Economic costs of electricity load shedding in Nepal*

Nepal has a severe infrastructure investment gap, which is slowing its economic growth. Between 2007 and 2017, the country went through a massive electricity supply shortage that caused up to 14 h of daily load shedding. Computable general equilibrium model estimates suggest this load shedding had drastic costs for Nepal's economy. The reliable power supply would have increased the country's annual gross domestic product by almost seven percent, and annual investment would have been 48% higher. The power supply has significantly improved after 2017 through additions to domestic generation capacity, improved load management, and increased imports from neighboring India, and the load shedding has been eliminated. The improvement must be continued and sustained to keep pace with rapidly growing electricity demand to avoid drastic economic loss in the future.

Automated summary

Nepal faced a severe electricity supply shortage between 2007 and 2017, causing significant economic losses, which could have been avoided with a reliable power supply. However, improvements made after 2017 have eliminated load shedding, but ongoing efforts are needed to keep up with the increasing electricity demand and prevent future economic losses.