Index Commentary

Nepal rises four ranks in the Index. In the energy security dimension, Nepal most struggles with diversity of electricity production; however, the recent drop was driven by a decrease in the wholesale margin on gasoline and a decreased ratio of energy production to total energy supply. Energy consumption growth was reduced during the last year but remains positive. This will remain a challenge for Nepal’s economic and social development as only 44% of the population has access to electricity. Low electricity access lead to Nepal’s weak performance in social equity. The decrease in environmental performance is driven by a lower quality of air and water, which is Nepal’s weakest indicator in this dimension and by an increase in CO2 emissions from electricity and heat generation. However, these negative trends are offset by a small decrease in energy intensity per GDP per capita. Nepal’s strong economic position is supported by low costs of living as proportion of household consumption expenditure. The recent increase however was driven by an increase in macroeconomic stability. Performance in political and societal strength remains weak.