Friday, March 3, 2017


Financial engineering is every bit as important as other kinds of engineering – civil, electrical and mechanical that normally command all the attention for hydropower projects, to ensure that on the macro-hand, they do not have an adverse effect on Nepal's overall economy and, on the micro-hand, that the ultimate users of the electricity are not ripped-off by having all the inefficiencies and unnecessary costs loaded onto their retail tariffs. A project is successfully engineered financially, we can say, when it is completed within the initially estimated cost (not one on the higher to ensure post-completion pat on the back for being able to save, nor lower one to “seduce” decision makers to implement the project) and within the stipulated time. Khimti project is an example that didn’t suffer both from time and cost overrun. But projects implemented by GoN/NEA like Kulekhani 1, Marsyangdi, Kali Gandaki A and Middle Marsyangdi suffered from substantial amount of time overrun entailing huge loss of revenue. But in completion evaluations loss of revenue due to time overrun is not even considered. While Kulekhani 1 and Middle Marsyangdi suffered from cost overrun too. Marsyangdi and Kali Gandaki A did not incur cost overrun as cost estimate for these were on the higher side.

Against the conventional wisdom ascribing load shedding in Nepal to cancellation of Arun 3, it turns out that its non-cancellation would have resulted in severe load shedding. With the cancellation of 201MW Arun 3, NEA alone succeeded to add 228.8MW (with projects that were mutually exclusive from the perspective of financing and covenant of not building project larger 10MW) and IPPs another 149MW by (if other IPP projects that got built due to “trophy-wife” syndrome is accounted for incremental installed capacity due to cancellation of Arun 3 is 499.8MW) by 2015.

Use of ERR (economic rate of return) to assess overall impact on country’s economy results in a stunted picture inducing to implement projects structured badly. Better toolkit for the purpose is an analysis from the perspective of economic linkages (forward, backward, investment and fiscal linkages) and if West Seti project had been implemented in the format and structure proposed by Snowy Mountain Engineering Corporation, Nepal would have been deprived of major benefits from economic linkages. This project should be implemented with an eye on wholesome impact on Nepal’s economy from the economic linkages.

The fault manifest in the failure in financial engineering cannot solely be attributed to Nepal’s hydrocrats, donorcracy is equally responsible. Donors are also partners in crime for ramming bad projects through gullible throats of Nepal’s hydrocracy.

Wednesday, March 1, 2017

“Licensed larceny” in Nepal’s context

Nicholas Hildyard has authored an interesting book titled “licensed larceny”, the theme being “infrastructure, financial extraction and the Global South”, intending to “mise-en-scène” (arrange on stage) the injustices of wealth; published by Manchester University Press in 2016.

People are licensed to drive vehicles, fly aircraft even to practice legal, medical professions. But with the advent of liberalization, people/entities get licensed not only to build, own and operate hydropower plants and sell electricity in bulk to a utility but also construct toll road, bridges, etc. and charge for their use. On the other hand “larceny” is defined by Merriam-Webster Dictionary as “the unlawful taking of personal property with intent to deprive the rightful owner of it permanently.”

Million-dollar question is how can people/entities be licensed for larceny! That too licensed by the very government of a country! The author has elucidated his theme in a very interesting manner. The objective of this article is to see if licensed larceny exists in Nepal. The author mentions a number of bases to arrive at the inference. However, due to time/space constraint only a few bases are reviewed in this article from Nepal’s perspective.

“Normal” financial extraction
The wage differential ratio of CEOs and lowest salaried employee till 1970s was 20:1 but now it has increased exponentially to 300:1. Even in Nepal the ratio is over 210:1 (lowest salary is around Rs 10,000 a month while highest is over Rs 2 million/month). It is amazing that all this is happening with benign blessing of government/s, including in Nepal. The question author asks is: is such an activity licensed by governments?

The author, looking at “western” economies, says that “private rate of return on capital tends to be significantly higher for long periods of time than the rate of growth of income and output” of respective economies. “Private wealth grows at 5% but the economy grows only at 1% - the rich have gains of 4% which they can use to make more wealth.” In Nepal’s context wealthy become wealthier by around 9 to 10%, while economy has been slugging around at less than 5%. Clearly, filthy rich are becoming richer (or rather filthier!) by day while unfortunate poor are struggling to make two ends meet day in day out. This snowballs over time as the wealthy become “more dominant over those who own nothing but their labor – the past devouring the future.” Effectively, those that own just their labor get bilked by the wealthy.

The author also opines that “rich are rich largely because they have inherited large fortunes.” But it is not universally true and there are a few self-made multi-billionaires too. But these people didn’t make money out of thin air. It would not be absolutely incorrect to see the role of licensed larceny in amassing such fortunes over an extremely short span of time.

While the oft-repeated cliché is “be patient, a rising tide will lift all boats,” (this is how “have not’s” have been consoled, but almost one-half of the world population of 7 billion don’t have “boat”! Thus the “boat-less” people will be drowned by the rising tide, instead.

Public private partnership
The author comes down heavily against PPP (public private partnership) mechanism, which has become latest fad, including with multilateral/s, as investment modality, which effectively becomes toolkit for licensed larceny. PPP is a modality to attract private money in partnership/collaboration with public sector. It is truly an effective mechanism to mobilize funding, especially to set up industries and construct infrastructure. But most of the time “public is private and private is public”. In other words, “what appears to be ‘private’ is in fact public or quasi public.” The term ‘public’ not only encompasses public sector (implying government) but also, unsuspecting, general public. In the name of roping in investment from general public, the promoter/developer would collect money from general public and use it as their own. The exposure to risk falls on the general public while benefit get skimmed by the private promoter/s who retain control over management. Private begins with experience and public with money and in the end public become experienced having lost money and private laughs all the way to the bank.

The point can be elucidated by citing a specific case. There was a spinning Mill in Nepal’s mid-Tarai that manufactured and supplied textile yarns (PSY, P/V, ASF and cotton yarns); established in 1989 and liquidated in 2012. In early 90s it had ordinary equity of Rs 127 million and Rs 67 million in preferred equity. In 1994 loan from consortium of banks in Nepal stood at Rs 257 million while Asian Development Bank (ADB) had loaned Rs 109.8 million. Similarly it had raised 14% Debenture of Rs 8.26 million and Rs 15% debenture of 6 million; totaling Rs 14.3 million. In total the Mill had mobilized over half a billion rupees from public and quasi-public sources.

Subsequent to its liquidation almost all banks in Nepal (members of the consortium) and ADB were forced to write off outstanding loan and most of the general public shareholders and debenture-holders lost almost all of their money invested in the Mill. It has been reported that a new company incorporated by same promoter (a renowned business house) succeeded to buy all fixed assets of the Mill inter alia land, factory premises including other buildings, plant machinery, equipment, etc. at rock bottom price and a new Mill was established in the ownership of same business house. In sum “public” ended up holding scraps of paper not worth the paper it is printed on and the business house creamed off everything else. The business house now is wealthier while general public owning shares and debentures lost their savings. Similarly, with banks writing off loan, the owners/depositors of such banks got creamed off. Further, ADB having to write off the loan implies that the fund that would have been available for poverty alleviation of actual poor ended up alleviating “poverty” of a rich business house.

