Wednesday, February 14, 2018

Electricity Act in Nepal’s Interest

After Government of Nepal (GoN) registered Electricity Bill 2008 in parliament, it was tabled for discussion only in 2011 and MPs were asked to register amendment proposals if the Bill required any amendment. The response was overwhelming: there were one hundred forty-two (142) proposals for amendments. In the normal course both the Bill tabled by GoN and amendment proposals registered by MPs should have been thoroughly discussed in the parliament and Electricity Act should have been promulgated after incorporating amendment proposals accepted by the parliament. But GoN chose not to go through with the process and abandoned the Bill resulting in its “stillbirth”.

This scribe too had prepared 44-point amendment proposal and succeeded to get it registered in the parliament by MPs representing Nepal Workers and Peasants Party, CPN (Maoist), Rashtriya Jana Morcha and Rashtriya Prajatantra Party in order to ensure that the legislation is in Nepal’s interest. The 142 amendment proposals are inclusive of these 44-point amendment proposal drafted by this scribe.

The Bill tabled by GoN was not in Nepal’s national interest and GoN became irked with the attempt to ensure that it is in Nepal’s interest bafflingly and chose not to have the legislation promulgated at all. Apparently the Bill was based on a draft prepared by an Indian organization.

In late 1980s, wishing to invest in Khimti project, Norwegians studied relevant laws of Nepal and found it wanting. Then a team of Norwegian legal experts came to Nepal on the auspices of Norwegian government and studied relevant Nepal law in force, after which the team submitted its report to GoN including a draft Khimti Act, which would have been instrumental in encouraging Norwegians to invest in the said Khimti project. The establishment of the time (politicos and bureaucrats) felt that it is not appropriate to promulgate one specific Act for one project and promulgated Electricity Act 1992 instead, based in draft made for Khimti project but after some tinkering and tampering with it. This Act was said to be based on Water Resources Policy, 1992.
Within 2 decades of coming into force of Electricity Act, about 450 MW hydropower was added to the system; public sector and private sector contributing almost equally. In 8 decades from 1911 (when first power plant in Pharping was commissioned) less than 240 MW was added to the system. It is clear that this Act succeeded to attract private sector investment in hydropower generation, which was exclusive domain of public sector till promulgation of Electricity Act.

Improvement in Electricity Act
This scribe was assigned a 3-month study to suggest improvements in the Electricity Act from the perspective of private investors in early 1998. After 3 months, he presented 4 working papers in a workshop in June 1998, the report based of which was furnished to GoN through FNCCI. GoN effectively thwarted the effort of more than a decade to improve the Act and also to ensure that it is in national interest.

Currently prevalent Electricity Act requires many improvements to ensure that it is in Nepal’s interest. Due to space constraint only a few important points are discussed in this article.

Multidimensional Uses of Water
While contemplating generation of energy from water, it should not be lost sight of the fact that water has multidimensional uses. There are many sources to generate energy, ranging from clean/renewable to unclean/un-renewable. Whereas, there is no alternative to fresh water (e.g. it is not possible to irrigate with saline water which is available aplenty in the world). Multidimensional uses of water are as follows:
• Drinking water and sanitation – by achieving water security, untimely death due to water borne diseases can be reduced, including reduction of expenditure on medicine and medical treatment by half that the country’s economy has to bear;
• Irrigation – to achieve food security by intensive cropping to preclude death by famine and starvation, including substantial mitigation of balance of trade and payment deficit by reducing import of food products;
• Animal husbandry and fishery – to avail nutritious food items and also to mitigate balance of trade and payment deficit to an extent by substituting imports thereof;
• Energy generation – to ensure self reliant energy security (water is required even to generate nuclear energy);
• Recreation – for water based tourism, inter alia rafting;
• Navigation – Nepal can transform into water linked country from landlocked one;
• Water based industries – including export of mineral water; and
• Cultural and traditional uses.

Comprehensive Assessment of Alternatives

In view of the fact that water has multidimensional uses and most of such uses are competitive in nature, conscious decision must be made before deciding to put water to any specific use at any site on any stretch of any river. For this purpose comprehensive assessment of all possible alternative uses must be made prior to deciding to put water to a specific use. In such assessment, possibility of production and use of hydrogen in near future should not be ignored (with further development of technology related to its storage and transportation, hydrogen will soon become affordable), in order to afford an opportunity to Nepal to enter into hydrogen economy.

If the decision is to generate hydropower, possibility of generating peak power by putting up a reservoir should be explored instead of run of the river (RoR), which produce more energy in wet season when demand is low and less in dry season when demand is high resulting in mismatch of supply and demand. It is a well-known fact that peaking power plant produces better quality electricity in higher quantum besides generating lean season augmented flow of fresh water. In this context Upper Karnali and Tamor projects are bad examples.

Moreover, reservoir projects should be made multipurpose, which helps control flood in rainy season in lower riparian areas and generate lean season augmented flow. Budhi Gandaki project is a bad example due to failure to make it multipurpose, which for example would have enabled lower riparian districts of Nepal like Chitwan, Nawalparasi, Bara, etc. to increase cropping intensity with water becoming available in the dry season, leading to prosperity.
In order to ensure that new enactment for the purpose is in Nepal’s interest, it should clearly stipulate that decision to harness any site should be made after making comprehensive assessment of alternatives and should make it mandatory to choose reservoir project, where feasible, which should be implemented as multipurpose project.

Objective of Electricity Generation

Self reliant energy security for Nepal should be the principal objective of electricity generation, including to displace imported fossil fuel, which would help (1) reduce balance of payment and trade deficit, (2) reduce cost of transporting people and goods and (3) reduce environmental pollution. Thus, liberation of Nepal from dependency on imported energy sources should be prime aim of such an enactment.

Self reliant energy security entails availing energy produced in Nepal to all sectors inter alia agriculture, industry, transportation, tourism, health, education, ICT, etc. and for urban, semi-urban kitchens to supplant LPG with electricity and eventually to displace firewood from rural kitchens. Ensuring access to electricity to all people of Nepal should be the prime goal.

Nepal is suffering from high trade deficit due to ever increasing imports and dependency syndrome is gaining stranglehold over the economy. On the one hand, industries are not provided requisite electricity forcing them to operate at around 50% of the capacity. On the other hand, industrialists are not able to start new industries for lack of electric energy. Aim should be to encourage establishment of industries to substitute import and to promote export by supplying ample electricity at affordable rate. It is noteworthy that, at the moment, Kathmanduites are enjoying liberation from load shedding at the cost of industries.
Similarly, electricity in adequate quantum at reasonable rate should be provided to industries that process agricultural produce, herbs, minerals, etc. and for cold storage, factories producing agricultural implements, fertilizer, etc. Energy security cannot be achieved without displacing diesel pumps with electric pumps used for irrigation.

New electricity law can only be in national interest if it succeeds to achieve self-reliant energy security by breaking dependency syndrome on imported sources of energy, including fossil fuel (it will not be possible to cease to be dependent on imports for aviation fuel for obvious reasons, though).

License Procedure
The licensing procedure under prevalent Electricity Act needs to be streamlined as follows:
• No license for electricity generation should be issued if Nepal stands to benefit more by putting water to alternative uses at any particular site of any river;
• License should be issued with an eye on optimization of benefit to Nepal from the watershed and river basin;
• License should not be issued only from the perspective of optimization of installed capacity from available head and flow from engineering perspective only, at the cost of irrigation of additional land in future, in both upstream and dewatered areas. With increase in population, more land will have to be brought under cultivation and cropping intensity will have to be increased, requiring water for irrigation;
• License should be issued on competitive basis in transparent manner to ensure availability of electricity at least cost to nation;
• License should not be issued to applicants without financial capability, including requisite credibility to mobilize debt funding. License should only be issued against bank guarantee covering 10% of the project cost. At the moment, brokers are able to hold licenses to peddle with prospective investors;
• Since ownership of the project devolves to GoN after the license period, design life of the plant needs to be specified to ensure that GoN can operate it without problem for at least a decade after handover and directives regarding construction, repair and maintenance standards have to be issued.

Export of Energy
Even without aiming to displace fossil fuel, Nepal is grappling with energy crisis. Issuing license for export-oriented project in such a backdrop is outright stupid. Therefore, no license should be issued for export-oriented projects till Nepal achieves self-reliant energy security.

If for any special reason, license has to be issued for an export oriented project, it should be subjected to parliamentary ratification as stipulated in Sub-article (1) and 2(d) of Article 279 of present Constitution, which specifies that agreements for division of natural resources and their use should be ratified by the parliament. It should not be forgotten that GoN issuing a license also amounts to an agreement.

In this interdependent world, it is not possible to avoid export and import of energy. It is but logical to export excess energy and import to meet deficit. However, energy should not be exported for profit maximization of the private sector; it should be done in accordance with nation’s need.

Downstream Benefit
Main weakness of prevalent Electricity Act is its silence with regard to sharing benefit of lean augmented flow. Basically it is silent with regard to mechanism for recompense for the cost of negative externalities and sharing benefits of positive externalities. Inundation and involuntary displacement are negative externalities and flood control and lean season augmented flow are positive externalities.

It is unconscionable to give away positive externalities free of cost, as Nepal has to bear huge cost, inter alia opportunity cost in terms of lost agricultural produce and forest product for more than half a century due to submergence of Nepal’s territory. Even Koshi and Gandak treaties have no provision to recompense GoN for such opportunity cost; there is provision to recompense to GoN for lost land revenue only.

Therefore, license for reservoir projects should be issued for the installed capacity with an eye on consumptive use of lean season augmented flow in lower riparian areas of Nepal. If India wishes to receive lean augmented flow, installed capacity of the license can be increased on the condition that she is committed to pay for such benefit. Optimization of Budhi Gandaki at 1,200 MW was a blunder, without receiving any commitment from India to pay for lean season augmented flow.

Conversely, if a project like Budhi Gandaki is to be implemented that allows India to enjoy downstream benefit, parliamentary ratification of it should be made mandatory after negotiating with India as to recompense mechanism for benefits of positive externalities that India would enjoy.

