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In energy literatures, Nepal is consistently referred to as one of the biggest sources for hydro power generation in the world – some even claiming that this country ranks second in hydro potentiality with possible generation of over 80,000 MW.
On the contrary, the country has been reeling under acute electricity crisis for some time now. A major embarrassment for the government has been the criticism it has been facing for its failure to address this power crisis. Of course, a country with so much potentiality of hydropower living in darkness is quite an irony.
The successive governments after the country turned into a republic have given enough assurances to address the power crisis and closure of industries caused by it. The Maoist-led government announced to produce 10,000 MW in the next 10 years and its successor UML-led coalition expanded the limited to 25,000 MW. Similar assurances had surfaced following 1990-revolution.
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| Community consultation meeting jointly held by GoN and WSH at Deura, Bajhang District (Reservoir area) (7 December 2008) |
The WSH even agreed for energy royalty of 2 percent of the total project revenue over the first 15 years and 10 percent thereafter, capacity royalty of Rs 100/kW per year for the first 15 years and Rs 1000/kW thereafter, export duty of 0.05 percent, forest leasehold and land taxes, corporate tax on profits and project dividends as a 15 percent shareholder.
In total, direct financial benefits that Nepal can receive during the operation period would be around Rs 160 billion at the present market value.
However, few organisations, politicians and experts on water resources have challenged the construction of this mega project, whose 675 MW power will be exported to India. There are some genuine issues the experts have raised on how Nepal can benefit from the project. The major objections from the experts are sale of power to India when Nepal lives in dark and the possibility of water induced disaster if the reservoir storing 1600 million cubic meters of waters gets burst.
Recently, the Public Account Committee (PAC) objected to one of the clauses of agreement signed with the project. The draft of the agreement has a clause which states that the law of Britain will be applicable if any dispute surfaces regarding the project. "This is an objectionable clause for any country. Moreover since the government of Nepal itself is one of the parties to the agreement, it is unacceptable. Law of the land must be applicable," Dr Prakash Chandra Lohani, a member of the committee, had told media after the meeting that decided to ask government not to renew the license until the clause is amended.
On the one hand, claims by the water resource experts like Dr A. B. Thapa that the dam failure is very much possible owing to earthquake prone topography of the region cannot be adequately substantiated unless a geological survey is carried out in the area, and on the other hand objections by some other experts saying the agreement was inconsistent with Article 156 of Interim Constitution has been cancelled by the Supreme Court saying judicial review is not necessary in case of the project. They are in fact hurdles created for progress of the project.
Following the recent decision by the PAC, Water and Energy Users’ Federation Nepal has filed a case at the Supreme Court seeking revision of its previous ruling stating that the apex court verdict was against national interests.
The interim constitution calls for two-third majority while deciding on natural resources and its distribution that are likely to have extensive, serious and long-term effect to the nation.
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| Surveyors Team conducting detail Transmission Line route survey along Budar- Bheemdattabagar section (18 May 2009) |
In the face of the continued controversy it seems that the project will probably face the fate of Arun III, which collapsed following the withdrawal of World Bank. Asian Development Bank is major investor for WSH.
No doubt, WSH will contribute to raising the living standard of this poorest region of the country. WSH surveys have mentioned a peak of 3,400 jobs will be created during the 5.5 years construction period and 200 jobs during the 25 year operating period in the far-western development region, education and development programmes in project affected areas, US $10 million infrastructure development programme for water supply, roads and rural electrification in project districts and an 8 MW riparian power station at the dam site will supply energy to the Nepal Electricity Authority for local communities as some of the benefits that Nepal gets..
Technology transfer, local business through linked industries and long term infrastructure are some other benefits that Nepal can receive from the project.
Solution
Nepal is in dire need of electricity and also foreign investment. Closure of the project is not in the interest of either party. Not to let the project face the fate of Arun III and leave Nepal in the darkness for years, a compromising solution is urgently necessary in case of WSH. Sure, investors cannot risk their investment while Nepal cannot ignore the national interest – both the parties should benefit from the optimum use of hydropower.
Nothing has been discussed – by government, investors and experts – about utislising the power in Nepal itself. Similarly, investors have the obligation to make a geological survey to inquire about the possible earthquake in the region and to ensure a standard dam that can resist even bad natural disaster to avoid any flooding in Terai region in the future. Similarly, it is the obligation of the government and the investors to channelise the water below the turbine for best utilisation into agricultural activities in Nepal.
If these issues are settled WSH is not a threat to development of the area as claimed by petitioner Ram Chandra Chataut, chairman of Federation of Water and Energy Consumers but an instrument to benefit Nepal technically and financially. This is a crucial test for the post-monarchy government to prove as efficient deliverer of assurances given to the people and meeting the forecast made to generate 25,000 MW of hydropower in the next one decade. Withdrawal of the investors from WSH is likely to discourage any other investors in Nepal’s projects. nepalnews.com
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