This is a typical case of “public” [(1) general public, (2) private sector banks holding deposit of general public and invested in by general public and multilateral financial institution (ADB)] being exposed to all risk and bearing all such risk while the private sector ends up sitting pretty. The toad’s eye perspective would be public impoverished due to this Mill and the private “investor” actually enriched.

It is sort of norm for private investor to use public fund and profit therefrom without investing their own money. But in this instance the private “investor” not only used public fund effectively to successfully “run” down the Mill but also ended up owning the Mill comprising landed property, equipment, plant machinery, etc. free of workers that supposedly created problem in operating the Mill. An excellent example that defies figure of speech that "You can't eat your cake, and have it too."

There are other modalities of how private sector piggy backs on public resources and skims off. Typically public sector would be made to invest in kind, mainly in real estate (land), and private “investor” would use such “property” as collateral to borrow to finance the venture; private investor effectively/successfully avoids exposing itself to risks. In several cases real estate put in by public sector as equity investment in kind is used to borrow money to build factory premises/building, which again gets mortgaged to borrow money for equipment against which also loan will be taken for working capital. Private sector would further leverage to mobilize additional fund by floating share, ordinary/preferred, and raising bond/debenture etc. as well, to cast the net wider.

Next part of the story would be if such a venture bites dust the public entity investing in kind would lose its landed property, while private “investor” would simply dust off and move on without a dent (also keep what it skimmed off in the interim).

Infrastructure as financial extraction

Mr. Hildyard also is not too kind to use of infrastructure as a mean of financial extraction. With the liberalization of hydropower sector in Nepal in 1992 a number of independent power producers (IPPs) have built hydropower plants in Nepal. Himal Power Ltd. (HPL) is the pioneer in this field which has built hydropower plant (60 MW) on Khimti River, which has been in the eye of storm due to things like revenue stream based on contract energy, sovereign guarantee, take or pay contract etc. incorporated in power purchase agreement (PPA). GoN had awarded license to HPL to build, own and operate the plant and is required to handover the plant after license period.

Although HPL is a public limited company, it doesn’t make its financial information public; taking advantage of the fact that it is a closely held company as it has not raised share capital from general public. Therefore, there is no way to ascertain how well it is performing. There is an indirect way to assess its performance. Butwal Power Company has invested Rs 434.93 million in equity in HPL (about 17%) and in 2015/16 it received a dividend of Rs 531.77 million; a handsome return on investment of 122% (a hundred and twenty-two percent! Wow!!). Other main owners of HPL are Norwegian: Statkraft owns 57% and BKK 26%. As Statkraft owns 49.9% of BKK (rest owned by 17 municipalities), Statkraft effectively owns almost 70% of HPL. As the Norwegian investors have invested in HPL in convertible currency and, therefore, the rate of return would be a little lower compared to BPC due to devaluation of Nepali currency.

The question that begs answer is, does such a high return on investment amount to being unconscionable, hence “financial extraction” in the context of “licensed larceny”? HPL earns its profit by selling electricity to Nepal Electricity Authority (NEA) under PPA signed in March 1994 (amended in January 1996), which has been roundly condemned by all concerned and it was asserted that NEA is bearing huge financial burden due to the PPA and incurring loss. The PPA is denominated in US dollars, subject to tariff escalation based on consumer price index (CPI) of New York, USA and protected by “change in legislation” provision that insulates HPL from increases in tax rates in Nepal. Further, NEA is required to buy all power according to contract energy schedule irrespective of whether it can use/sell; it still has to pay if it is not able/willing to receive power (in early 2000 NEA had to, reportedly, shut down its power stations that generated cheaper power to enable it to buy power from HPL). This certainly looks like best one-sided deal of record.

An important and sensitive question here is: isn’t it unconscionable for a wealthy country like Norway (her sovereign wealth fund amounts to whopping US$ 885 billion) to bilk a dirt-poor country like Nepal? [Statkraft is fully owned by Norwegian government.]

Licensed larceny in other sectors
Licensed larceny is not limited to manufacturing and infrastructure sector. It is rampant everywhere in Nepal; highly pervasive too. To illustrate, gold and silver jewelry sellers cheat both on quality and quantity. Adulteration of petroleum product and short supply thereof is the norm at every stage: transportation, storage and distribution. The list is very long. But what takes the cake is the fact that if state/regulator takes action against such activities, the larcenists blackmail the consumers as well as the state and force to “surrender”. Therefore, these are turning into state sanctioned larceny.

Published in Peoples Review on March 2, 2017

Saturday, January 28, 2017

Hydropower Policy – A Critique

In 1992 government of Nepal (GoN) formulated Hydropower Development Policy and also promulgated Electricity Act and Water Resources Act. The following four reasons were cited as the rationale for the formulation of the Policy:

1. “It is necessary to make alternative arrangement to meet the interim demand of the country till the above projects come into operation”. In this excerpt, the words “above projects” were used in reference to Arun-III (402 MW ) and Kali Gandaki (100 MW) , which were expected to “be executed within a period of 7-12 years.”

2. “It is also necessary to construct new small hydroelectric projects to meet the demand of those hilly and remote Himalayan regions where the national electricity system has not been extended or would not be extended in the near future.”

3. “It is utmost necessary to extend proper distribution system in the rural areas where electrification has not been done, and

4. In order “to develop hydropower of the country by motivating national and foreign private investors in the electricity sector.”

The first two rationales, basically, focused on making alternative arrangements to meet the interim demand while Arun-III and Kali Gandaki A projects were under construction, by ensuring construction of small projects to serve hilly and remote Himalayan areas. However, the enabling law, the Electricity Act, 1992, does not suffer from such limitation; it was not intended to address just the interim requirement. Under this legal environment Khimti, Upper Bhote Koshi, and Indrawati III (totaling 112.5 MW) were constructed with foreign investment while a number of other projects have been built with local finance.
It is heartwarming to note that the policy heralding private investment in the power sector in Nepal have had a successful trial. However, it needs improvement in a stratified manner so that each improvement reinforces the policy for the betterment. The policy works as a fulcrum in attracting private investments in the sector. Nepal is facing power shortage herself, and the huge power deficit in the neighboring India also affords a market for the excess hydropower generated in Nepal. In order to ensure that the planned capacity addition is realized to enable NEA to meet ever-increasing demand for electricity domestically as well as in the neighborhood, the policy needs to be rationalized and also made more responsive to the needs of potential private investors from Nepal and abroad.

Changes based on Lessons Learnt

In 2001 a new policy (Hydropower Development Policy, 2001) was formulated to revise and improve the hydropower policy based on the (a) experience gained in the course of implementing the principles followed by the original policy, (b) emerging concepts in the international market and their impacts, (c) technological development, (d) possibility of export of hydropower, (e) possibility of foreign investment, and (f) commitment to environmental protection with a view to making it clear, transparent, practical, and investment-friendly. It was formulated to achieve following objectives :

1. “To generate electricity at low cost by utilizing the water resources available in the country.