Published in People's Review on February 15, 2018

Ratna Sansar Shrestha, FCA

Saturday, February 10, 2018

आवश्यकताः नेपालको हित अनुकूल विद्युत ऐन

विद्यमान विद्युत ऐन २०४९ प्रतिस्थापनार्थ विद्युत विधेयक २०६५ संसदमा दर्ता गरिएर छलफलको लागि टेबल भएपछि यसमा संशोधन आवश्यक भएमा सांसदहरुबाट प्रस्ताव आह्वान गरेकोमा १ सय ४२ प्रस्तावहरु दर्ता गरिए । यी छलफलोपरान्त विधेयकमा आवश्यक परिमार्जन गरेर विद्युत ऐन संसदबाट पारित गराउनुको सट्टा गर्भमै तुहाईयो । यस पंक्तिकारले उक्त विधेयकलाई नेपालको हितअनुकूल बनाउन अत्यावश्यक ४४ बुंदे संशोधन प्रस्ताव मस्यौदा बनाएर नेमकिपा, नेकपा माओवादी, राष्ट्रिय जनमोर्चा र राष्ट्रिय प्रजातंत्र पार्टीका केहि सांसदहरुमार्फत संसदमा दर्ता गरिएका प्रस्तावहरु पनि उक्त १ सय ४२ प्रस्तावमा समाबिष्ट थिए ।

स्तम्भित पार्ने कुरा के हो भने उक्त विधेयकलाई राष्ट्रहित अनुकूल बनाउन खोज्दा विधेयकै तुहाईयो ! विधेयक राष्ट्रहित अनुकूल थिएन, संशोधन गरेर राष्ट्रहित अनुकूल बनाउने प्रयास सरकारलाई पाच्य भएन ! उक्त विधेयक एक भारतीय संस्थाले मस्यौदा गरेर ऐनकोरुपमा पारित गर्न सरकारलाई दिईएको भन्ने चर्चा स्मरणिय छ ।

खिम्ती आयोजनाका प्रवद्र्धकले नेपालमा नीतिगत तथा कानुनी व्यवस्थाको अभाव रहेको अनभूति गरेकोले नर्वे सरकारको आर्थिक सहयोगमा नर्वेका कानूनविदहरुको टोलीले नेपाल भ्रमण गरेर अध्ययनोपरान्त खिम्ती आयोजना निर्माणार्थ खिम्ती ऐन नामकरण गरेर एउटा विधेयक मस्यौदा सरकारलाई बुझाएको थियो । तर तत्कालिन सरकारले एउटै आयोजनाकोलागि छुट्टै ऐन बनाउनुको सट्टा त्यहि मस्यौदामा हेरफेर, तोडमरोड गरेर सन् १९९२ मा विद्युत ऐन २०४९ जारी ग¥यो, जलविद्युत नीति २०४९ मा आधारित ।

ऐन कार्यान्वयनमा आएको २ दशकमा ४ सय ५० मेगावाट भन्दा बढी जडित क्षमताका जलविद्युत आयोजनाहरु निर्माण सम्पन्न भएकोमा सार्वजनिक र निजी क्षेत्रको योगदान लगभग बराबर रह्यो । सन् १९११ देखि ८ दशकको अवधिमा २ सय ४० मेगावाट भन्दा कम आयोजनाहरु निर्माण भएको परिप्रेक्ष्यमा उक्त ऐन सफलतापूर्वक कार्यान्वयन भएकोमा शंका छैन ।

विद्युत ऐनमा परिमार्जन
यस पंक्तिकारले ३ महिने अनुसन्धानपश्चात निजी क्षेत्रको दृष्टिकोणमा विद्युत ऐनमा परिमार्जन गर्नुपर्ने बुँदाहरु समेटेर ४ वटा कार्यपत्र सन् १९९८ जुनमा आयोजित गोष्ठीमा प्रस्तुत गरेर एउटा प्रतिवेदन नेपाल उद्योग व्यापार महासंघ मार्फत नेपाल सरकारसमक्ष प्रस्तुत गरेबाट शुरु भएको परिमार्जनको प्रयासले सन् २००८ मा मूतरुप लिएकोमा तुहाईयो ।

बिद्यमान विद्युत ऐनमा धेरै परिमार्जन आवश्यक भएतापनि स्थानाभावको कारण प्रस्तुत लेखमा केहि महत्वपूर्ण बुंदाहरुकोमात्र विवेचना गरिएकोछ ।

जलश्रोतको बहुआयामिक उपयोगहरु
जलविद्युत उत्पादनको कुरा गर्दा नदीमा बग्ने पानीबाट बहुआयामिक लाभ लिन सकिन्छ, विद्युत उत्पादन मात्र होइन भन्ने कुरा बिस्मृतिमा पार्न हुन्न । विद्युत उत्पादनका धेरै वैकल्पिक श्रोतहरु छन्, स्वच्छ र नवीकरणीय देखि अस्वच्छ र गैर नवीकरणीयसम्म । तर पानी, त्यो पनि स्वच्छ पानीको विकल्प छैन । जलबिद्युत उत्पादन बाहेक पानीको बहुआयामिक उपयोगहरु निम्न हुनः

* खानेपानी तथा सरसफाइ — खानेपानी सुरक्षा हासिल भए अकाल मृत्युबाट उन्मुक्तीदेखि देशमा हुने औषधोपचार खर्च आधाभन्दा बढी बचत हुन्छ;
* सिंचाइ — सघन खेतीबाट खाद्य सुरक्षा हासिल भएर अनिकाल तथा भूखमरीबाट हुने मृत्युबाट मुक्तीका साथै खाद्यान्न आयातजनित व्यापार/शोधनान्तर घाटा कम हुन्छ;
* पशु तथा मत्स्यपालन — पोषक खाद्य पदार्थको सर्वसुलभ उपलब्धता तथा पशुपंक्षी तथा माछा आयात घटेर पनि व्यापार÷शोधनान्तर घाटा कम हुन्छ;
* बिद्युत उत्पादन (आणविक उर्जा उत्पादन समेत) — आत्मनिर्भर उर्जा सुरक्षाकोलागि;
* जल पर्यटन — ¥याफ्टींग लगायतकोलागि;
* जल परिवहन — ढुवानिमा लाग्ने उर्जा खपतमा ८५ प्रतिशत बचतबाट लाभान्वित हुन;
* पानीमा आधारित उद्योग — स्वच्छ तथा लवणयुक्त पानीको निकासी लगायत;
* सांस्कृतिक तथा परम्परागत उपयोग ।

विकल्पहरुको व्यापक मूल्यांकन
कुनै पनि नदिको पानीको सदुपयोग गर्नु अघि उपरोक्त उपयोगहरु मध्ये कुन उपयोगबाट जनता समृद्ध तथा देशको अर्थतन्त्र सुदृढ हुन्छ भन्ने कुरा बिचार गरिनुपर्छ । यसकोलागि सम्भाव्य विकल्पहरुको व्यापक मूल्यांकन गरेर निक्र्योल निकालिनुपर्छ । निकट भविष्यमा हाइड्रोजन उत्पादन गरेर हाइड्रोजन अर्थतन्त्रमा नेपालको प्रवेशको सम्भाव्यतालाई पनि दृष्टिगत गरिनुपर्छ ।

जलविद्युत आयोजनै निर्माण गर्ने भए आयोजनास्थल विशेषमा जलाशययुक्त आयोजना बन्नसक्छ भने नदी प्रवाही आयोजना नबनाइ जलाशययुक्त आयोजना नैं निर्माण गर्दा देशको हित हुन्छ । जसबाट बिजुली पनि बढी, त्यो पनि उच्च गुणस्तरको उत्पादन हुनाको अतिरिक्त सुख्खायाममा थप/नियन्त्रित बहुमूल्य पानी उपलब्ध हुन्छ । यो कुरा ऐनमा लाइसेन्स सम्बन्धी व्यवस्थामा स्पष्ट उल्लेख गरिनुपर्छ । यस सन्दर्भमा माथिल्लो कर्णाली र तमोर खराब उदाहरणहरु हुन् ।

जलाशययुक्त आयोजनालाई बहुउद्देश्यीय बनाइनु पर्छ भन्ने व्यवस्था पनि ऐनमा किटानी गरिनुपर्छ । किनभने जलाशययुक्त आयोजनाबाट तल्लो तटीय इलाकामा वर्षातको ४ महिना बाढी नियन्त्रण हुनुको अतिरिक्त पानीको बहुआयामिक उपयोग गर्न सकिन्छ । बुढी गण्डकी आयोजना एउटा उदाहरण हो, जसलाई बहुउद्देश्यीय बनाईएन, नत्र चितवन, नवलपरासी, बारा आदि भेगलाई समृद्ध बनाउन सकिन्थ्यो ।

जलविद्युत उत्पादनको लक्ष्य
जलविद्युत उत्पादनको लक्ष्य आत्मनिर्भर उर्जा सुरक्षा हुनुपर्छ, आयातीत खनिज इन्धनको विस्थापनार्थ यातायातको विद्युतिकरण समेत, जसबाट (१) व्यापार/शोधनान्तर घाटा घट्छ (२) ढुवानीमा लाग्ने उर्जाको लागत तात्विक रुपमा कम हुन्छ र (३) वायू प्रदुषण न्यूनिकरण हुन्छ ।

ऐनको मुख्य लक्ष्य शत प्रतिशत जनताको विद्युतमा पहुंच र नेपाल उर्जामा परनिर्भरताबाट मुक्ती हुनुपर्छ । अन्तिम लक्ष्य गृहिणीहरुलाई आन्तरिक प्रदुषणबाट मुक्ति दिलाउन भान्छाबाट दाउरालाई विद्युतले प्रतिस्थापन गर्ने हुनुपर्छ । खाना पकाउने ग्यांसको विस्थापन मनग्गे बिजुली सुलभतापूर्वक उपलब्ध भएपछि आफै हुनसक्छ ।

नेपालमा उपभोग्य वस्तुहरु उत्पादन गर्ने उद्योगहरु आवश्यकता अनुरुप स्थापना नभएकोले अर्थतन्त्र पूर्णतः परनिर्भर छ, व्यापार÷शोधनान्तर घाटा चुलिंदोछ । संचालनमा रहेका उद्योगहरु पनि यथेष्ट बिजुलीको अभावमा पूर्ण क्षमतामा संचालित छैनन् । त्यसैले आयात प्रतिस्थापन तथा निर्यात प्रबद्र्धन गर्ने उद्देश्यले बृहत् स्तरमा औद्योगिकरण गर्न सर्वसुलभतापूर्वक बिजुली उपलब्ध गराउने लक्ष्य हुनुपर्छ ।

यस अतिरिक्त कृषि, खनिज, जडिवुटी आदि प्रशोधन उद्योग स्थापनार्थ विद्युतिय उर्जा सर्वसुलभतापूर्वक उपलब्ध गराउने दायित्व राज्यको हुने कुरा ऐनमा उल्लेख गरिनुपर्छ । सिंचाइकोलागि बिजुलीले पानी तान्ने पम्प तथा निर्वाहमुखि कृषि क्षेत्रको व्यवसायिकरण गर्न शीत भण्डार र कृषि सामग्री तथा रासायनिक मल उत्पादन आदि प्रोत्साहित गर्न प्रचुरमात्रामा विद्युत आपूर्ति सुनिश्चित गर्ने व्यवस्था ऐनमा गरिनुपर्छ ।

लाइसेन्स प्रकृया
हाल लाइसेन्स प्रकृया यति खुकुलो छ कि झोलामा खोला भन्ने आहानै बन्यो । यस सम्बन्धमा नयाँ ऐनमा निम्न कुराहरु किटानीसाथ उल्लेख गरिनुपर्छः

* कुनै पनि आयोजनास्थलको लाइसेन्स जारी गर्दा बिजुली उत्पादनको सट्टा पानीको वैकल्पिक उपयोग गर्दा देश बढी लाभान्वित हुनेभए जलविद्युत लाइसेन्स नदिने;
* जलाधार क्षेत्रबाट अधिकतम लाभ प्राप्त हुने गरेर लाइसेन्स दिने;
* बग्ने पानीको परिमाण र उपलब्ध उचाइको इन्जिनियरिंग हिसाबले हुनआउने जडित क्षमताको आधारमा लाइसेन्स जारी नगरी भविष्यमा थप सिंचाइको लागि आवश्यक पानी समेतलाई दृष्टिगत गरेर लाइसेन्स दिने । नत्र भविष्यमा थप सिंचाइ गर्न नपाई जनघनत्वको आवश्यकता अनुरुप खाद्यान्न लगायत उत्पादन हुनसक्दैन;
* राज्यलाई सबभन्दा कम दरमा उच्चस्तरको बिजुली उपलब्ध हुने गरेर पारदर्शी रुपमा प्रतिश्पर्धा गराएर लाइसेन्स जारी गर्ने;
* वित्तिय हैसियत र वित्त परिचालन गर्ने क्षमता नभएकाहरुले लाईसेन्स ओगटेकोले झोलामा खोलाको अवस्था आएको छ, उर्जा संकटको साथै राज्य रोयल्टीबाटपनि बंचित भएकोछ । यसैले आयोजनाको लागतको १० प्रतिशत बराबर बैंक जमानत लिएर मात्र लाइसेन्स दिने;
* लाइसेन्स अवधि पछि आयोजनाको स्वामित्व सरकारमा निक्षेपण हुने भएकोले आयोजनाहरुको डिजायन आयु, निर्माण तथा मर्मत सम्भार मापदण्ड तोकेर अवलम्बन गराउने र लाइसेन्स अवधि पछि कमसेकम १० वर्षसम्म संचालन सुनिश्चित गर्ने ।

