. But many people argued that since the operators rode in the car during oiling and maintenance, they should also be allowed to. They did not seem to understand that when the maintenance crew rode the ropeway to grease the ropes, the ropeway went slowly and they carried a radio set to tell the operator to reduce speed when the car approached towers. This arrangement was not in place on regular runs when the ropeway carried goods.
Of the four dead, two were from Barpak; the other two were from a nearby village. The ropeway committee provided Rs 10,000 to the families of each victim to perform their last rites. Although saddened by the tragedy, the committee could not afford to pay more.
There was a lot of speculation about why the rope snapped, especially as the combined weight of the four persons who died in the accident was less than what the ropeway normally carried. Some people said that the drive system was faulty and that when the ropeway started moving at high speeds, excessive force had been exerted on the rope, thereby causing it to break. Others argued that it was because of insufficient lubrication. Some opined that the rope itself was not very strong. In fact, the accident occurred because the hauling rope, not the main track cable, snapped. The carrier then accelerated over the track cable before it hit the ground at a very high speed. It was the impact of the carrier striking the ground, not the carrier falling down, that had killed the passengers.
The ropeway supplier had not provided any special guidelines for maintenance. We lubricated the cable and checked the bearings regularly. Sometimes the roller battery on the tower would fall off when the ropeway was running, but operators learned how to deal with this problem. Operating the ropeway did not seem all that difficult.
The ropeway was still paying off old loans, but, considering the amount of revenue it generated, it was certain that the enterprise would be profitable. Excited by the success of the ropeway operation, we had planned modifications and improvements. For example, the location of the upper station had not seemed safe so we had planned to shift it a bit higher. We had also planned to change the operation modality. Tragically, the rope snapped and with it, our dreams.
We plan to rebuild the system, but we will need technical and financial support as well as expert advice to do so. We must also find out how and why the rope broke. This still remains to be done. A thorough investigation by ropeway experts is necessary before we conclude why the ropeway failed. If possible, we must salvage what good remains of the system.
We have already contacted experts. We need to find out what equipment needs to be changed or added, what can be manufactured locally and what needs to be imported. We need to estimate the value of whatever old equipment is salvageable. Then we plan to request interested organisations and people for financial support, whether loans or grants. We might establish a public limited company and float shares, although I am not keen on this option because it will involve too many people and will make it difficult to get things done. I have also contacted various agencies for help.
The Barpak Ropeway should be repaired as soon as possible. The villagers hope it will start operating again. They expect that the repaired ropeway will become a regular part of their lives. Porters, too, are hopeful that it will operate so that they do not have to carry loads up the steep Rangrung-Barpak section. It is backbreaking drudgery they want to avoid while still earning money by carrying goods on the less steep stretches to Gorkha Bazaar.
In 2001, I visited many cable car systems in Switzerland. I learnt a few lessons about how and where a ropeway station should be located. These lessons will be useful at Barpak. When we rebuild the ropeway, we will raise the lower station by 50 metres and the upper station by 300. Both locations are safe from possible damage by flooding and the upper station will also be closer to the village.
I believe that ropeways must transport people as well as goods. Having a dual function improves their utility. To carry people, however, ropeways have to be built with a higher safety factor and this costs more. When the road from Gorkha reaches the lower station of the ropeway in the future, as is planned, it will result in the increased movement of people to and from Barpak. At present, we are interested in getting the ropeway to function as it did earlier. In order to reduce the cost, we will try to make use of local people and resources. We will try to salvage parts from the old ropeway. In Nepal there are many companies which can install ropeways though they lack the confidence to do so.
CONCLUSION
Many Nepali villagers have not had the opportunity to realise how useful ropeways can be in Nepal. Even though there is very little interest in official circles and very few provisions for ropeway development, I feel that the government should promote ropeways by providing long-term loans, electricity at lower rates, and necessary technical support. Proper rules and provisions must be made to facilitate national entrepreneurs and investors who wish to take the risk of establishing a ropeway. My suggestion to those who plan to invest in ropeways is to conduct a sound market survey, find ways of reducing costs without compromising on safety, and look for ways to make ropeway operation reliable and stable.
Entrepreneurs should estimate the load that will be transferred every day and decide whether loads will be carried upwards, downwards or both ways. If these factors are taken into consideration, then a proposed ropeway may be successful. One cannot make quick and easy money by operating a ropeway though it can provide slow but steady revenue over the long term. Ropeway development is also an opportunity to do something for our society by reducing the harsh drudgery villagers face in their daily lives. It is also perfect for showing how private investments can meet the larger interests of the country.
NOTES
1 When the existing Trade and Transit Agreement between Nepal and India expired in March 1989, Nepal could not import petroleum products via India. For a few months, until a ration system was put in place, the supply system was completely disrupted. Petroleum products were even flown in from Bangladesh and imported from China during the initial days of the embargo. Fuel was expensive and not readily available. Because of the shortage of kerosene, the government opened several depots to sell firewood to consumers in Kathmandu, but the shortage of diesel meant that firewood from the jungles could not be transported to the urban depots. A new Trade and Transit Agreement was signed in 1990 after the restoration of democracy.
2 DDCs were known as District Panchayats until 1990. They are political units comprising a number of VDCs and in some cases, one or two municipalities. Development planning is carried out at the district level and hence most government organisations have their lowest unit at the district level. DDCs coordinate the development activities of many offices.
Source: Ropeway in Nepal