2. To extend reliable and qualitative electric services throughout the Kingdom of Nepal at a reasonable price.

3. To tie-up electrification with the economic activities.

4. To render support to the development of rural economy by extending the rural electrification.

5. To develop hydropower as an exportable commodity.”

1. Salient Features
The new policy concept lays down strategies for its implementation. It has made provisions concerning the environment, water rights, investment in generation, transmission, and distribution, power purchase, etc. to attract investments from within and outside Nepal. It stipulates mandatory release of at least 10% of the minimum monthly downstream discharge of the river or stream by a project as environmental flow. In case its environmental impact assessment (EIA) study report calls for higher quantum as environmental flow, then the project is obliged to release that quantum of. There is also provision for acquiring necessary private and public land for implementation of the project, and the government is obliged to assist developers in this respect. A developer is made responsible for the rehabilitation and resettlement of any family that is displaced in the course of construction of power plant, transmission and distribution network, as specified by the GoN, at the cost of the project proponent.

The policy has also made provision for preventing adverse impact on the availability of water or water rights of the project for which license has been obtained or license is not required. It envisages issuing licenses for study or survey as well as implementation of projects for generation, transmission and distribution of electricity, including captive generation. The policy stipulates specific timeframe within which license are to be issued. The survey license is for a period of five years while generation license will have a term of 30 to 35 years. Similarly, the term of the electricity transmission and distribution license is to be 25 years. The policy has waived the license requirement for projects of up to 1 MW.

There is provision for providing 50% of the royalty obtained by GoN from hydropower projects to the VDCs and districts that are directly affected by the power projects. The policy also envisages handing over responsibility of operation and management of small hydropower plants in mountainous rural areas outside the national power system to community groups.

2. Build, Own, Operate, and Transfer

The policy’s fulcrum is the provision related to build, own, operate, and transfer (BOOT) concept, making it mandatory for the transfer of the project to GoN in good running condition after expiry of license period without any compensation. Under the policy, a hydropower site has been treated in parallel to a concession and owner’s title right over the power plant devolves to GoN upon completion of the term of the license. In order to ensure “good running” condition of such assets, the regulatory body (yet to be constituted) has been empowered to prescribe guidelines for repair and maintenance of main electric equipment and structure. The policy has also made provision for the involvement of GoN in the operation two years before the handover of the project.

Except in the case of captive plant, and where the plant owner directly uses the electricity, the policy has made it mandatory to execute a PPA to sell energy. By doing so the policy has failed to recognize that private sector investors also do implement merchant plant which will not sign PPA in advance; rather such plants are operated during the times of high tariff and are not operated when the tariff affords marginal return. The policy also has stipulated that the PPA shall be transparent.

In order to encourage foreign investments in the sector, provision has been made for granting non-tourist visa and work permit to investors, their representatives, experts, skilled personnel, and their families. Besides, the policy encourages hydropower projects to use Nepali labor, skills, means, and resources to the maximum extent possible in order to ensure that the benefit accruing from the backward linkage does percolate into the economy. Similarly it also guarantees against the nationalization of power plants and against revocation of a license in contravention of the terms of the license.

3. Fiscal Provisions

The policy provides for two-tier capacity and energy royalty with annual escalation of the latter by 5%. The rate regime is different for up to 15 years and after 15 years. Unlike the previous policy, it prescribes different rates for projects of different sizes, like 1 to 10 MW, 10 to 100 MW, above 100 MW, captive use project, export-oriented project, storage project etc. In India, an IPP is required to pay nominal water use charges and, additionally, has to provide 12% free power to the host State. However, an IPP in Nepal has to pay only a combined capacity and energy royalty and no free power is required to be provided. Compared to the nominal rates in Nepal, what an IPP has to pay in cash and kind in India is exorbitantly high, which has far-reaching implications for the economy—from high development costs to high prices that consumers have to ultimately pay for electricity or the macro economy has to internalize.

The policy has made provision to charge only a nominal 1% custom duty on the import of plant, machinery, equipment and spares for the construction or erection of the project. It has also made provision for the exemption of VAT on the import of these items.

According to the policy, custom duty and VAT facilities are also available for upgrading the capacity of a plant or for its necessary repair and maintenance because of exigency or natural calamity. It also guarantees that no tax, duty or governmental revenue in any form or title other than those levied in accordance with the agreement executed at the time of issue of license will be levied.

Moreover, the policy has made provision for exemption of income tax (also included in previous policy also). However, it was withdrawn by Income Tax Act, 2001 only to be reinstated with some modification by Finance Act, 2009 under which projects commissioned by April 13, 2019 are entitled to income tax holiday for first 7 years and a reduction by 50% for next 3 years.

4. Repatriation

Under this policy, GoN makes firm commitment to assure repatriation for debt servicing (payment of interest and repayment of principal) and as return on equity, and the proceeds from the sale of such equity in the case of foreign investment.

5. Institutional Mechanism
The policy envisages developing the Electricity Tariff Fixation Commission (ETFC) into a regulatory body to regulate the sector and also fix electricity tariffs and wheeling charges . Under the policy, the private sector is entitled to use the national grid on payment of a fee (wheeling charge). Similarly, it has reposed the responsibility of study and promotion to Department of Electricity Development (DoED), which is also a licensing authority. Water and Energy Commission Secretariat is to prepare a national load forecast, carry out system planning study, conduct preliminary identification of hydropower projects, conduct various policy research, etc. Electric Energy Management Research Institute is also to be set up.

Incidentally, Electricity Act 1992, promulgated to implement previous policy, has not been updated/changed to make it compatible with new policy.

Critique of Policy

There are a number of areas in the policy that warrant improvement. This paper tries to deal with some important ones in the following sections.

1. Enforceability of the Policy

The Electricity Act, 1992 was promulgated to make previous policy enforceable. In other words, the Act “implements” the vision enshrined in the Policy. In October 2001, GoN promulgated new policy, which supplanted the earlier policy. However, GoN is yet to effect changes in relevant legislation, including in the Electricity Act, 1992, thereby rendering the new policy (of 2001) unenforceable.

There are contradictions between the new Policy and the existing Act. This is sowing a lot of confusion in the private investors, and, therefore, inhibiting it from playing a significant role in hydropower sector. The new policy has made several changes to the existing policy, but when it comes to implementation, it is still the Electricity Act of 1992 that gets implemented. As an example, we can take the case of royalty. The new policy stipulates that energy royalty of 1.75% and 1.85% respectively to be charged to projects from 1 to 10 MW and from 10 to 100 MW sizes for first 15 years. But GoN is still charging 2% energy royalty to projects of all sizes in accordance with Electricity Act, 1992. Such a state of affairs discourages private investors.