देशमा उर्जा संकट छ (खनिज इन्धन इत्यादि प्रतिस्थापन गर्ने लक्ष्य बिनै) । यस्तोमा आयोजनाहरुलाई निकासीमूलक लाइसेन्स दिईनु बिडम्बना हो । देशले पूर्णरुपमा आत्मनिर्भर उर्जा सुरक्षा हासिल नगरेसम्म कुनैपनि आयोजनालाई निकासीमूलक लाइसेन्स दिईनुहुन्न । विशेष कारणले आयोजना विशेषलाई निकासीमूलक बनाउनु पर्दा अनिवार्यरुपमा संसदीय अनुमोदनको व्यवस्था गरिनुपर्छ, वर्तमान संविधानको धारा २७९ को उपधारा (१) र (२)(घ) मा “प्राकृतिक श्रोत तथा त्यसको उपयोगको बाँडफाँट” सम्बन्धी सन्धी र सम्झौता संसदीय अनुमोदन गरिनुपर्ने व्यवस्था भएकोले । स्मरणिय छ, राज्यले लाइसेन्स जारी गरेर पनि सम्झौता गर्दछ ।

निरपेक्ष ढंगबाट बिजुली निकासी नगर्न सम्भव हुन्न । आफूलाई बढी भएको बेलामा निकासी गर्नु र अपुग भएमा पैठारी गर्नु अन्तरनिर्भरताको जमानामा सामान्य कुरा हो । तर यो काम राज्यको आवश्यकता अनुसार गरिनुपर्छ, आयोजना प्रवद्र्धकको हैकममा हैन ।

तल्लो तटीय लाभ
हाल प्रचलनमा रहेको विद्युत ऐन र तुहाईएको विद्युत विधेयकको सबभन्दा ठूलो कमजोरी नै तल्लो तटीय लाभ सम्बन्धी मौनता हो । नेपालको भूभाग डुबाएर, जनतालाई विस्थापित गराएर सुख्खायाममा उत्पादन हुने थप/नियन्त्रित पानी तल्लो तटीय मुलुकलाई निशुल्क दिनु कुनै पनि हालतमा उचित/जायज हैन । किनभने डुबानमा पर्ने जमिनबाट उत्पादन हुने कृषि उपज र वन पैदावारबाट राज्य पचासौं वर्ष सम्म बंचित हुन्छ, कोशी र गंडक सन्धीमा राज्यले गुमाउने मालपोत सम्बन्धीमात्र व्यवस्था छ ।

तसर्थ आयोजनाको नेपाल भित्रको तल्लो तटीय क्षेत्रमा थप÷नियन्त्रित पानी उपभोग हुनसक्ने सम्मको जडित क्षमता निर्धारण गरिनुपर्छ । यदि भारतले नेपालमा निर्मित आयोजनाबाट उत्पादित थप/नियन्त्रित पानी उपभोग गर्ने चाहना राखे अन्तर्राष्ट्रिय प्रचलन÷नजीर बमोजिम यस्तो पानीबापत रकम तिर्न कबूल गरेको खण्डमा मात्र जडित क्षमता बढाउने व्यवस्था ऐनमा गरिनुपर्छ । यस सम्बन्धमा बुढी गंडकी आयोजनाको जडित क्षमता निर्धारण गर्नेहरुबाट ठूलो गल्ती भएकोछ ।

२०७४ माघ २८ गतेको नागरिकमा प्रकाशित

Ratna Sansar Shrestha

Saturday, January 13, 2018

नदी सम्बन्धी सन्धीहरुको पुनरावलोकन

करिब दुई महिना अघि आयोजित सम्मेलनमा एउटा भारतीय गैससले कोशी र गण्डक सन्धीहरुको पुनरावलोकन गरेर दुवै सन्धी समेट्ने एउटा व्यापक सन्धी गर्ने प्रस्ताव ग¥यो । यसरी एउटै व्यापक सन्धी गर्ने भए महाकाली सन्धी पनि समेटिनु पर्छ । कुनै सन्धी नगरिएको कर्णाली नदी भने यस सम्बन्धमा चोखो छ । नेपालबाट बगेर भारत जाने नदीहरु समेटेर व्यापक सन्धी गर्ने लक्ष्य भए कोशी, गण्डकी, कर्णाली र महाकाली नदीहरु समेटेर व्यापक सन्धी गरिनु राम्रो हुन्छ (मेची अर्को सीमा नदी भएतापनि सानो हुनाले सन्धीहरुको भएको छैन) । तर यस विषयलाई हलुका ढंगबाट लिनु हुन्न ।

यस सन्दर्भमा के कुरा बिस्मृतिमा पार्नु हुन्न भने यी नदीहरु चीनमा उत्पत्ति भएर नेपाल हुंदै भारतमा गंगा नदीमा मिसिएर बंगलादेश पुग्छन् । त्यसैले यिनलाई कतिपयले बहुराष्ट्रिय नदी भन्छन् । नेपालको लागि चीन माथिल्लो तटीयराष्ट्र हो भने भारत र बंगलादेश तल्लोतटीय । त्यसैले यी चार देशहरु भएर बग्ने नदीहरुको सम्बन्धमा व्यापक सन्धी गर्ने हो भने नेपाल, बंगलादेश, चीन र भारतबीच चार पक्षिय सन्धी हुनुपर्छ ।

यस्ता नदी सम्बन्धी सिद्धान्तहरु
यस्ता नदी सम्बन्धमा मुख्यतया निरपेक्ष क्षेत्रिय संप्रभुता र निरपेक्ष क्षेत्रिय अक्षुण्णता जस्ता दुई सिद्धान्त छन् । पहिलोको सिद्धान्तको प्रतिपादक संयुक्त राज्य अमेरिकाका तत्कालिन महान्यायाधिवक्ता जडसन हार्मन हुनाले यसलाई हार्मन सिद्धान्त पनि भनिन्छ, जस अनुसार आफ्नो देश भित्र बग्ने नदीको पानी त्यो देशले आफ्नो आवश्यकता बमोजिम असीमितरुपमा उपभोग गर्न पाउंछ, तल्लोतटीय राष्ट्रको चिन्ता नगरिकन । चीन र भारत दुवैले यहि सिद्धान्त प्रयोग गर्छन । जस्तै चीनले ब्रम्हपुत्र नदीमा बाँधहरु बनाउंदैछ भने भारतले बंगलादेशलाई पानीबाट बंचित पारेर गंगा नदीको फरक्कामा बाँध बनाएको छ ।

निरपेक्ष क्षेत्रिय अक्षुण्णता सिद्धान्त लागू भएमा माथिल्लो तटीयराष्ट्रले तल्लो तटीयराष्ट्र भएर बग्ने नदीको प्राकृतिक बहावमा असर पर्ने गरेर कुनै पनि भौतिक संरचना बनाउन पाईन्न । यो सिद्धान्त केहि हदसम्म पाकिस्तान र भारत बीच सम्पन्न सिन्धु जल सन्धीमा अवलम्बन गरिकोछ । सिन्धु नदीको ६ मुख्य सहायक नदीहरु ब्यास, रवी, सतलज, सिन्धु, चेनव र झेलम मध्ये सतलज र सिन्धु चीनमा उत्पत्ति भएर भारतमा उत्पत्ति हुने अन्य ४ नदीहरुसंग मिसिंदै पाकिस्तान भएर अरब सागरमा समाहित हुन्छ । उक्त सन्धी अनुसार पूर्व तर्फका ब्यास, रवी र सतलजको नियन्त्रण भारतले गर्छ भने सिन्धु, चेनव र झेलम पाकिस्तानलाई दिइएकोछ । यसैले भारतमा बगेपनि सिन्धु, चेनव र झेलम नदीको पानी उपभोग भारतमा प्रतिबन्धित छ ।

बिद्यमान सन्धीहरु
नेपालले भारतसंग कोशी, गंडकी र महाकाली सन्धीहरु गरिसकेकोछ (कान्छो कोईरालापुत्र गिरिजा कोइराला सरकारले टनकपुर सन्धी गरेकोमा सन्धी हैन समझदारी भनेतापनि सर्वोच्च अदालते खारेज ग¥यो) । प्रत्येक पटक सन्धी भएपछि राष्ट्रघाती सन्धी गरियो भनेर ठूला आन्दोलनहरु भएकाछन् । अर्कोतर्फ यी सन्धीहरु आक्रोस थोपर्ने माध्यम पनि भएकाछन् । माओवादीले १० वर्षे सशस्त्र द्वन्द्वमा जानु अघि शेरबहादुर देउवा सरकारलाई बुझाएको ४० बुंदे मागपत्रमा कोशी, गंडकी र महाकाली सन्धीहरु खारेज गर्नुपर्ने प्रमुख थिए । तर यहि दलको नेतृत्वमा पटक पटक सरकार बनेपनि यी सन्धीहरु खारेज त के सुधार गर्न पनि अग्रसर भएनन्; पण्डित्याई गर्ने, व्ययवहारमा नउतार्ने आहान चरितार्थ गर्दै । यस सन्दर्भमा यी सन्धीहरुको संक्षिप्त विश्लेषण सान्दर्भिक हुन्छ (स्थानाभावको कारणले बिस्तृत विश्लेषण सम्भव छैन) ।

कोशी सन्धी
जेष्ठ कोईरालापुत्र मातृका कोईराला सरकारले १९५४ अप्रिल २५ तारिखमा दस्तखत गरेको कोशी सन्धीको प्रमुख लक्ष भारतको बिहारमा बाढी नियन्त्रण र सिंचाइ हो । यसकोलागि नेपाल–भारत सीमाना नजिकको हनुमाननगरबाट डेढ कोश उत्तरमा बाँध लगायतका संरचना निर्माण गरिएकाछन् । यो सन्धीका १८ धारा मध्ये धारा ४ बाहेक सबै उक्त संरचना निर्माणमा केन्द्रित छ । नेपालमा डुबान तथा बिस्थापन गरेर भारतमा बाढी नियन्त्रण र सिंचाइको व्यवस्था गर्ने यो सन्धी राष्ट्रघाती भएकोमा शंका छैन ।

धारा ४ ले नेपाल र भारतको पानीमाथि अधिकारको व्यवस्था गरेकोछ, जसको शब्दसंरचनाले कोशीको सबै पानीमा भारतको अधिकार निहित रहने र नेपालको पानीमाथिको अधिकार भारत मातहत छ भन्ने इंगित गर्छ । सायद यहि व्याख्या गरेर धरानबासीले पिउनको लागि चतराबाट कोशीको पानी लैजान खोज्दा अवरोध गरियो ।

तर सन् १९६६ मा, निरंकुश मानिएको स्वर्गिय राजा महेन्द्रको शासनकालमा, यो सन्धीमा संशोधन गरिएर सिंचाइ लगायत अन्य सबै प्रयोजनकोलागि नेपालले आफुलाई आवश्यक परिमाणमा पानी उपभोग गर्न पाउने र बाँकी रहने पानीमामात्र भारतको अधिकार हुने व्यवस्था गरियो । यो व्यवस्थाले स्पष्टरुपमा कोशी नदीमा नेपालको निरपेक्ष क्षेत्रिय संप्रभुता स्थापित गरेकोछ ।

अझ नेपालले समय समयमा आफ्नो आवश्यकता बमोजिम पानी उपभोग गर्न पाउने व्यवस्था भएकोले भारतले बिद्यमान उपभोगको सिद्धान्त अनुसार पानीमाथि दावी गर्न मिल्दैन । अर्थात नेपालले वर्तमानमा उपभोग गरिराखेको भन्दा बढी पानी आगतमा उपभोग गर्न यहि व्यवस्थाले गर्दा मिल्छ र यसले कोशीमा नेपालको निरपेक्ष क्षेत्रिय संप्रभुता अझ सुदृढ ग¥यो ।

