WATER CAN BE NEPAL’S MAJOR EXPORT
- Dr. A. B. Thapa
Demand for water worldwide and also in India is rapidly growing as a result it is becoming increasingly scarce. Water has already become a valuable export item. But Nepal is totally unaware of this vast economic potential. In actual fact, the benefit to accrue to our country from the export of water could even exceed the benefit from the hydroelectric power, which has been highly acclaimed as the only exportable natural resource available in our country in abundance.
India’s Growing Demand for Water
The world’s population grew enormously in the 20th century. According to UN estimates, 1.65 billion people lived on Earth in 1900. By 1999 the world’s population had passed 6 billion people, and the UN estimates that it will reach 9 billion people by 2050. But the annual supply of renewable fresh water will remain constant.
In India the demand for agricultural water dominates the total demand for water. India has the second largest population in the world. There are plentiful rains over most of the country but they are concentrated in a few months. As a result, India is already experiencing water scarcity. Mr. Chaturbedi M.C. had claimed that by 2005 the total ground and surface water would have been assigned to users and thus further irrigation would be restricted.
India Willing to Buy
India is showing a great deal of interest in development of Nepal’s storage dam projects that would help to increase virtually by four times the sustainable flow of our major rivers. Recently the information provided in the Indian news media clearly indicates that few years back the Government of India was engaged in developing a policy to obtain the consent of Nepal through revenue sharing agreements in respect of the regulated waters discharged from the storage reservoirs built inside our country. A special high level commission constituted by the last Bajpee Government of India had even started to function to conduct studies to this effect. Unfortunately, our government is not as yet seen paying any attention to this highly important development that would have helped our country to gain access to a totally new stream of enormously large benefits accruing free of cost from the large storage dam projects to be implemented inside our country. Mysteriously, our government is now bent on grant license to private parties to implement large storage dam projects completely ignoring their vast export potential. Very soon the West Seti storage dam project is going to be the casualty.
Price of Exported Water
Experience of other countries tells us that a formal agreement must be signed between water exporting and purchasing countries to ensure recovery of water export benefit even before the start of the construction of the storage dam project earmarked to export water. Since the last forty years Canada is being paid for export of water to the USA. Very recently the landlocked country Lesotho has started to receive payments from South Africa for export of regulated water flowing across the border after power generation in Lesotho.
Canada is receiving from the USA according to the treaty signed between them 50% share in net benefit accruing to the latter from the use of the regulated water. Canada is entitled to receive in perpetuity such benefit from the USA for the water exported to latter after hydropower generation in its territory. Landlocked Lesotho is receiving 56% share in net benefit accruing to South Africa from the use of regulated water exported to the latter.
Landlocked Lesotho
Lesotho, formerly Basutoland, is bordered on all sides by South Africa. Lesotho is one of only three nations in the world to be completely encircled by a single country (the others are San Marino and Vatican City). Its dependence on South Africa for access to the outside extends to economic reliance as well, and has deeply affected the development of the country since independence in 1966. The kingdom of Lesotho is mainly mountainous and has a total area of 30,355 sq km. Lesotho was able to reach an agreement to recover a fair share of downstream benefit (water export) despite its complete dependence on South Africa.
Lesotho Highlands Water Project
The Lesotho Highlands Water Project( LHWP) is one of the largest and most intricate construction projects currently underway in the world. The LHWP has been conceived to export water to South Africa and also to generate electricity for use in Lesotho.
The Treaty
Realization of the scheme is made possible under a Treaty signed by the Republic of South Africa and Lesotho in 1986. Under the terms of the Treaty, South Africa agrees to pay a royalty for water delivered from Lesotho for the duration of the Treaty. As stated earlier the royalty will be 56% of the total net benefit to accrue to the South Africa from the use of the exported water.
South Africa agrees to pay for the entire capital cost of structures required for water transfer, roads, bridges etc Lesotho will bear only the cost of the hydropower to be built for supply of electricity within its territory.
In first phase only 18 cum/sec water will be exported to South Africa by partially implementing the LHWP at a cost of US $ 2.2 billion. Hydropower will be generating only 72 MW. South Africa will bear the entire cost of the first phase project with the exception of relatively small cost of the hydroelectricity station. South Africa agrees to pay each year to Lesotho for 18 cum/sec water a lump sum $25 million (in 1991 prices) for the first 50 years of the Treaty, subject to various adjustments for inflation and other financial considerations.
Export Royalty in Perpetuity
The South Africa would be recovering in full the capital cost of building the scheme within 50 years. After that the royalty will be renegotiated for the period after 50 years. Thus, the Lesotho will be receiving in perpetuity the royalty for export of water.
Lesson to Nepal
Nepal must hold negotiations to reach an agreement with India to get a fair share of downstream benefit prior to taking the final decision to implement our storage projects. Else our country would be deprived of such downstream benefit for ever. We all would be failing to protect our legitimate national interest whereas even the most backward landlocked country in Africa like the Lesotho is able to recover a great proportion of such net downstream benefit to accrue to the South African Republic from the use of the regulated flow of rivers after hydroelectricity generation in Lesotho