2. Lack of stability and predictability in policy
Section 12(3) of the Electricity Act, 1992 stipulates “hydro electricity generation, transmission and distribution shall be exempted from income tax for fifteen years from the date of generation, transmission and distribution of electricity for commercial purposes.” A number of projects have been built, being attracted by this exemption, and they are already enjoying the “income tax holiday.” But this facility was withdrawn in March 2001.

Income tax is a tax that is paid only if there is some income: no income, no income tax. Therefore, revenue officials have been doing their best to downplay the impact of the withdrawal of such exemption. Except for some marginal sites, the impact of having to pay income tax at the rate of 20% (a concessional rate against the corporate rate of 25%) may not be that substantial. But the issue is that of stability and predictability of the policy, and the issue of income tax is just an example. Investors all over the world look out for stability and predictability in the policy under which they have to operate. This holds true more so in the case of infrastructure projects that are capital-intensive with relatively long gestation (construction) period and are long-term investments (recovery of investment with return possible only over a long time). Therefore, this particular step has been discouraging potential investors.

3. Lack of Vision for Energy Security
Electricity is one of the sources of energy and other non-renewable and unclean sources of energy are also used in Nepal, besides other renewable sources like sun, wind, biogas/biomass, etc. Traditional sources like firewood, agricultural residue, animal residue, etc. constituted 55% in FY 2015/16 and 40% of energy requirement is met by modern but unclean sources like coal and petroleum product. Electricity and renewables constitutes only 5%.

The nature has endowed Nepal with water resource aplenty but “forgot” to provide any fossil fuel like coal, gas, etc. Therefore, this policy should have focused on achieving energy security by harnessing water resource for most need, including displacement of fossil fuel and firewood; not only for lighting but also for industrialization, electrification of transportation and electric cooking
But sadly the policy has failed badly in this respect.

4. Failure to capture positive externalities
Hydropower development does not mean building only run of the river projects; reservoir projects play much important role in meeting dry season demand (generates high value electricity). Such projects also generate positive externalities like lean season augmented flow in the downstream areas availing much needed water for human consumption, irrigation, fisheries etc. besides controlling flood during wet season. But the policy has completely ignored this facet of water use, which is criminal as there is no alternative to fresh water for water security and food security while there are both clean and unclean alternative for energy generation.

5. Faulty licensing policy
By November 30, 2016 GoN has already issued 276 licenses for an assortment of projects of various sizes in total for about 5,914 MW as detailed below:

Status of Survey Licenses Issued

Capacity range Number of projects Total Installed capacity
Up to 1 MW 172 121.98
1 to 25 MW 75 626.03
25 to 100 MW 16 933.61
Above 100 MW 13 4,232.7
Total 276 5,914.32

And 117 Generation Licenses were issued for total installed capacity of 3,340.95 MW. However, so far only 50 projects with total installed capacity of 324.446 MW have been commissioned, while the country is facing load shedding problem caused by demand and supply mismatch. While only 91 projects with total installed capacity of 1,721.53 is under constriction. A sad show compared to licenses issued for almost 400 projects with installed capacity totaling over 7,500 MW.

This is one of the main problems in the licensing policy. The current policy is to issue license for hydropower projects, irrespective of whether for domestic consumption or export, on “first come first serve” basis. People approaching GoN for license for any particular site can walk away with one if they are able to satisfy certain requirements.

There is not much to show for the huge number of licenses that have been issued. One meets people ranging from wanting to sell a license for a “price” to looking for a partner while the license holder is not able to mobilize even 10% of the required equity (even under the 75:25 debt equity ratio) on their own. On the other hand those who have financial strength to build hydropower projects have no access to licenses.

This phenomenon exists due to the fact that the policy is bereft of a mechanism to ensure that the applicant has access to necessary resources to implement the project. This problem has deprived genuine investors of potential sites and blocked the generation of electricity and thus the development of power sector thereby exacerbating power crisis. Similarly, such rent-seeking attitude of the license holders without financial strength is also additionally depriving the national treasury of the royalty revenue, which would have started flowing in had the policy made better provision to screen the applicants’ financial capabilities to implement a project.

6. Hindrances to dispute settlement
The Foreign Investment and Technology Transfer Act (FITTA), 1992 had no provision for the selection of foreign governing law for dispute settlement. For the proponents of the Khimti project, pioneer foreign investors, it was a sine qua non; they were unwilling to invest in Nepal unless they were allowed to choose foreign law to govern various contracts. Therefore, Subsection (4) was added to Section 7 of FITTA in January 1996, in order to afford foreign investors an opportunity to choose foreign jurisdiction for dispute settlement. As Nepal has already signed the New York Convention on Arbitration, an arbitral award made in any country is enforceable in Nepal as long as the arbitration is conducted under the laws of the country where the venue of arbitration is located. This is one of the effective modes of dispute settlement. But the same cannot be said of other modes of dispute settlement.

Although, such a foreign investor is entitled to choose laws of any country, the decision of the foreign court is not enforceable in Nepal. The point can be illustrated with an example of a foreign investor, having exercised the right to choose English law, will have to go to a court in England to settle dispute if s/he opts for the judicial settlement of dispute instead of arbitration. If the English court were to hand down a verdict in her/his favor, s/he would need the assistance of a Nepali court to enforce the verdict of English court in Nepal. However, the verdict of the English court, for that matter any foreign court, is not enforceable in Nepal.

Similarly, the liberty to choose foreign law implies that the investor exercising such choice will be entitled to adjudication under the law of that country even in the host country, too, where the project is located. But it is not even worth imagining that a court of Nepal will apply, for example Norwegian laws in the settlement of disputes; most in Nepal don’t even understand Norwegian language. In view of this, the liberty to choose foreign jurisdiction becomes ineffective.

Once foreign jurisdiction for the settlement of disputes under a contract has been chosen, a court in Nepal will not adjudicate a dispute under such contract even under Nepal law, as the governing law of the contract, freely chosen by the contracting parties, is the law of a country other than Nepal.

7. Import duty facility at the cost of the economy
Pursuant to Clause 6.14.2 of the HDP 2001, no VAT is levied on the machinery, equipment, and spares thereof imported for a hydropower project. Similarly, Clause 6.14.3 of the policy waives customs duty on the import of machinery, equipment, and spares (except for the nominal 1%). This is a welcome provision in as much as attracting private investment is concerned. But due to such waiver, imported machinery, equipment, and spares become cheaper compared to domestic production because of which, Nepal fails to take advantage of the backward economic linkage. The investments made in the hydropower project will not percolate into Nepal’s economy by way of backward linkage.

8. Sovereign guarantee and PPA
It is well known that government guarantee is met with disapproval from multilateral FIs in general. However, in order to perfect the security for hydropower projects, like Khimti and Upper Bhote Koshi, GoN had to provide counter guarantee, without which these projects would not have been implemented (these were financed by multi-laterals like International Finance Corporation, Asian Development Bank, etc. who themselves generally frown upon GoN issuing sovereign guarantee). In providing the sovereign guarantee as such, GoN has unconditionally and irrevocably guaranteed that NEA shall perform all of its obligations in time under the PPA to the proponents of these projects. If NEA is to fail, GoN is committed to pay the IPP the dues owed by NEA to the extent that GoN even foregoes its right of immunity as a sovereign government, citing the reason that the transaction contemplated by the PPA is of commercial nature.
However, such guarantee has not, generally, been available to domestic investors. It shows lack of a level playing field, as well.