१९५४ मा सम्पन्न सन्धीमा अवधि तोकिएको थिएन, तर संशोधनमा १ सय ९९ वर्षको अवधि तोकियो । कतिपय विशेषज्ञ यसलाई राष्ट्रघात मान्छन् । तर यो व्यवस्थाले कोशी नदीमाथि नेपालको निरपेक्ष क्षेत्रिय संप्रभुता १ सय ९९ वर्षकोलागि सुनिश्चित ग¥यो, जुन यसको सुन्दर पक्ष हो । वर्तमान भारत र अहिलेको भारतीय नेतृत्वले यसरी कोशी नदीमाथि नेपालको निरपेक्ष क्षेत्रिय संप्रभुता स्थापित गर्न मान्ने अवस्था छैन ।

कोशी सन्धी खारेज गर्नुपर्छ भन्नेहरु बाटामा बच्चा राखेर नुहाईदिंदा फोहर भएको पानी फाल्दा बच्चा समेत फाल्नखोज्ने जस्ता छन् । कोशी नदीमा बिद्यमान भौतिक संरचनाहरुले नेपालको अत्यधिक अहित गर्छ । तर यी संरचनाको आयु ५० वर्षमात्र हो, जुन लगभग सकिई सक्यो । तर धारा ४(क) अर्को १ शताब्दी भन्दा बढी अवधि सम्म लागू रहन्छ ।

गंडक सन्धी

माइला कोईरालापुत्र वीपी कोईराला सरकारले पनि भारतमा बाढी नियन्त्रण र सिंचाइको लागि गंडकी नदीमा सुस्ता नजिकै बाँध लगायतका संरचना बनाउन दिन सन् १९५९ डिसेम्बर ४ मा गंडक सन्धीमा दस्तखत ग¥या । १२ वटा धाराहरु भएको यो सन्धीको धारा ९ बाहेकका सबै उक्त संरचना निर्माण सम्बन्धी छन् ।

यो सन्धी अन्तर्गत निर्मित सबै संरचनाले नेपालको अहित गर्छ । भारतमा बाढी नियन्त्रणमात्र नभएर सिंचाइको लागि पानी पनि भारतले लगभग एकलौटी गरेकोछ । तर १९६४ अप्रिलमा संशोधित धारा ९ ले भने गंडकी नदीको पानीमा नेपालको निरपेक्ष क्षेत्रिय संप्रभुता स्थापित गरेकोछ, सुख्खायाम ३ महिना (फेब्रुवरी देखि अप्रिल सम्म) यस नदीको जलाधार क्षेत्र बाहिर पानी लैजानमा लगाईएको प्रतिबन्ध बाहेक । सुख्खायाममा बाहेक नेपालले यो नदीको पानी यसको जलाधार क्षेत्र बाहिर समेत लगेर उपभोग गर्न सक्छ ।

यो सन्धीमा पनि नेपालले समय समयमा आफ्नो आवश्यकता बमोजिम पानी उपभोग गर्न पाउने व्यवस्था रहेकोले बिद्यमान उपभोगको सिद्धान्त अनुसार भारतको दावी पुग्दैन । अर्थात नेपालले वर्तमानमा उपभोग गरिराखेको भन्दा बढी पानी आगतमा गर्न मिल्छ । कालो बादलमा चांदीको घेरा हो यो ।

यो सन्धीमा अवधि तोकिएको छैन र यसैलाई देखाएर कतिपय बुद्धिजीवि यो सन्धीलाई राष्ट्रघाती ठान्छन् । तर अर्को परिवेशबाट हेर्दा सुख्खायाममा यो नदीको जलाधार क्षेत्र बाहिर पानी लैजानमा प्रतिबन्ध बाहेक नेपालको निरपेक्ष क्षेत्रिय संप्रभुता स्थापित गरेकोछ र अवधि नतोकिएकै कारणले नेपालको निरपेक्ष क्षेत्रिय संप्रभुता अनन्तकालसम्म कायम रहन्छ । कोशी सन्धीको सन्दर्भमा भनिए झै वर्तमान भारत र अहिलेको भारतीय नेतृत्वले यसरी गंडकी नदीमाथि नेपालको निरपेक्ष क्षेत्रिय संप्रभुता स्थापित गर्न मान्ने अवस्था छैन र त्यो पनि अनन्तकाल सम्म कायम रहने गरेर मान्नु असम्भवप्राय छ ।

तसर्थ गंडकी नदीमा बिद्यमान भौतिक संरचना राष्ट्रघाती भएतापनि यो नदीमाथि नेपालको निरपेक्ष क्षेत्रिय संप्रभुता अनन्तकालसम्म कायम रहनु निश्चय नै नेपालको हितमा छ ।

महाकाली सन्धी
सुगौली सन्धी बमोजिम नेपालले “काली नदीको पश्चिमी भू–भागको (मात्र) सम्पूर्ण अधिकार परित्याग” गरेकोले यो नदीमाथि नेपालको आधिपत्य कायम राखेकोमा यो सन्धीले महाकाली नदीलाई सीमानदी घोषणा गरेकोले नेपालले अधिकार गुमायो । सीमानदी मानिएकै आधारमा यो सन्धीको धारा ३ ले पानीमाथि नेपाल र भारत बराबर हक कायम गरेकोछ; समानतापूर्ण हक, समतापूर्ण हैन । जुन सकारात्मक हो । तर “बिद्यमान उपभोग्य उपयोगको हकमा प्रतिकूल प्रभाव नपर्ने गरेर” भन्ने प्रतिबंधात्मक वाक्यांश थपिएकोेले भारतले यो सन्धी सम्पन्न हुनु अघि अवैधानिकरुपमा उपभोग गरिराखेको ९३% पानी कटाउंदा नेपालको हक ३.५% मा सीमित हुने अवस्था बन्यो । यस पृष्ठभूमिमा नेपालको संसदले देहाय बमोजिम ४ बुंदे संकल्प प्रस्ताव पारित गरेको स्मरणिय छः

* विस्थापित लागतको आधारमा उर्जाको मूल्य निर्धारण गर्ने;
* महाकाली नदी आयोग गठन गर्ने;
* पंचेश्वर आयोजनाबाट उत्पादन हुने पानी बराबर बाँडफाँट गर्ने; र
* महाकाली नदीको हैसियत किटान गर्ने ।

व्यापक सन्धी
सबै सन्धीहरु समेटेर व्यापक सन्धी गर्ने हो भने नेपालको संसदले पारित गरेको संकल्प प्रस्तावमा उल्लिखित बुंदाहरु पहिले महाकाली संधीमा समेटेरमात्र व्यापक संधीमा समावेश गर्नुपर्छ । साथै कोशी संधीमा निहित निरपेक्ष क्षेत्रिय संप्रभुतालाई यथावत राखेर कर्णाली नदीमाथि पनि नेपालको निरपेक्ष क्षेत्रिय संप्रभुता कायम गरिनुपर्छ भने गंडक संधीले सीमित पार्न खोजेको निरपेक्ष क्षेत्रिय संप्रभुतामाथिको प्रतिबन्ध हटाईनुपर्छ ।

यस्तो व्यापक सन्धी गर्दा नेपालको जलयातायातको हक स्थापित गरिनुपर्छ ताकि नेपालले नदी प्रणालीबाट भारत तथा बंगलादेश हुंदै बंगालको खाडी सम्म जलयातायात संचालन गर्न सकोस् । यो ठूलो उपलब्धि हुनेछ, एउटा भूपरिवेष्ठित देशलाई ।

सन्धी गरेर नदी बाँडफाँट गर्ने भन्ने सोच कतिपयले राखेकाछन् । नेपालको मौसम प्रणालीमा आधारित जलचक्रले गर्दा नदी बाँडफाँट गरिए ४ महिना वर्षातमा बाढी र बाँकी ८ महिना सुख्खायाममा खडेरीकोमात्र बाँडफाँट हुन्छ । सन्धीको लक्ष्य जलश्रोतको दोहन गर्दा हुने लाभ र लागत बाँडफाँट गर्ने हुनुपर्छ ।
Ratna Sansar Shrestha

२०७४ साल पुस ३० गतेको नागरिकमा प्रकाशित

Wednesday, January 3, 2018

Revision of Transboundary River Treaties

Transboundary river means river that transcends boundaries. Rivers crossing boundaries of multiple users, countries and regions are transboundary rivers. Even lakes can be transboundary if shared by a number of countries (like Lake Superior in North America). In Nepal’s context Koshi, Gandaki and Karnali are major transboundary rivers, while Mahakali is both border River and transboundary river (Mechi is minor one). These are transboundary rivers for Nepal, Bangladesh, China and India. For Nepal China is upper riparian and Bangladesh and India lower riparian.

Principles governing Transboundary Rivers
There are two principles that govern transboundary rivers. First principle is absolute territorial sovereignty, also known as Harmon Doctrine, which allows unlimited use of water of a transboundary river located within national borders regardless of any consequence on lower riparian. Both China and India use this principle. China has built and is building dams on Brahmaputra River. Similarly, India has built Farakka dam on Ganga River depriving Bangladesh.

Absolute territorial integrity is another principle, which prohibits any development in an upstream state that would interfere with the natural flow of the river. India wishes that both Nepal and China adhere to this principle, although she herself uses first principle. To an extent this principle was adhered to in Indus Treaty. Although rivers like Beas, Ravi, Sutlej, Indus, Chenab and Jhelum originate in India, under Indus treaty, Beas, Ravi and Sutlej (eastern rivers) are given to India, while control over the three "western" rivers Indus, Chenab and Jhelum lie in Pakistan.

Overarching framework treaty
Recently, an Indian NGO that focuses on environmental law, unveiled draft of an overarching framework treaty for watercourses shared between Nepal and India in an interaction program in Nepal. Surprisingly, although the draft is expected to be “overarching” and lays down “framework” for treaty on “shared watercourses” it aims to encompass treaties on Koshi and Gandaki rivers only. It is mysterious why Mahakali River was left out, if this draft is expected to cover rivers for which Nepal and India have already signed treaties. In order for these two countries to sign an overarching treaty, Karnali River too will have to be included, for which no treaty has been signed so far.

Moreover, while referring to shared watercourses between Nepal and India, it seems to have been forgotten that the watercourses that are shared between these two neighbors, originate in China, while Bangladesh is lower riparian. Therefore, if one is to refer to these watercourses as shared, then these are shared between Nepal, Bangladesh, China and India; this fact seems to have been lost sight of in putting together the said draft.

History of treaties
Government of Nepal has signed treaties with India on Koshi, Gandaki and Mahakali rivers (Tanakpur treaty, signed by government of GP Koirala, youngest Koirala brother, although called an understanding, precursor to Mahakali treaty, was repealed by Supreme Court of Nepal). Signing of each of these treaties resulted in uproar in Nepal as these treaties were deemed detrimental to Nepal’s national interest by a large section of populace. These treaties have also become popular “whipping boys” for disgruntled elements of the society. For example, demand to repeal these treaties found pride of place in 40-point demand of CPN Maoist that culminated in armed insurgency lasting a decade resulting in death of 18,000 people and forced disappearance of many. However, it is surprising that Maoist did not attempt to repeal or even rectify these treaties, when they ruled the country; a case of failing to practice what they preached.

In this backdrop, this paper attempts a brief and cursory analysis and review (detailed one not possible in view of space constraint) of each of these 3 treaties and endeavors to draw a conclusion regarding revision.

Koshi Treaty
Signed by MP Koirala (eldest Koirala brother) government on April 25, 1954, the main focus of this treaty was to construct physical structures including barrage, head-works, etc. 3 miles upstream of Hanuman Nagar (Nepal’s town near Indian border) to control flood and to generate water for irrigation, both in India. The treaty, comprising 18 Articles, deals with matters related to construction of these physical structures, except for Article 4(i) that dwells on “sharing of water”.

