An Exemplary Case of Darna MHP as an Enterprise Model

<p style="margin-left:0in; margin-right:0in; text-align:center">An Exemplary Case of Darna MHP as an Enterprise Model </p> <p style="margin-left:0in; margin-right:0in; text-align:justify">Achham district is located in the Far Western Development Region of Nepal. The district is among the poorest in the country and is ranked 71st out of 75 districts in Human Development Index (HDI).  AEPC has supported the local communities to install 5 micro hydro power projects (MHP) utilizing water from the Kailash Khola river. As a result, the Kailash Khola corridor is also locally known as the “Micro Hydro Corridor”. The Kailash Corridor being as close as a rural territory, national grid connection is not quite possible lately. Due to this inopportuneness, establishment of such micro hydro projects at Ramarosan has been proved to be a great advantage and community gain as indicated by the local inhabitants. Among those micro hydro projects, “Darna MHP” situated at Darna with 83kW capacity has been recognized as a successful and effective MHP of that area.</p> <p style="margin-left:0in; margin-right:0in; text-align:justify">Darna MHP was constructed with great effort, enthusiasm, community support and joint commitment but soon after its establishment, it could not financially withstand and sustain its operation due to the lack of proper management as acknowledged by founder chairman Mr. Bhim Bahadur Thapa. The installed capacity of this MHP was 83 kW, however 93 kW of energy was generated from which the peak load consumption was hardly 39 kW. The generated output could not be consumed and utilized in a commercial manner because of which the economic status of Darna MHP was weak. A discussion was carried out concerning the utilization of surplus energy and to introduce scope of commercialization where a matter was raised regarding the possibility in consumption of surplus power in nearby Kalagaun. On top of that, the representatives of Kalagaun were also interested in purchasing electricity from Darna. Hence, after a series of negotiations, it was decided that Darna MHP would sell 25kW electricity to Kalagaun. An agreement was signed between two parties indicating that the extension would be completed within a year and Kalagaun would have to pay a sum of NRs 2.800.000.00 to Darna management committee. The agreement also stated that after installation, Darna MHP would charge as wholesale NRs 4 per unit usage of electricity from Kalagaun. Although the project was supposed to be completed within a year, it took 2 years to finalize the extension process at Kalagaun and presently testing and house wiring process in ongoing.</p> <p style="margin-left:0in; margin-right:0in; text-align:justify">AEPC/RERL has been constantly providing guidelines and intervening to improve the MHP management standards and to utilize surplus energy of MHPs into commercial operation so that revenue is generated and long term sustainability is achieved. Likewise, RERL has been providing technical support to Darna MHP continuously in order to improve its management committee and quality of services. Previously before intervention from AEPC/RERL, Darna MHP was quite unorganized and the operation was unmanaged. The financial and public audit was not carried out since long period of time, energy meters was not installed in HHs and tariff was collected on basis of Rs 50 per month. Moreover, the revenue collection was not regular and very low amount of revenue was collected back then. There was no proper account description and justification of revenue collection, savings and expenses altogether. With no proper office space, the documents such as register, bill vouchers etc. were totally unorganized and were endorsed in a hand carry baggage. But after intervention from AEPC/RERL through social mobilization process and institutional strengthening to uplift the standards of management, Darna MHP soon has become an exceptionally successful MHP and has set an example of most successful operation to other MHPs as well. Darna MHP had loans from its starting phase and every month the loan used to increase along with the interest. The funds for repair and maintenance also could not be managed and MHP had to depend on other for repairs. On account of post installation period during social mobilization process, different milestones were achieved such as financial and public auditing, registration of MHP as a cooperative institution, installation of energy meters at HHs, upgrading tariff rates in scientific format etc. After being registered as a cooperative institution, Darna MHP was settled down in a separate office space with proper well equipped setup. A manager has been appointed by the committee to handle out the office related tasks. For better organization and less error, computerized accounting has been adopted by Darna MHP. Darna MHP has implemented a policy where all those connected HHs are a shareholder in the cooperative. Regular revenue collection with improved tariff rates is being applied and provision for discount and penalty has already been implemented. Presently, through savings and credit mechanism the overall revenue increment strategy has already begun. Moreover, certain sum of money (approximately 250,000.00) NRs has been separately added to repair and maintenance funds so that the repairs can be timely done without depending on others. Previously Darna MHP has a loan of NRs 6,000,000.00 and from its own enterprise earnings it has cleared up some amount and now it has been reduced to NRs 4,000,000.00. Chairman Mr. Jagat Thapa claims that the remaining amount of loan will be paid within a year.</p> <p style="margin-left:0in; margin-right:0in; text-align:justify">The bill payment counter is being operated within the cooperative office. Different operators are appointed for meter reading purposes at user households and based on that reading, users are subjected to pay for their usage. The office premises have the facilities of complaint box and notice boards for better service circulation. Darna MHP has proved that to achieve better employment opportunities and smooth administration, better capacitive building activities for staffs and personnel handling through various services like life insurance, provident funds, regular uniform and communication services can be adopted by MHPs. As mentioned earlier that Ramarosan being a tourist attraction site, people visiting Ramarosan actually perceive the better standards of MHP management and can study how micro hydro operates. Due to this factor and to achieve success like Darna, other MHPs of the area have started upgrading their management and institutional strengthening of their respective MHPs. </p>