9. Autonomy of NEA
Pursuant to Section 4(1) of the Nepal Electricity Authority Act, 1984, NEA is an autonomous corporate entity. But, in practice, NEA does not get to exercise such autonomy most of the time. As the entire ownership of NEA vests with GoN, it is logical for it to receive policy directions from GoN through the board of directors (either ex officio representative of GoN or nominees of GoN) from time to time. But, NEA receiving executive instructions (non policy related) at times from GoN functionaries, oral or otherwise, amounts to the impairment of its autonomy.

The total installed capacity in NEA system is 855.886 MW , of which it owns hydropower plants with total installed capacity of 531.44 MW making it responsible for operation of these power plants totaling while it needs to take care of the transmission and distribution of the total installed capacity in the system. In view of this, its 10,000-strong workforce is a case of over-staffing. With the change of every government, a number of people are invariably hired (with a few exceptions). When Rajiv Gandhi, late prime minister of India, declared, “These are not Electricity Boards, but Employment Boards,” he could very much have been referring to NEA.

Even the appointment of NEA’s board members is done by MoE in a non-transparent and non-competitive manner without regard to academic qualification, experience and exposure. Furthermore, the Board has no say in the appointment of chief executive. All these are manifestations of encroachment on the autonomy of NEA, and it reflects poorly on the sector.

10. One-Window policy
It is a common practice to set up a “one-window” institution to develop a particular sector. In Nepal, too, the policy envisages setting up such a window and designates DoED as the one-window for hydropower projects. However, investors need to secure permits and approvals from many other agencies under the GoN, and DoED just works as a conduit for a developer to approach various other agencies within the government system. This has resulted in cumbersome processes, taking unduly long time, which has disenchanted/discouraged the existing IPPs as well as potential investors.

11. Regulatory Body

Regulatory body is the pivot of implementation of hydropower development policy. It simply doesn’t exist, nor has legislation for it been promulgated. Electricity Tariff Fixation Commission regulates just the tariff.


1. In order to eliminate existing anomaly, obviously, new law conforming to HPD 2001 needs to be promulgated forthwith.

2. The new policy assures that no change that will adversely impact the investors will be effected. But for want of legislation, this welcome piece of policy is not enforceable yet. The legislation which will make the policy that has this clause enforceable should be passed forthwith.

3. The policy needs to “shift gear” to achieve energy security in Nepal rather than excessive focus on export. Obviously, energy security doesn’t just mean no load shedding not only in the case of people with access to electricity but also to those without. It should focus on displacement of fossil fuel in the transport sector and kitchen including fire wood.

4. License for hydropower projects should not be issued to anyone and everyone walking in with an application. GoN needs to develop a mechanism whereby license is issued to only those who can show proof of their ability to invest a substantial portion of the estimated cost of the project. This can be implemented by requiring, for example, bank guarantee covering 10% of the estimated project cost. Such bank guarantee should be forfeited if the applicant doesn’t implement the project, which could be tantamount to recovery of royalty revenue to GoN, that it is deprived from by the failure of the licensee to implement the project.

Moreover, project licenses should be awarded on the competitive basis such that project is commissioned sooner and better revenue to GoN is assured.

5. In order to make the liberty to choose foreign jurisdiction for the settlement of disputes effective, GoN should make arrangements to allow the private sector investors to avail of all avenues of dispute settlement by, for example, allowing courts in Nepal to implement the verdicts of foreign courts.

6. In order to enable the economy to absorb the investments in capital-intensive projects, thereby reaping the benefits of backward linkage, GoN needs to provide import duty facility to only those items that cannot be manufactured or produced in Nepal in a cost-effective manner and of required quality in necessary quantum and when needed.

7. As GoN furnishing sovereign guarantee causes distortions and also because the instrument does not belong to the age of economic liberalization, it should not be provided at all. If GoN thinks that sovereign guarantee needs to be provided to accelerate the development of the power sector, then it should be provided only for a limited fixed duration and ensuring level playing field.

8. In order to ensure that NEA actually enjoys the autonomy guaranteed to it by legislation, political interference of any type should be prohibited in the NEA. GoN should constitute a professional board comprising members with requisite education, experience and exposure for a fixed term. The board should be allowed to manage NEA professionally and also should be held accountable.
One reason behind the high level of political interference in NEA is that a minister chairs the board. Both the chairperson and other members, as well as the executive director, should be chosen through a transparent and competitive process with provision for public hearings.

9. It makes no sense to make provision fora “one-window” agency when such an agency is actually not able to function as one. In order to ensure that the power sector projects move on a real fast track, the one-window system should be implemented in the real sense. The turf wars between various agencies of the government can be eliminated by letting all departments concerned delegate necessary authority to DoED at the time of issuing license itself.

10. Legislation for regulatory body needs to be promulgated forthwith and such a body needs to be formed with further delay.

It goes without saying that having a policy that cannot be implemented does not make sense. Besides, as Nepal is not endowed with mineral resource while nature has bestowed her with ample water resource, Nepal should strive to achieve energy security by harnessing water at the optimum level.

Published in Hydro Nepal Journal of January 2017

Sunday, December 18, 2016

Parliamentary Ratification of PDAs

SAARC Power Trade Agreement (PTA), signed on November 27, 2014, was ratified by Nepal’s parliament on August 29, 2016 under Article 279 of Nepal’s Constitution, which paved path for SAARC member countries to sell and purchase electricity amongst them.

Sub Article (1) of Article 279 makes provision for ratification of treaties or agreement to which the State of Nepal or the Government of Nepal is a party. Sub Article 2 stipulates that treaties or agreements dealing with (a) peace and friendship, (b) security and strategic alliance, (c) the boundaries of Nepal and (d) sharing of (i) natural resources or (ii) their uses. It also specifies that treaties/agreements with far-reaching, grave or long-term impact shall be ratified by two third majority of the total members of the parliament; otherwise will have to be ratified by simple majority.

Therefore, treaties/agreements signed by state/government of Nepal related to sharing of natural resource or sharing of uses of natural resources are required to be ratified by the parliament. With regard to water resource, sharing of it signifies assigning one particular river to one party and another river to another party. While sharing of uses of water resources connote sharing of, for example electricity generated by using water resource. Electricity trading is tantamount to sharing of natural resources and for this very reason SAARC PTA required parliamentary approval. Since there is no provision as such in Indian constitution, India didn’t need to ratify SAARC PTA.

Parliamentary Ratification of PDAs
However, project development agreements (PDAs) for export oriented projects like Arun III, Upper Karnali, etc. have not been ratified by the parliament yet. Superficially, these agreements do not deal with export of power – sharing of use of natural resource. But these PDAs are to implement export-oriented projects and the developer would export power from these projects upon completion; use natural resource, water, to generate power and export electricity (sharing of use of natural resource) in the same way as under SAARC PTA. Therefore, these PDAs need ratification by the parliament.