There is no doubt that extant physical structures, that result in inundation of Nepal’s territory and involuntary displacement of local inhabitants (negative externalities) is detrimental to Nepal, while positive externalities like flood control and irrigation is enjoyed by India.

A close perusal of original Article 4(i) is called for from the perspective of Nepal’s right over Koshi water. India “will have right to regulate all the supplies in the Koshi River” could have been construed to mean that Nepal’s right to Koshi water is subservient to India’s right. India prohibiting “Dharanites” from extracting water from Koshi River at Chatara for drinking water supplies is manifestation of that.

However, amendment of this Article in December 1966 by government under absolute monarchy of king Mahendra, got India to concede that India will have right over “balance” only after Nepal withdrawing water for “irrigation and for any other purpose in Nepal.” Moreover, as Nepal can withdraw water “as may be required from time to time” as specified in this Article, India cannot assert right under the principle of “existing prior consumptive use”. This clause allows Nepal to increase withdrawal of water in accordance to her requirement and India cannot claim prior use.

Therefore, this sentence has established absolute territorial sovereignty of Nepal over Koshi River.

Initially, there was no mention of term in this treaty. But the term of 199 years was inserted by the amendment in Article 16(i). Some intellectuals have deemed it to be against Nepal’s interest. But it also means that Nepal’s absolute territorial sovereignty over Koshi River has been established for 199 years. As modern day India and its rulers are unlikely to allow Nepal to use Harmon Doctrine in any such treaty, this provision is in Nepal’s interest.

Those clamoring for abrogation of this treaty are the type that throw baby with the bathwater. Physical structure of the barrage is obviously not in Nepal’s interest, but, thankfully, it has limited life (said to be 50 years). However, India accepting Nepal’s absolute territorial sovereignty over Koshi River will survive for more than a century.

Gandak Treaty
BP Koirala (younger brother of MP Koirala) government signed Gandak Treaty on December 4, 1959, to allow India to build Gandak barrage 1,000 ft. below Tribeni canal head regulator. Of 13 articles of this treaty 12 articles deal with construction of the barrage etc. while Article 9 deals with Nepal’s water right.

Like Koshi barrage, physical structures under this treaty are fully detrimental to Nepal as it results in inundation of Nepal’s territory and involuntary displacement of local inhabitants (negative externalities) while positive externalities like flood control and irrigation is monopolized by India. However, Article 9 of the treaty, amended by king Mahendra’s government in April 1964, is in Nepal’s interest to a limited extent because it restricts “trans-valley uses” of water in the months of February to April. Accordingly, Nepal can exercise Harmon Doctrine fully on Gandaki River, including transfer from Gandaki basin to other basins except in 3 dry months.

India also is not entitled to use principle of “existing prior consumptive use” on this river too as Article 9 allows Nepal to withdraw water “as may be required by them from time to time in the valley.” This is another silver lining of this treaty full of dark cloud.

As no term of the treaty is mentioned in the treaty, it seems to stay in force for perpetuity and opponents of this treaty point to it and demand its abrogation. Such people fail to notice the silver lining in India acceding Nepal’s absolute territorial sovereignty over Gandaki River in perpetuity. On the one hand, the restriction on transfer of water to other basins makes it relatively bad treaty compared to Koshi treaty, but from the perspective of applicability of Harmon Doctrine in perpetuity, this is better treaty relatively speaking due to amendment in 1964, as it has no fixed term.

Mahakali Treaty
Mahakali River has been deemed border river by Mahakali Treaty and some contest it on the ground that Nepal had ceded only territory west of Mahakali to India under Sugauly Treaty, signed on December 2, 1815 and this river was not made a border river by this treaty leaving it under exclusive domain of Nepal. This facet, unfortunately, is now water under the bridge of Mahakali River after this treaty was signed on February 12, 1966 as Article 3 has recognized it as a “boundary river on major stretches between two countries”

Article 3 of this treaty has established “equal entitlement in the utilization of waters of the Mahakali River”. This provision is certainly positive, as it has accepted the principle of equality, not equity. However, unfortunately, this principle was qualified by a proviso clause: “without prejudice to then respective existing consumptive uses”, which effectively means Nepal stands to receive 3.5% with India hogging 96.5% (this treaty legitimized use of 93% by India under “existing consumptive use” principle). A rectification of this flaw was attempted by Nepal’s parliament by passing a 4-point stricture motion as follows:

• Price of energy to be determined on the basis of principle of avoided cost;
• Formation of Mahakali River Commission;
• Equal sharing of water after Pancheshor project; and
• Status of Mahakali River to be ascertained.

Until this treaty is amended to incorporate principles enshrined in the stricture motion, it will continue to be detrimental to Nepal.

Revision of treaties
First and foremost, Mahakali Treaty needs to be revised to incorporate principles enshrined in the stricture motion. After that signing of an overarching treaty can be considered. However, in doing so, provisions that establish Nepal’s absolute territorial sovereignty like on Koshi River should not be tampered with. If possible, restriction on inter basin transfer of Gandaki River should be removed. Such an overarching treaty should also include Karnali River, establishing absolute territorial sovereignty of Nepal on it too.

If a revision of these treaties is undertaken, right to inland navigation of Nepal needs to be enshrined such that Nepal can become water linked country from landlocked to allow water transportation from Nepal via India, Bangladesh to open sea/ocean.

Most believe that treaties have to be signed to share transboundary rivers. Under extant hydrological cycle of Nepal, sharing of rivers amounts to sharing flood during wet seasons and sharing drought in remaining 8 months of dry season. Ideally a transboundary river treaty should be geared to share costs (negative externalities) and benefits (positive externalities) in harnessing them.
Ratna Sansar Shrestha, FCA

Published in People’s Review on January 4, 2018

Saturday, December 23, 2017

माथिल्लो कर्णालीः पाउने भन्दा गुम्ने धेरै

हिरा र कोइला दुबै, कार्वनले बनेको, खानीबाट उत्खनन् गरेर निकालिन्छ । तर यी दुईको मूल्य र महत्वमा आकाश जमिनको अन्तर हुन्छ । माथिल्लो कर्णाली आयोजनाको निर्माणस्थल पनि हिरा हो, जसबाट ४ हजार १ सय ८० मेगावाट बिजुलीमात्र उत्पादन नभएर वर्षको ८ महिना सुख्खायाममा थप÷नियन्त्रित पानी उत्पादन हुनसक्छ भने वर्षातमा बाढी नियन्त्रण पनि । तर नेपाल सरकारले यसलाई कोइला बनाएर भारतीय प्रवद्र्धकलाई ९ सय मेगावाटको नदी प्रवाही आयोजना निर्माण गर्ने गरेर सम्झौता ग¥यो, जसले गर्दा तीन गुणा बढी उच्च गुणशील र महंगो बिजुली (नदी प्रवाही आयोजनाबाट निम्नस्तरको बिजुली उत्पादन हुन्छ)बाटमात्र नेपाल बंचित नभई सुख्खायाममा उत्पादन हुने अमृत सरहको थप÷नियन्त्रित पानी र बाढी नियन्त्रण आदिको लाभबाटपनि बंचित हुन्छ ।

सेप्टेम्बर १८, २०१६ भित्र वित्तिय व्यवस्था गर्न प्रवद्र्धक असफल भएकोले १ वर्ष म्याद थप्दा पनि सफल नभएतापनि सरकारले अर्को १ वर्ष म्याद थपिएकोछ । प्रवद्र्धक असफल हुनुमा उसले आफैले लगानी गर्नुपर्ने पूंजीको व्यवस्था गर्न नसक्नु र अन्तरराष्ट्रिय वित्तिय संस्थाहरुले निजलाई विश्वास नगर्नु मुख्य हुन् ।
यस पृष्ठभूमिमा यसका दुवै विकल्पहरुबाट नेपालले पाउने र गुमाउने कुराहरुको बिबेचना गर्नु समसामयिक हुन्छ ।

सौजन्यः नागरिक दैनिक

नदी प्रवाही आयोजनाबाट अपेक्षित लाभ
* आयोजना निर्माण गर्ने कम्पनीको २७% स्वामित्व नेपाललाई निशुल्क प्राप्त हुने सम्बन्धमा के भ्रम छ भने प्रवद्र्धकले नेपाल सरकारको तर्फबाट लगानी गरिदिन्छ । १ सय ४० अर्व रुपैया लागत अनुमान गरिएकोमा तीन चौथाई ऋण र एक चौथाई पूंजी रहनाले नेपालको स्वामित्व ९ अर्व ४५ करोड रुपैया हुन्छ र यति रकमको शेयर प्रमाणपत्र नेपालको नाममा जारी गर्दा उक्त रकम बराबर आयोजना विकास खर्च थपिन्छ, जसले गर्दा यति रकमले आयोजना महंगिन्छ ।

निशुल्क स्वामित्वको महत्व उक्त कम्पनीले नाफा आर्जन गर्ने हदसम्म हुन्छ । २ किलोमिटर जतिमात्र सुरुगं खन्नुपर्ने हुनाले वास्तविक लागत ६० अर्व रुपैयामात्र हुनुपर्नेमा प्रवद्र्धकले कुत्सित नियत राखेर लागत बढाईसकेकाले यो कम्पनीले नाफा आर्जन गरेर लाभांश वितरण गर्ने सम्भावना न्यून छ । साथै बिजुली भारत निकासी गर्दा कम दरमा निकासी गरेको देखाउने सम्भावना पनि छ, नियन्त्रण संरचनाको अभावमा । यस कारणले पनि न यो कम्पनीले नाफा देखाउंछ न नेपालले लाभांश पाउंछ ।

यस्तोमा २५ वर्षमा १ सय ३७ अर्व रुपैया लाभांश पाईने अपेक्ष आधारहीनछ । ९ अर्व ४५ करोड रुपैया पूंजीबाट यति लाभांश पाउन वार्षिक ५८% लाभांश वितरण गरिनुपर्छ, जुन सम्भव छैन । पूंजीको वार्षिक औसत १०% लाभांश वितरण गरेमा २५ वर्षमा २५ अर्व रुपैया लाभांश प्राप्त हुनसक्छ, ¥याल चुहिने १ सय ३७ अर्व रुपैया हैन ।

* यो आयोजनाबाट १२% निशुल्क उर्जा पाउनेलाई सरकारले १ सय ८ मेगावाट बिजुली पाईने ठानेकोछ, जुन वर्षात ४ महिनामात्र पाईन्छ, र सुख्खायाममा १८ देखि ३६ मेगावाटमात्र ।

यसरी पाईने बिजुली नेपालमै आपूर्ति गरिने भ्रम छ । सम्झौताको दफा १०(१४क)मा निकासी गर्दा लाग्ने प्रशारण शुल्क र दफा ११.१५.४ मा निकासी गरेबापत प्रवद्र्धकले दलाली पाउने व्यवस्था छ । घाउमा नून चुक दले जस्तो, आफु बिजुलीको अभाव खेपेर निकासी गरिदएिबापत रकम तिर्ने !

