The existing deficit in the power supply in Nepal can now be mitigated through cogeneration to a considerable extent. This has been made possible after the Cabinet’s Economic Infrastructure Committee approved a proposal on cogeneration Wednesday on 3 June 2015. With the approval, bagasse, which is otherwise a waste material of the sugar industry, can now be turned into a source of electricity not only for the internal use of the industry but also as an additional power supply to the national grid. Accordingly, sugar production with an integrated cogeneration system can have additional income through the sale of surplus electricity. Furthermore, the supply of power to the grid would be beneficial to NEA, contributing to reducing transmission and distribution losses and also improve the stability of the grid. The committee has decided on following points (unofficial translation);

1. Powerhouse including machinery and equipment required for cogeneration at sugar industries is the integral part of the industries themselves. Hence, ownership of powerhouse will be under the ownership of the industries until the industries are in operation and need not be handed over to the Government of Nepal.  
2.  License for survey/study that shall be necessary for cogeneration of electricity from a sugar industry shall be provided according to the Electricity Act 2049 and the Electricity Regulation 2050 to the extent of their relevancy.
3. Cogeneration of electricity is an integral part of sugar industry. As such arrangement do not  affect environment as the expansion of the industrial capacity and information already included in the existing environment impact assessment (EIA) there is no need of EIA or initial environment examination (IEE).
4.  It will not be necessary to carry out environmental impact assessment or initial environmental evaluation for cogeneration unless there will not be any expansion of industrial capacity or there are not significant changes in industrial base.
5. Ministry of Energy (MoE) is provided with authority to make necessary contract on behalf of the Government of Nepal with sugar industry for cogeneration. Additionally, MoE is also authorized for implementation and monitoring of the contract.
6. Under the conditions as mentioned in contract agreement and power purchase agreement mentioned in Point (4), the sugar industries generating electricity through cogeneration should supply the remaining electricity to the national grid after internal consumption in the industry itself.
7. After internal consumption in the sugar industries, the surplus electricity generated through cogeneration should be supplied to the National Electricity Grid within the conditions included in contract agreement as mentioned in Point (4) above and power purchase agreement.
8. Five percent of gross revenue gained through sales of electrical energy produced through cogeneration in sugar mills should be disbursed to sugarcane farmers proportionately as per quantity of sugarcane supplied. Provision of such amount should be made by the purchaser of electricity at the time of payment. Receipt of such payments by the farmers will be ensured by Ministry of Agricultural Development under the coordination of the Ministry of Industry.

Further information:

Click here for more information on cogeneration opportunities in Nepal

(http://wecs-neep.gov.np/downloadthis/cogen_opportunities_nepalese_sugar_sector.pdf)

Click here for more information on cogeneration

https://energypedia.info/wiki/Cogeneration

Click here for media coverage on Cabinet’s decision on cogeneration

http://www.annapurnapost.com/News.aspx/story/12713

http://www.ekantipur.com/the-kathmandu-post/2015/06/03/money/cabinet-approves-using-bagasse-for-bioenergy/276936.html

http://www.enayapatrika.com/epaper/june-04/