Failure as such has not only resulted in breach of constitution but also resulted in infringement of authority of parliament, thus undermining it. Parliamentarians are known to raise ruckus when they do not like food served in the canteen in the parliament premises. But they kept resoundingly silent in the matter of parliamentary ratification of PDAs. Trust legislature is not performing the function of an accomplice of executive in this aberration.

History of Parliamentary Ratification
In all constitutions promulgated prior to 1990, there was no provision for parliamentary ratification. Perhaps it was due to the fact that sovereignty and state authority was vested in the King and agreements with his blessing did not require parliamentary ratification. Various institutional mechanisms under those constitutions, called by different names, were not sovereign.
For the first time, the provision for parliamentary ratification for treaties/agreements dealing with specific subjects was incorporated in the constitution of 1990 in Article 126. It is clear that drafters of this constitution did not wish to vest such authority to the executive arm of the government and made provision for ratification by parliament. This provision was replicated in Interim Constitution in Article 156 and present constitution in Article 279.

A writ petition was filed in Supreme Court as agreement for export-oriented West Seti project was not ratified by the parliament and this scribe too had appeared in the hearing on behalf of the petitioner before a division bench comprising justices Anup Raj Sharma and Kalyan Shrestha. In handing down a verdict (number 8059) the court ruled that parliamentary ratification is not necessary as the agreement was not contractual agreement for division of natural resources between two countries or a number of countries. It implies that parliamentary ratification is only necessary if such agreements are executed between two states/governments or number of states/governments.

Under this interpretation PDA for Arun 3 will require parliamentary ratification as it was signed by the government of Nepal with Sutlej Jal Vidyut Nigam (SJVN), which is owned jointly by Indian federal government and a state government. Effectively, it constitutes an agreement between governments of Nepal and India. A writ petition filed against the agreement for Arun 3 is under consideration at Supreme Court and it is hoped that the Court will not rule that ratification would be required only if agreement is signed by government of Nepal with Indian government, not with a company owned by Indian government.

1990 Constitution
Drafters of 1990 Constitution were clear about their intention and had constructed Article 126 very wisely. This article stipulates that agreement signed by Nepal state or government on the subjects specified in Article 126(2) require parliamentary ratification. It doesn’t say that only agreements signed between Nepal state/government and another state/government or a number of states requires ratification.

Therefore, treaties/agreements related to subjects specified in Article 126(2) [Article 279(2) of current constitution] whether signed between Nepal state/government and another state/government or a number of states or by Nepal state/government with any party (whether foreign state/government or public/private company, institute, agency etc.) has to be ratified by the parliament.

Confusion between treaty and agreement
Generally agreements concluded between two states/governments are called treaty, which is covered by Article 2(a) of Vienna Convention on the Law of Treaties. While agreements signed between non-government institutions and between government and other non-government institutions are called agreement; such agreements are not referred to as treaties.

With this in view, the constitution drafters have used both words: treaty and agreement. In an important document like constitution, an extra word would not have been inserted unnecessarily if it were not absolutely essential. The constitution would not have mentioned the word “agreement” if the intention was just to cover inter-government treaties or treaties between a numbers of nations. Only one word, treaty would have been sufficed.

Power Trade Agreement
Nepal government has signed Power Trade Agreement with India in 1997 and although it constituted a treaty, it was called an agreement and it required parliamentary ratification; for the failure to get it ratified by the parliament the agreement became defunct. Nepal signed another Power Trade Agreement in 2014. It becomes clear from this that although treaties are signed between government-to-government; these are at times also called agreements. Moreover, not only treaties come under purview of Article 279 but also agreements come under it. Further, merely because a document is called an agreement, it doesn’t become exempt from parliamentary ratification if it comes under the purview of article related to parliamentary ratification.

PTA signed in 2014 is an agreement subject to parliamentary ratification in accordance with precedent set by Supreme Court; it has yet to be ratified by the parliament. Seemingly, GoN is not getting it ratified by the parliament by interpreting that since it is an “agreement,” it doesn’t need parliamentary ratification. This not only constitutes transgression of constitutional provision but also infringement of authority of the parliament. Further, it also amounts to breach of precedent set by Supreme Court in West Seti case. It is hoped that Supreme Court would take sou moto notice of the matter and direct GoN to get PTA with India ratified by the parliament.

Transfer of Project to GoN under BOOT
Supreme Court, in handing down the verdict in West Seti case, also contented that the Project would be returned back to GoN after completion of specific period, e.g. 25 years and inferred that, therefore, the project doesn’t have long-term adverse impact. What has been lost sight of is the fact that, although civil structures like dam, canal etc. have life of about 50 years, but plant, equipment like turbine, generator etc. have limited life and when the project is handed over, these would be in almost dilapidated condition. It can be compared with the practice of girls being put under bondage called Kamlari in Nepali, wherein a girl is given away till her parents are able to repay money borrowed by which time her reproductive age would be over. This adversely impacts more than imagined; Nepal will be deprived of electricity when the project is in robust condition (while Nepal is not able to meet demand, including latent demand) and returned after it is not in optimum condition will again deprive Nepal from reaping benefit from the project.

At the risk of being charged with contempt of court, this scribe has to state that judiciary has become silent witness to unconstitutional acts of GoN. An important question arises: does it imply that if an agreement is signed with private sector no parliamentary ratification is required? Then all agreements related to Article 279(2) would be signed with private sector thus avoiding botheration of getting ratified by parliament. In any case even intergovernmental agreement like PTA has not been subjected to parliamentary ratification, committing contempt of Supreme Court and infringing power of parliament.

If agreements signed by GoN with private sector is not subject to parliamentary ratification, how about similar agreements related to (1) peace and friendship (2) security and strategic alliance and (3) the boundaries of Nepal signed by GoN with private sector? Would these too be exempt from parliamentary ratification? If so, what will happen if an agreement is signed with a private sector modeled after East India Company handing over certain territory of Nepal?