* निशुल्क प्राप्त हुने ४१ करोड ६० लाख युनिट बिजुलीको मूल्य ८१ अर्व रुपैया हुने आकलन गलत छ । युनिटको ५ रुपैयामा बिक्री गरिएमा ५२ अर्व रुपैयामात्र हुन्छ । ८१ अर्व रुपैया पाउन दर ८ रुपैया हुनुपर्छ । तर नदी प्रवाही आयोजनाको बिजुली यतिमा बिक्री हुन्न ।

* यो आयोजनाबाट ¥वायल्टीबापत १ सय १६ अर्व रुपैया प्राप्त हुने आकलन मिल्दैन । सम्झौताको दफा ११.२५ मा पहिलो १५ वर्ष क्षमता ¥वायल्टी प्रति किलोवाट ४ सय रुपैया र उर्जा ¥वायल्टी ७.५% तोकिएकोछ भने साह्रौं वर्ष देखि पच्चिसौं वर्ष सम्म क्षमता ¥वायल्टी प्रति किलोवाट १८ सय सय रुपैया र उर्जा ¥वायल्टी १२% । यो दरमा २५ वर्षमा पाईने ¥वायल्टी करिब साढे ५४ अर्व रुपैया हुन्छ । प्रति युनिट १४ रुपैयामा निकासी गरेमात्र कूल ¥वायल्टी १ सय १६ अर्व रुपैया हुन्छ, नदी प्रवाही आयोजनाको दर यति हुनसक्दैन ।

* सरकारले २५ वर्षमा ८४ अर्व रुपैया आयकरबापत प्राप्त हुने आकलन गरेकोछ । सम्झौताको दफा ३.२.४ अनुसार पहिलो १० वर्ष शतप्रतिशत आयकर छूट हुन्छ भने त्यसपछिको ५ वर्ष ५०% । त्यसैले पहिलो १० वर्ष केहि पनि पाईन्न भने दोश्रो ५ वर्ष जम्मा साढे ३ अर्व रुपैया र बाँकी १० वर्षमा ७० अर्व रुपैया गरेर जम्मा साढे ७३ अर्व रुपैया प्राप्त हुने हुनाले अनुमान केहि यथार्थ नजिक छ ।

* सरकारले ९ अर्व रुपैया र १.३ अर्व रुपैया क्रमसः मूल्य अभिबृद्धि कर र भंसार महसूलबापत प्राप्त हुने आकलन गरेकोछ । तल उल्लेख गरिएझै क्रमसः १४ अर्व रुपैया र ५ अर्व रुपैया मूल्य अभिबृद्धि कर र भंसार महसूल छूट प्रवद्र्धकले पाउंछ । अनि अनुदानस्वरुप प्रति मेगावाट ५० लाख रुपैयाको दरले साढे ४ अर्व रुपैया पनि पाउंछ । सरकारले यसरी दिने साढे २३ अर्व रुपैया बारे मौन रहेर प्राप्त हुने १० अर्व रुपैयामात्र उल्लेख गर्नु गलत उद्देश्यबाट प्रेरित ।

* यो आयोजना निर्माणक्रममा ३ हजारले रोजगारी पाउने उल्लेख छ, तर आयोजना संचालनमा आएपछि १ सय जना जतिले मात्र रोजगारी पाउने कुरा उल्लिखित छैन । बिस्मृतिमा नपरोस् कि नेपालमा श्रृजना हुने यस्तो रोजगारी अधिकांश भारतीयहरुले पाउंछन्, श्रम स्वीकृति अनिवार्य नभएको परिवेशमा ।

* स्थानीय उद्योगहरु स्थापना हुने कुरा उल्लेख गर्दा के बिस्मृतिमा परेछ भने बिजुली निकासी गरेपछि उद्योग संचालनकोलागि आवश्यक बिजुली कहाँबाट आउंछ !

* बाटो, पुल, विद्यालय, स्वास्थ्य केन्द्र आदि स्थापना हुने कुरा पनि उल्लेख छ । महत्वपूर्ण प्रश्न के हो भने यो भेगका नागरिकहरु यहि आयोजना निर्माण नभए सम्म यस्ता पूर्वाधारबाट किन बंचित हुनुपर्छ, जुन अन्यत्र त्यत्तिकै निर्माण भएकाछन् ।

समष्टिमा ४ सय ३१ अर्व रुपैया प्राप्त हुने सरकारको आकलन गलत छ । माथि कच्चेवारीमा उल्लिखित रकमहरुको जम्मा २ सय १४ अर्व रुपैया हुन्छ ।

प्रवद्धकलाई सुविधा
नेपालले के कसरी कति रकम प्राप्त हुन्छ भन्ने कुरा उल्लिखित भएतापनि प्रवद्र्धकलाई दिईने निम्न सुविधा सम्बन्धमा मौन छः

* सम्झौताको दफा ९.२.१ अनुसार प्रवद्र्धकले सरकारलाई मूल्य अभिबृद्धि कर तिरेबापत प्रति मेगावाट ५० लाखको दरले साढे ४ अर्व रुपैया अनुदान दिने व्यवस्था छ । यसरी अनुदान दिईदा आयोजना कार्यान्वयन लागत घट्न गएर उत्पादित बिजुली सस्तिन्छ । तर बिजुली निकासी गरिने हुनाले भारतीय उपभोक्तालाई सस्तो बिजुली उपलब्ध गराउन नेपाल सरकारले अनुदान दिनु बुद्धिमत्तापूर्ण होइन ।

* सम्झौताको दफा ९.२.२ मा सिमेन्ट, छड जस्ता वस्तुमा ५०% भंसार महसूल छूटको व्यवस्था हुनाले नेपालले ५ अर्व रुपैया राजश्व गुम्छ । त्यस्तै बिद्युत ऐनको दफा १२(७) बमोजिम प्लान्ट, मेशिनरी आदिमा भंसार महसूल (१% बाहेक) र मूल्य अभिबृद्धि कर छूटले गर्दा नेपालले १४ अर्व रुपैया गुम्छ ।

* अनि सम्झौताको दफा ३.२.४ बमोजिम पहिलो १० वर्ष आयकर पूर्णरुपमा छूट छ भने ११ वर्ष देखि १५ वर्षसम्म ५०% छूट छ । यसले गर्दा नेपाललाई साढे १७ अर्व रुपैया नोक्सान हुन्छ ।

समग्रमा नेपालले ४१ अर्व रुपैया गुमाउंछ, तर यो कुरा सरकारले खुलासा गरेको छैन । नेपालले पाउने बारे बढाईचढाई विवरण दिएर नेपालले गुमाउने सम्बन्धमा मौन रहनुमा केहि अभिष्ट हुनसक्छ ।

गुम्ने जलाशययुक्त आयोजना
विश्व बैंकबाट ऋण लिएर गरिएको अध्ययन अनुसार यो आयोजनास्थल ९ सय मेगावाट जडित क्षमताको नदी प्रवाही आयोजनाको सट्टा ४ हजार १ सय ८० मेगावाटको जलाशययुक्त आयोजनाकोलागि उपयुक्त हो । जलाशययुक्त आयोजना बनाए साढे ३ अर्व युनिटको सट्टा झण्डै ११ अर्व युनिट उच्च गुणशील बिजुली उत्पादन हुन्छ, जुन महंगोमा विक्री हुन्छ । नदी प्रवाहीको तुलनामा जलाशययुक्त आयोजनाबाट निम्न बमोजिम नेपाल लाभान्वित हुन्छ, यहि प्रवद्र्धकलाई बिद्यमान सम्झौताकै आधारमा दिएपनिः

* निशुल्क उर्जा वर्षातमा १ सय ८ मेगावाट र सुख्खायाममा १८ देखि ३६ मेगावाटको (साढे ४१ करोड युनिट)को सट्टा बाह्रै महिना ५ सय २ मेगावाट (१ अर्व ३२ करोड युनिट) प्राप्त भएर २५ वर्षमा ५२ करोड रुपैयाको सट्टा ३ सय २५ अर्व रुपैया प्राप्त हुन्छ ।

* ¥वायल्टी पनि नदी प्रवाही आयोजनाबाट २५ वर्षमा प्राप्त हुने साढे ५४ अर्व रुपैयाको सट्टा ३ सय ९१ अर्व रुपैया पाईन्छ ।

* यहि हिसाबमा आयकर, लाभांश, मूल्य अभिबृद्धि कर, भंसार महसूल आदि पनि नेपालले बढी आर्जन गर्छ ।

यसरी सरकारलाई राजश्व पनि दशौं गुणा बढी पाउनेमा जलाशययुक्त नबनाएर राष्ट्रलाई घाटा पारिएकोले राष्ट्रघात भएकोछ ।

पानीको बहुआयामिक लाभ
जलाशययुक्त आयोजना निर्माण भए सुख्खायाममा उत्पादन हुने ५ सय घनमिटर प्रति सेकेन्ड थप÷नियन्त्रित पानी उपलब्ध हुन्छ, जसबाट १५ लाख हेक्टर जमिन सिंचित हुनसक्छ । यो विकल्प कार्यान्वयन गरिए भएर ६ र ७ नं प्रदेशको यस भेगमा पिउन र सरसफाईकोलागि पानी सुलभताकासाथ उपलब्ध भएर खानेपानी सुरक्षा सुनिश्चित हुनाकोसाथै सुख्खायाममा सिंचाइ सम्भव भएर सघन खेतीबाट एक वर्षमा ४ वाली सम्म खेती गरिएर खाद्यान्न सुरक्षा हासिल हुन्छ । जसले गर्दा त्यस भेगमा बिद्यमान भोकमरी र अनिकाल इतिहाँसको पन्नामा सीमित गर्न सकिन्थ्यो । तर नेपाल सरकारको अदूरदर्शीताले गर्दा यी सबै गुम्ने अवस्था छ ।

२०७४ पौष ९ गतेको नागरिकमा प्रकाशित

Wednesday, December 13, 2017

Upper Karnali: Cost to Economy Outstrips Benefit by Huge Magnitude

Diamond is primarily composed of carbon and found in mines, like coal. But there is huge difference in value and importance of the two. Upper Karnali Project site on Karnali Bend is like a diamond that can be harnessed to develop as a multipurpose project with 4,180 MW installed capacity. But Government of Nepal (GoN) treated it like coal and gave it away to GMR, an Indian Company, to build peaking run of the river project (PRoR) with only 900 MW installed capacity, thereby depriving Nepal from benefits, inter alia related to stored water from reservoir and higher quantum of better quality electricity. Hence, the controversy.

The project development agreement (PDA) for this project, signed (during coalition government led by Sushil Koirala) by Investment Board of Nepal (IBN) on behalf of GoN with GMR Upper Karnali Hydropower Ltd. (GMR) on 18th September 2014, requires GMR to arrange financial closure within 2 years. Failing to achieve financial closure within the timeframe, GMR requested extension by one year, which too expired without any achievement. GMR again requested another one-year extension, which was granted in November 2017.

The failure of GMR to achieve financial closure throws light on: (a) GMR lacking financial capability to inject requisite equity to implement the project and (b) lack of trust on the part of international financial institutions in GMR. But GoN is unmindful of these and continues to extend the deadline to no avail.

In this backdrop, it is high time to conduct a critical assessment of both options of this project, with an eye not only on benefits to Nepal but also cost to Nepal’s economy, including opportunity cost of not harnessing the site as reservoir project.

PDA was signed to implement PRoR scheme and an analysis of benefit to Nepal’s economy from it and cost thereof ensues:

Expected benefits
The website of IBN proudly lists various benefits to Nepal from 900 MW scheme that GMR plans to implement (depicted in the infograph below):

The veracity of these benefits to Nepal is examined below:

• There is provision for free equity of 27% to Nepal. Hydrocrats seem to be belaboring under the mistaken impression that GMR will inject equity on behalf of Nepal and issue share certificates against it. This is a fallacy; it simply will be an accounting sleigh of hand. Actually GMR will issue share certificates to Nepal and simultaneously add equivalent amount in the books of account as “project development cost”, thereby increasing the project cost by commensurate amount.

Specifically, as GMR has estimated this project to cost $ 1.4 billion (about Rs 140 billion) and if it is financed with 75% debt and 25% equity as stipulated in Section 11.27 of PDA, Nepal’s free equity of 27% will amount to Rs 9.45 billion. Meaning Rs 9.45 billion will be added to the cost of the project as project development cost to issue share certificates to Nepal.