There could be another logic that agreement signed by GoN with private sector related to (1) peace and friendship (2) security and strategic alliance and (3) the boundaries of Nepal is subject to parliamentary ratification and only agreements with private sector related to natural resource is exempt from parliamentary ratification. This would be a very irrational logic.
As Nepal is a sovereign country any agreement on subjects specified in Article 279(2) requires parliamentary ratification whether signed between Nepal state/government and foreign state/government or any other institution, agency, private sector or amongst number of states/governments.
Ratna Sansar Shrestha

Published in Peoples Review on December 15, 2016

Friday, November 11, 2016

जलश्रोत सम्बन्धी सम्झौताको संसदीय अनुमोदन

नभेम्बर २७, २०१४ मा दस्तखत भएको सार्क बिद्युत व्यापार सम्झौता (सार्क पीटीए) अगष्ट २९, २०१६ मा नेपालको संविधानको धारा २७९ बमोजिम संसदबाट अनुमोदन गरियो । यो सम्झौता सम्पन्न भएपछि सार्कका सदस्य राष्ट्रहरु बीच बिद्युत व्यापार (आयात–निर्यात) गर्ने बाटो खुलेकोछ ।

संवैधानिक व्यवस्था
संविधानको धारा २७९ को उपधारा (१) मा “नेपाल राज्य वा नेपाल सरकार पक्ष हुने सन्धी वा सम्झौताको अनुमोदन” इत्यादि गर्ने व्यवस्था छ र उपधारा (२) मा (क) शान्ति र मैत्री, (ख) सुरक्षा एवं सामरिक सम्बन्ध, (ग) नेपाल राज्यको सीमाना र (घ) प्राकृतकि श्रोत तथा त्यसको उपयोगको बाँडफाँडका विषयहरुमा भएको सन्धी सम्झौता संसदबाट अनुमोदन गरिनुपर्ने भनिएकोछ । “राष्ट्रलाई व्यापक, गम्भीर वा दीर्घकालिन असर पर्ने भएमा तत्काल कायम रहेका सम्पूर्ण सदस्य संख्याको दुई तिहाइ बहुमतले गर्नुपर्ने”, नत्र साधारण बहुमतबाट गरिने व्यवस्था छ ।

तसर्थ नेपाल राज्य/सरकारले (१) प्राकृतिक श्रोतको बाँडफाँड वा (२) प्राकृतिक श्रोतको उपयोगको बाँडफाँड गर्ने प्रयोजनले गरिने सन्धी/सम्झौता संसदबाट अनुमोदन गरिनुपर्दछ । जलश्रोतको सन्दर्भमा प्राकृतिक श्रोतको बाँडफाँड भन्नाले (१) एउटा खास नदीको पानी यसलाई र अर्को नदीको उसलाई अथवा (२) नदी विशेषको पानीको यो यति परिमाण यसलाई र उति परिमाण उसलाई भनेर बाँड्ने हो । प्राकृतिक श्रोतको उपयोगको बाँडफाँड भन्नाले पानी, जुन प्राकृतिक श्रोत हो, उपयोग गरेर उत्पादन हुने उपज—जलबिद्युत—को बाँडफाँड गर्नु हो र जलबिद्युत व्यापार गर्नु भनेको प्राकृतिक श्रोतको उपयोगको बाँडफाँड हो । यसैकारण सार्क पीटीए संसदबाट अनुमोदन गर्नुपरेको हो । भारतीय संविधानमा यस्तो व्यवस्था नभएकोले भारत सरकारबाट गरिएका सन्धी सम्झौता संसदबाट अनुमोदन गराईदैन ।

पीडीएको संसदीय अुमोदन
तर निजि क्षेत्रसंग सम्पन्न निकासीमूलक माथिल्लो कर्णाली, अरुण ३ जस्ता आयोजनाहरुका प्रबद्र्धकहरुसंग गरिएका आयोजना विकास सम्झौताहरु, जसलाई अंग्रेजीमा प्रोजेक्ट डेभलेप्मेन्ट अग्रिमेन्ट (पीडीए) भनिन्छ, संसदबाट अनुमोदन गराईएका छैनन् । सतहिरुपमा हेर्दा यी सम्झौताहरु बिद्युत व्यापार (सम्झौता हैनन्, आयोजना कार्यान्वयन सम्झौता हुन् । तर निकासीमूलक आयोजना निर्माण गर्न पीडीए गरिएको र उत्पादित बिजुली निकासी गरिने हुनाले प्राकृतिक श्रोत, पानी, उपयोग गरी जलबिद्युत उत्पादन गरेर उत्पादित उपज (जलबिद्युत) निकासी गरिने हुनाले प्राकृतिक श्रोतको उपयोगको बाँडफाँड हुनजान्छ, सार्क पीटीएबाट जस्तै । तसर्थ यी सम्झौताहरुको पनि संसदीय अनुमोदन अपरिहार्य छ ।
यसबाट संसदीय अनुमोदन सम्बन्धी संवैधानिक व्यवस्थाको उल्लंघन भएकोछ भने संसदबाट अनुमोदन नगराइनाले संसदको हक हनन् भएको छ, अवमूल्यन पनि । सांसदहरुले खाजा मिठो नहुंदा पनि विरोध/अवरोध गर्छन भने यस सम्बन्धमा मौन रहनु रहस्यमय छ, संविधान उल्लंघन मात्र भएको नभएर संसदको अधिकार समेत कुंण्ठित भएकोछ । कार्यपालिका र व्यवस्थापिका दुधको साक्षी बिरालो बसेको त हैन होला !

संसदीय अनुमोदनको इतिहाँस
नेपालको संवैधानिक इतिहाँस केलाउंदा २०४७ सालअघिका संविधानमा संसदीय अनुमोदनको व्यवस्था थिएन । शायद, ती व्यवस्थाहरुमा देशको सार्वभौमसत्ता र राजकिय सत्ता राजामा निहित भएकोले उनले अनुमोदन गरेपछि संसदीय अनुमोदन आवश्यक ठानिंदैनथ्यो । किनभने त्यस बखतका बिभिन्न नामकरण गरिएका संसद जस्तो देखिने निकायहरु सार्वभौम थिएनन् ।

नेपालमा पहिलो पटक २०४७ सालको संविधानमा धारा १२६ मा यस्तो व्यवस्था गरियो भने अन्तरिम संविधानको धारा १५६ मा र वर्तमान संविधानको धारा २७९ मा पनि सोहि व्यवस्था छ । स्पष्ट छ, २०४७ सालको संविधान निर्माताहरुले यस सम्बन्धमा कार्यपालिकालाई पूर्ण अधिकारसम्पन्न बनाउन चाहेन र निश्चित विषयहरुमा भएका सम्झौता/सन्धी संसदबाट अनुमोदन गर्नैपर्ने बाध्यात्मक व्यवस्था ग¥यो, जुन वर्तमान संविधानले पनि निरन्तरता दिएकोछ ।

निकासीमूलक पश्चिम सेती आयोजनाको सम्झौता सम्बन्धमा सर्बोच्च अदालतमा रिट निवेदन परेर यस पंक्तिकार समेतले बहस गरेको मुद्दाको २०६५ भदौ २४ मा न्यायाधीश अनूपराज शर्मा र कल्याण श्रेष्ठको संयुक्त इजलासले संसदीय अनुमोदन अनावश्यक ठह¥यायो (निर्णय नं. ८०५९) । फैसलामा उक्त “करारीय सम्झौता दुई देश बीचको वा बहुराष्ट्रिय प्रकृतिको प्राकृतिक श्रोत बाँडफाँडसम्बन्धी सम्झौता नभएको” भनिएकोले यस्ता सम्झौता दुई देश बीचको वा बहुराष्ट्रिय प्रकृतिका भए मात्र संसदीय अनुमोदन आवश्यक हुने नत्र नहुने व्याख्या देखियो ।