Further, free equity will have value only to the extent the project company succeeds to earn profit and declare/distribute dividend. GMR has already jacked up estimated cost. The project should have cost only about $ 600 million, especially due to the fact that project needs to dig only 2 km long tunnel, thereby shaving huge tunneling cost, which tends to be costly especially in Nepal’s geology. In this backdrop the project company is unlikely to earn or show profit.

Besides, as this is an export-oriented project, GMR is in a position to use transfer-pricing mechanism to syphon off profit. GoN has not instituted any mechanism to pre-empt such activity.

• Nepal is to receive 12% free energy from this project. GoN has taken it for granted that this will amount to 108 MW. This is only partly true. Because, GMR is now proposing to build the project as RoR scheme without peaking to avoid adverse impact on irrigation schemes downstream, in which case Nepal will receive only 18-36 MW as free power in dry season (almost 8 months a year).

People are under illusion that free electricity received from this project will help mitigate Nepal’s load shedding. But the PDA has a provision to export free electricity in clause 10 (14A) and GoN has to pay “transmission tariff” to GMR for the purpose. Under clause 11.15.4 GMR has been reposed with the responsibility to take care of export for which it would be paid trading commission, too. This amounts to adding insult to injury: having to pay GMR to export free electricity that Nepal should have received and used, while Nepal languishes for lack of electricity.

Incidentally, Nepal would stand to receive Rs 2.08 billion a year for 12% free energy (416 GWh) if sold at Rs 5/kWh; totaling Rs 52 billion, not Rs 81 billion as mentioned by IBN. Conversely, Nepal’s share of free energy will have to be sold at about Rs 8/kWh to achieve revenue stream of Rs 81 billion from free energy as claimed by IBN, but electricity from RoR scheme will not attract this high tariff.

• IBN has mentioned that Nepal stands to earn Rs 116 billion in royalties from this project. Section 11.25 of PDA specifies that capacity royalty will be Rs 400 per kW and energy royalty will be 7.5% in first 15 years after commissioning, which will be increased to Rs 1,800 per kW and 12% respectively for 16-25 years. Therefore, annual capacity royalty will be Rs 316.8 million for first 15 years (on 900 MW minus 12%) and Rs 1.425 billion for remaining 10 years. Similarly, annual energy royalty on 88% of energy generated will be Rs 1.143 billion for first 15 years and Rs 1.83 billion for remaining period if electricity is exported at Rs 5/kWh. Total royalties Nepal will earn from this project over 25 years will amount to Rs 54.465 billion only, not Rs 116 billion; a clear case of overstatement. Even if GMR is to export electricity at Rs 10/kWh, Nepal’s royalties earning in 25 years will amount to Rs 89.922 billion only. However, as mentioned above it is highly unlikely that power from a RoR scheme would fetch Rs 10/kWh. Therefore, this too is a clear case of misinformation.

• Similarly, IBN claims that Nepal will be paid dividend totaling Rs 137 billion in 25 years; annual average of Rs 5.48 billion. As mentioned above, Nepal will own shares in the project of Rs 9.45 billion and in order for Nepal to earn dividend from this project of Rs 137 billion in 25 years, dividend pay out rate will have to be 58% of equity each year. It is over ambitious to expect dividend pay out at this rate.

Besides, as mentioned above, this project is over capitalized at Rs 140 billion and its chances of earning even decent profit is rather slim; forget dividend declaration at almost 60% each year. Realistically, Nepal may earn Rs 945 million each year (10% of equity), totaling Rs 23.625 billion in 25 years at the most; not mouthwatering Rs 137 billion.

• Moreover, IBN claims that Nepal’s treasury will receive Rs 84 billion as income tax over 25 year period. While discussing what Nepal is to receive as income tax from this project, provision of Section 3.2.4 of PDA should not be lost sight of, under which GMR is completely exempt from income tax in first 10 years and the exemption is 50% in years 11 through 15. Therefore, no income tax will be received in first 10 years and receive Rs 700 million a year as income tax from years 11 through 15 (at the rate of 50% of 20% under Clause (4) of section 2 of Schedule 1 of Income Tax Act), totaling Rs 3.5 billion in 5 years, supposing GMR succeeds to earn net profit of 20% on equity. In the same vein, income tax receipt will total Rs 70 billion (Rs 7 billion/year) in 10 years spanning years 16 to 25. IBN estimate of income tax revenue of Rs 84 billion, for a change, is close to real potential income tax revenue of Rs 73.5 billion.

• In “estimated financial benefit within 25 years of concession period” IBN also has included Rs 9 billion and Rs 1.3 billion as VAT and custom duty, respectively, totaling Rs 10.3 billion. It needs to be remembered that the VAT and custom duty facility to GMR costs the treasury Rs 14 billion and Rs 5 billion respectively as described below. Moreover, GMR is to be paid subsidy of Rs 5 million per MW for having paid VAT to GoN, totaling Rs 4.5 billion. IBN mentions that Nepal will receive Rs 10.3 billion as VAT and custom duty, but fails to mention loss to GoN treasury of Rs 23.5 billion, including as subsidy.

• IBN has estimated that there will be 3,000 direct jobs during peak construction period. What IBN has failed to mention is the fact that direct employment in the project will be less than 100 after commissioning of the scheme due to automation, remote control, etc. Another fact of vital importance that IBN has ignored is that with no work permit required, people from across the border will be employed in these jobs, rather than from Nepal. There is no mechanism to ensure that only people from Nepal benefit from such employment opportunities.

• IBN has painted a rosy picture by mentioning that it will “boost local industries”, forgetting that industries need to be powered by electricity. With every kWh of electricity (including free energy to Nepal) generated by this project being exported, it will not be possible to set up industries locally for lack of energy. Therefore, contrasted with IBN’s expectation, fostering entrepreneurship becomes merely pipedream when it is not possible to establish industries for lack of energy.

• Construction of roads bridges, schools, health and community centers, etc. by the project finds mention in the list of benefits prepared by IBN. An important question that goes abegging is: do not people affected by this project deserve roads, bridges, schools, health and community centers, etc. even without the project being implemented? Why should they be made to await implementation of this project for these basic infrastructures, which citizenry from other parts of the country take for granted as innate right?

In this manner, IBN claims that Nepal will receive financial benefit totaling Rs 431 billion over 25 years. But realistically speaking Nepal is likely to receive only about Rs 214 billion in the period. Maybe it is a case of over-enthusiasm on the part of IBN or accepting illusory numbers fed by GMR with “creative” financial/economic analysis.

Another important aspect to be remembered is the fact that these are nominal amounts that Nepal hypothetically stands to receive over 25-year period. An objective evaluation of such amounts requires computing present value of such amounts, which IBN has failed to do or deliberately forgot.

Facilities to GMR
But there are costs that Nepal has to bear included in the facilities granted to GMR under various sections of PDA, in order to attract foreign investment in this project. The website of IBN conveniently fails to mention these:

• Under Section 9.2.1 of PDA, GMR is entitled to Rs 5 million per MW as subsidy, amounting to Rs 4.5 billion for having paid VAT to GoN, although under Nepal law only the projects that connect to national grid to meet Nepal’s internal demand are entitled to it. Such subsidy will reduce initial investment of the project and effectively reduce cost of generating power. This is equivalent to subsidizing buyers of electricity abroad. It is strange that Nepal, a poorer neighbour and supposedly receiving largesse from India, is enabling the project to export electricity at cheaper rate.

• Similarly under Section 9.2.2 of PDA GMR is entitled to 50% custom duty exemption on cement, iron and steel products. This facility is not afforded to projects built to meet Nepal’s internal demand. Such exemption is estimated to cost Rs 5 billion to Nepal’s treasury.

• Further, under Section 12(7) of Electricity Act, GMR is exempt from paying custom duty (except for 1%) and VAT on import of plant, equipment and machinery; estimated cost to Nepal’s treasury Rs 14 billion (assuming cost of electro-mechanical equipment to be 40% of initial investment).

• Moreover, under section 3.2.4 of PDA GMR is exempt from income tax in first 10 years and 50% from year 11 through 15. Nepal loses Rs 14 billion on Income tax exemption in first 10 years and Rs 3.5 billion in years 11 through 15. Total loss to economy Rs 17.5 billion.

In total Nepal loses Rs 41 billion in various facilities to GMR. But this facet has been completely ignored by IBN; highlighting what Nepal stands to receive (even overstating it) but ignoring what Nepal is set lose.

Vulnerabilities of Nepal due to Change in Law
Section 12A.6 of PDA makes Nepal further vulnerable, as it stipulates that GoN shall be liable to any loss GMR is to suffer due to changes in law. GMR, after establishing a company in Nepal under Nepal law called GMR Upper Karnali Hydropower Ltd., to implement the project becomes a corporate citizen. But in contrast with other corporate citizens that are subject to Nepal’s prevailing law, GMR is immune.

Quite a lot of discourse has taken place about suitability of this particular site for reservoir project (4,180 MW) instead of RoR (900), peaking or otherwise. In this backdrop an analysis of opportunity cost of building RoR scheme instead of multipurpose project is called for.

Reservoir vs. run of river
This very site if developed as reservoir project would have generated annual energy of 10,985 GWh compared to just 3,446 GWh from RoR scheme. Importantly energy from reservoir project would be of high quality fetching higher tariff. Besides, reservoir project results not only in downstream benefit but also can control flood to an extent, which are not possible from RoR projects, peaking or otherwise. Moreover, reservoir project can also facilitate inland navigation in downstream areas as well as in the lake formed by the dam.

Opportunity cost of choosing RoR
Logically, benefit accruing to Nepal from reservoir project will be higher by a magnitude compared to RoR scheme. Hypothetically, if GMR were allowed to harness the site as multipurpose project on same conditions of the PDA, the benefits accruing to Nepal would be as follows:

• Free power will be 502 MW; same in both wet and dry season, contrasted with 108 MW in wet season and 18-36 MW rest of the year. Similarly, free energy will be 1,318 GWh from former compared to just 415 GWh from latter. Besides, not only the quantum of free energy will be higher by more than 3 times, but the value too will be higher by more by Rs 10 billion (Rs 13 billion from former compared to just Rs 2 billion from latter).

• Nepal’s revenue from royalties from multipurpose scheme will be Rs 391.5 billion in 25 years (capacity royalty Rs 500/kW and energy royalty 10% in first 15 years and Rs 2,000/kw and 15% respectively in 16 though 25 years) compared to Rs 54.465 billion from latter.

• In the same vein Nepal’s treasury will receive exponentially higher amount by way of dividend, income tax, VAT, other taxes, etc. due to reasons like more than 3 times energy that fetches higher tariff and large scale economy.

• Compared to building RoR scheme of 900 MW, building 4,180 MW reservoir project will generate employment by a magnitude higher.

• Generation of more electricity means more energy to boost local industries to higher plane.

Nepal will be deprived of potential benefits listed above, if the site is developed as RoR scheme, an opportunity cost to Nepal.

Part III: Downstream Augmented Flow
Generally reservoir projects have multipurpose benefits, all over world due to production of additional water in dry season in controlled manner. Besides, reservoir project also results in flood control in lower riparian areas. These are important benefits that Nepal stands to lose if GMR is allowed to implement it as RoR Scheme.

People believe that Nepal is rich in water, which is just mirage as Nepal suffers from flood in wet season and drought in dry season; in an average Nepal is rich in water but Nepal suffers from water poverty. In dry season (spanning almost 8 months) people in rural areas not only become sick for lack of potable water but even succumb to it. But a reservoir project will avail additional water not only by way of lean season augmented flow, but also by recharging underground aquifers. This results in water security. Nepal’s province number 6 and 7 will be deprived from water security if RoR scheme is built on this site instead of storage project. Water security has very higher value and monetization of such benefit may not an easy task. Water for drinking (people cannot live long without drinking water) and sanitation (linked to hygiene and wholesome health) is second most important necessity for human beings, just after air to breathe.

Similarly, there is rampant starvation and famine in Nepal in general and more so in province number 6 and 7 in particular for failure to achieve food security. Building reservoir project on this site will avail water for irrigation in dry season, enabling intensive cropping (up to 4 crops/year compared to one crop in most agricultural land now). This site can generate 500 cubic meters per second of lean season augmented flow, enough to irrigate 1.5 million hectare of land. Remembering that land cannot be irrigated with petrol/diesel, the real value of irrigation to achieve food security is manifold compared to benefit from electrification (people can survive without electricity, but not without food for long). Therefore, no attempt is required to impute value of food security, besides stressing that people need to be fed to be able to enjoy electricity.
It should not be forgotten that there is no alternative to water, mainly fresh water, whereas energy can be generated from a number of sources, both clean/renewable and unclean/unrenewable.

With more energy generated from this site, it will help Nepal achieve energy security too if Nepal is to refrain from colonial model of development in which Nepal’s primary resource (electricity being one example) is exported.

Essentially, GoN has glorified potential benefits disproportionately (also in nominal value), while sweeping costs that Nepal’s economy has to bear under the carpet. Also GoN has completely ignored benefits from multidimensional uses of stored water that will ensure water, food and energy security from multipurpose project. Therefore, GoN has blundered by allowing GMR to build RoR scheme on this site, due to which Nepal will be deprived from close to Rs 1,000 billion in direct financial benefits too. From this perspective it is an antinational act. For some nationalism is just abstract. But this project is economically and financially detrimental to Nepal’s national interest, not just in abstract sense. GoN’s this action results in huge economic and financial loss to the nation.

GoN decision to earmark the project as export oriented has ignored positive impact on the economy if electricity is used in Nepal due to multiplier effect and, hence, this decision is detrimental to Nepal.
In view of this new government that will be formed imminently needs to correct this blunder and implement multipurpose project on this site in Karnali Bend for consumption of both water and electricity in Nepal.

Ratna Sansar Shrestha

Published in People’s Review of December 14, 2017

Wednesday, November 22, 2017

Lest Koshi High Dam become a National Disgrace

The press communiqué issued after PM Deuba’s India visit in August 2017 stated that detailed project report (DPR) of Koshi High Dam would be finalized expeditiously. Expecting implementation of the project many became happy, while some opined that this project should not be undertaken at any cost. Those in favor thought it would help develop Nepal. While consultants, engineers, contractors, suppliers of equipment/materials, etc. and their brokers too were happy at the prospect of additional business including agency commission. Hydrocrats in general were happy, not merely because a project is going to be built, but perhaps at the prospect of additional under the table earning.

Amongst the naysayers, some worried on account of earthquake risk, while others were concerned about environment. It is not prudent not to undertake any development work due to such reasons. Prudent course is to take requisite precaution in implementing the project such. Japan is one of the countries fraught with high earthquake risk. But she has not stopped building physical infrastructure. Similarly, potential adverse environmental impact too should not discourage development; such impacts should rather be mitigated effectively. A project may displace thousands of people; the project should be built after properly resettling/rehabilitating displacees, if the project benefits hundreds of thousand people.

A large section of hydrocrats that brand this scribe anti-development would be surprised to read above lines. There are two types of development. First is in Nepal’s national interest (good development) and this scribe is in favor this type of development. This scribe, however, is against bad development. Latter type of “development” is Nepal’s national disgrace and such “development” should not be allowed to take place at any cost.

Reservoir project
With installed capacity of 3,300 MW, implementing this project entails building 269-meter high dam to impound 13.45 billion liter water, from which 0.546 million hectare land will be irrigated in Nepal and 0.976 million hectare in India, using lean season augmented flow. It will, reportedly, submerge one airport, 19 bridges and 196 square km of land in 80 villages of 11 districts and displace hundreds of thousand people.

Models of development
Barrages on Koshi and Gandaki rivers near Bhimnagar and Susta respectively (both close to Nepal-India border) were built by government of India in 1950s promising that electricity and water for irrigation shall be availed to Nepal. The model was “India will build project in Nepal and give something to Nepal”. Nepal is not receiving even a single drop of water for irrigation from Koshi barrage and she is supposed to receive 6.8 MW electricity from hydropower plant in Kataiya, India, using water from this barrage. Similarly, India has built a 15 MW hydropower plant on water from Gandaki barrage, which is currently generating less than 10 MW. While, although Nepal was slated to receive 20 cusec water to irrigate 40,000 acres land in Nepal from eastern canal, she is not receiving even one-fourth of that quantum.

Both of these dams are under Indian control and Nepal cannot open or close the gates of these barrages even when Nepal is inundated/flooded and local populace displaced. Under Koshi and Gandaki treaties, India is responsible for management, operation, repair and maintenance of these barrages including other physical structures. In effect, the land under these projects, in sovereign Nepal, is under Indian control.

India is proposing to build Koshi High Dam in this very model and Lampasarbadi (capitulationist or groveler) hydrocrats (politicos, bureaucrats, business community, pseudo intellectuals) are eager to accept this model. This model entails inundation and involuntary displacement in Nepal (negative externalities), while India will not only enjoy cheap electricity but also benefit from flood control and lean season augmented flow free of cost (positive externalities). Meaning while Nepal suffers the losses, benefits are hogged by India. This is an alternative (first) that Nepal should not touch even with a barge pole.

Indian security force
Indian security force is deployed for the security of both these barrages, which are in sovereign Nepal. This amounts to neocolonialism and, hence, unacceptable in this age. On 20 April 1969 late king Mahendra forced India to withdraw Indian security force deployed in 18 border check posts in Nepal’s northern border, but could not get India to withdraw from these two projects.

Koshi High Dam is to be built near Barahakshetra and its reservoir will extend deep into Nepal’s territory in north. Deploying Indian security force in this area will amount to rendering the area Indian colony, which is absolutely unacceptable.

In 1970s India was about to start building 10,800 MW reservoir project on Karnali River at Chisapani and about 500 Nepal students had already been sent to Roorkee (India) on scholarship for engineering degrees, to be employed in this project. But on learning that there was plan to deploy Indian security force in this project too, late king Birendra cancelled the project, according to former Indian external affairs secretary, Jagat Mehta.

No matter how much Nepal will become materially developed, such development is not acceptable if Nepal needs to mortgage/compromise her sovereignty. This will not be development but neo-colonialism. One cannot allow one’s mother to be raped (begging pardon for rather strong word) in the promise of wealth and prosperity. Therefore, projects in Nepal should be built under Nepal’s ownership to preempt deployment of India security force and to ensure that Nepal’s sovereignty is not impaired. An attempt is being made to conceptualize implementation model of this project without impairing Nepal’s sovereignty in following lines.

Lean season augmented flow
As mentioned above, India plans to irrigate 0.976 million hectares of land, for the purpose of which 325 cumecs (cubic meter per second) water is required for non paddy crop that uses comparatively little water. It must be remembered that water flowing in rivers in normal hydrological cycle bring flood, landslide etc. during rainy season (4-month monsoon period), while relatively little water flows rest of the year. Value of lean season augmented flow produced by building a reservoir is very high, for purposes like ensuring drinking water security, food security (intensive cropping with irrigation around the year) as well as navigation.

Production of lean season augmented flow involves opportunity cost in terms ranging from lost agricultural crop and forest products for close to a century as well as needing to rebuild alternative physical infrastructure. In this backdrop, downstream riparian countries like India and Bangladesh should recompense Nepal for the cost of negative externalities and share benefit of positive externalities. A prudent model of development of a project like Koshi High Dam should include a mechanism/formula for the purpose. Columbia treaty between Canada and USA or Lesotho Highland Water Project Treaty (with South Africa) could be replicated in this respect. If Lesotho model ($25 million for 18 cumecs) is to be emulated, India will have to pay Nepal $450 million/year for lean season augmented flow. Perhaps the formula could incorporate elements like irrigation and navigation benefit to both India and Bangladesh.

Flood control
Koshi River is known as “sorrow of Bihar” (India) and by building high dam in Nepal, flood control will be effectuated. Obviously, flood entails submergence of land in both India and Bangladesh, which results in involuntary displacement, resulting in loss of lives and property (agricultural crop and industries, infrastructure etc.) and resettlement and rehabilitation subsequent to flood is also costly. Both India and Bangladesh stand to gain from flood control if the high dam is built. Therefore, in order to persuade Nepal to build Koshi High Dam, both India and Bangladesh should assess damages related to flood and work out a mechanism to recompense Nepal.

Nepal has been “cursed” by nature as a landlocked country. However, if this project is undertaken, ships, steamers, etc. can be operated from Chatara to open sea/ocean via Kolkata in India or Chittagong in Bangladesh. In this manner Nepal will rise from landlocked to water linked.
Both India and Bangladesh are having problem with inland navigation due to sediment-laden river with low water level. Subsequent to implementation of this project, this problem will get mitigated. An important pre-condition to implement this project will be to ensure unfettered right to access to open seas via India and Bangladesh for Nepal.

Use of electricity
The electricity generated by this project should be used to electrify Nepal to the fullest extent including to industrialize, to displace fossil fuel used by transportation, etc. and remaining could be exported to India and Bangladesh at avoided cost.

Financing model
It has been said that it would cost US$3 billion to implement; installed capacity 3,300 MW. It can be financed by borrowing $2.25 billion and investing $ 750 million as equity (75:25). As India is required to pay $450 million/year for lean season augmented flow to Nepal, she should advance $750 million to Nepal in order to enable Nepal to inject equity, subject to adjustment against future payments for lean season augmented flow to Nepal. This is best model from Nepal’s perspective.

Koshi treaty
As this project is one of the principal projects on Koshi river system, a review of Koshi treaty in this backdrop is warranted, which was initially signed in 1954 and revised in 1966. The revision (specifically Clause (i) of Article 4) “reaffirms Nepal’s water right over the entire Koshi Basin in Nepal, thus limiting India’s claim based on chronology of use or absolute riverian integrity.” In this manner the revised and updated treaty has reposed Nepal with full sovereignty over Koshi water; enabling Nepal to use Koshi water for any purpose including irrigation and India has right over remaining water only.

Besides, if India wishes to exercise prior use right, she is entitled to do so under current hydrological cycle. But India has no right over any additional water produced (lean season augmented flow) by building dam in Nepal over and above the quantum that India is currently receiving in dry season. In sum, if India wishes to use lean season augmented flow, she will need to agree to pay Nepal as described above.

Alternative model
In case the model proposed above is unacceptable to India (current model being unacceptable to Nepal); a third model can be structured. Lower the dam height to around 100 meters to generate about 1,000 MW (engineers to work out exact dam height and installed capacity) thereby reducing both inundation and involuntary displacement, to generate enough water to irrigate 0.464 million hectares in Nepal. It may cost $1 billion, to be financed with $750 million as loan and $ 250 million as equity.

Nepal should be prepared to increase dam height, installed capacity and lean season augmented flow if India and Bangladesh agree to recompense Nepal the cost of negative externalities and share positive externalities with Nepal.

National pride versus disgrace
GoN has started a practice of tagging “important” projects as national pride. Most parents consider their offspring ideal. However, it will be determined only by how the child behaves/performs after growing up. Similarly, a project cannot be deemed national pride, if it is detrimental to Nepal, deprives people of Nepal from water and electricity, favors neighboring countries at the cost of Nepal and so forth. Hence, each and every project needs to be structured such that it deserves to be tagged as national pride and ensure that it doesn’t become a national disgrace. Koshi High Dam too will become a national disgrace if it is built following the models of extant Koshi and Gandaki projects.
Ratna Sansar Shrestha FCA

Published on November 23, 2017 in People’s Review