यो व्याख्याले अरुण ३ आयोजना सम्बन्धमा सतलज जलबिद्युत निगमसंग सरकारले गरेको सम्झौताको संसदीय अनुमोदन आवश्यक हुन्छ । किनभने यो सम्झौता भारतको संघिय सरकार तथा एक प्रान्तिय सरकारको स्वामित्वमा खडा गरिएको कम्पनि र नेपाल सरकार बीच भएको हुनाले वस्तुत नेपाल सरकार र भारत सरकार बीच नैं सम्झौता भएकोछ । यस सम्बन्धमा सर्बोच्च अदालतमा परेको रिट निवेदन हाल बिचाराधीन छ । आशा गरौं, सर्बोच्च अदालतबाट भारत सरकारसंगै सम्झौता भएको भएमात्र संसदीय अनुमोदन अनिवार्य हुने र भारत सरकारको स्वामित्व भएको कम्पनिसंग गरिएको सम्झौता हुनाले संसदीय अनुमोदन आवश्यक नहुने व्याख्या हुनेछैन ।

२०४७ सालको संविधान
२०४७ सालको संविधान निर्माताहरुको मनसाय स्पष्ट थियो र यो धारा बुद्धिमत्तापूर्ण तवरले निर्माण गरिएकोछ । उक्त धारामा “नेपाल राज्य वा सरकार पक्ष हुने” मात्र भनिएकोछ । एक पक्ष नेपाल राज्य/सरकार र अर्को पक्ष अर्को राज्य/सरकार भनिएको छैन । यसबाट अर्को राष्ट्र/सरकारसंग भएका सन्धी/सम्झौता मात्रमा संसदीय अनुमोदन गर्नुपर्ने र निजि क्षेत्रसंग गरिएको सन्धी/सम्झौता संसदीय अनुमोदन आवश्यक नहुने भन्ने देखिंदैन । तसर्थ धारा २७९(२) का विषयहरुमा (१) नेपाल राज्य/सरकार र अर्को राज्य/सरकार बीच सन्धी/सम्झौता भएमा वा (२) नेपाल राज्य/सरकार एक पक्ष र कुनै स्वदेशी वा बिदेशी व्यक्ति, संघसंस्था, निकाय वा निजि क्षेत्र अर्को पक्ष रहेर सम्झौता भएमा पनि संसदीय अनुमोदन अपरिहार्य हुन्छ । समग्रमा नेपाल राज्य/सरकार एक पक्ष भएर यी विषयमा सन्धी सम्झौता भएमा संसदीय अनुमोदन आवश्यक हुन्छ, अर्को पक्ष अर्को राज्य÷सरकार होस्, बहुराष्ट्र होस् वा कुनै कुनै स्वदेशी वा बिदेशी व्यक्ति, संघसंस्था, निकाय वा निजि क्षेत्र होस् ।

सन्धी र सम्झौताको शब्दहरुका अन्यौल
सामान्यतया राज्य/सरकारहरु बीच हुने सम्झौतालाई सन्धी (अंग्रेजीमा ट्रिटी) भन्ने चलन छ र यो विषय भियना कन्भेन्सन अन द लः अफ ट्रिटीजको धारा २ को (क)ले समेट्छ । अनि गैर सरकारी स्तरमा गरिने सम्झौतालाई सामान्यतया सन्धी भनिंदैन । यहि कुरालाई हृदयंगम गरेर संविधान निर्माताहरुले सन्धी र सम्झौता दुबै शब्दहरु यो धारामा प्रयुक्त गरेका हुन । अवश्य पनि संविधान जस्तो महत्वपूण दस्तावेजमा नेपाल राज्य/सरकार र अन्य राज्य/सरकार बीच भएका सन्धीको सन्दर्भमा मात्र लागू हुने भए दुबै शब्दहरु प्रयोग गरिंदैनथ्यो, सन्धी शब्द मात्र प्रयोग गरिन्थ्यो ।

बिद्युत व्यापार सम्झौता
सरकारले १९९७ मा भारतसंग गरेको बिद्युत व्यापार सम्झौतालाई सन्धी नामकरण गरेको नभएतापनि संसदीय अनुमोदन आवश्यक थियो र संसदीय अनुमोदन हुन नसकेकैले उक्त सन्धी मृत भयो । २०१४ मा फेरि अर्को बिद्युत व्यापार सम्झौता गरियो । यसबाट के प्रष्टिन्छ भने नेपाल राज्य/सरकारले अर्को राज्य/सरकारसंग गरेका सबै सम्झौतालाई सन्धी नामकण गरिंदैन र धारा २७९ को मनसाय सन्धी मात्र संसदीय अनुमोदनको अधिकार क्षेत्र भित्र पर्ने र सम्झौता नामकरण गरिएकोले संसदीय अनुमोदन आवश्यक नपर्ने हैन ।

तर भारतसंग २०१४ मा भएको बिद्युत व्यापार सम्झौता, जुन सर्बोच्च अदालतकै व्याख्या अनुसार सन्धी हो (सार्क पीटीए जस्तै), अहिलेसम्म संसदबाट अनुमोदन गरिएको छैन र अनुमोदन गराउन नपर्ने मनगढन्ते व्याख्या गरेर सरकार ढुक्क बसेकोछ । यसबाट पनि संविधान उल्लंघन मात्र हैन संसदको हक समेत हनन् भएकोछ । सर्बोच्च अदालतको पश्चिम सेतीको नजीरलाई समेत सरकारले उपेक्षा गरेकोले सर्बोच्च अदालतको अपहेलना भएकोछ । आशा गरौं, सर्बोच्च अदालतबाट आफ्नै अग्रसरतामा यस सम्बन्धमा जानकारी (suo moto notice) लिएर परमादेश वा अरु कुनै उपयुक्त आदेश जारी गरेर संसदीय अनुमोदन सुनिश्चित गरिनेछ ।

जलबिद्युत आयोजनाको कमलरिकरण
सर्बोच्च अदालतले यो समझौता खास अवधिसम्मको लागि भएको र उक्त अवधि पछि सरकारले आयोजना फिर्ता पाउने हुनाले पनि दीर्घकालीन प्रतिकूल असरयुक्त नभएको ठह¥याएकोछ । ओझेलमा के परेको छ भने सिमन्टी छडले बनेको बाँध, कुलो जस्ता संरचनाको आयू ५० वर्ष जति भएतापनि टर्बाई जेनरेटर जस्ता उपकरणको आयू २५/३० वर्ष मात्र हुने हुनाले नेपाल सरकारले २५/३० वर्षमा आयोजना फिर्ता पाउंदा कवाडी अवस्थामा हुन्छ । यो व्यवस्था त हुर्केकी छोरी (आयोजना)लाई निश्चित अवधिलाई कम्लरी बनाउने (बिजुली निकासी गर्नदिने) र २५/३० वर्षपछि, सन्तानोपादन गर्ने क्षमता सकिएपछि, घर फर्काएर ल्याउने (नेपालको हुने) भने जस्तै हो । यसबाट नेपाललाई सोचिए भन्दा बढी गम्भीर दीर्घकालिन प्रतिकूल असर पर्छ । दोहन गर्न मिलेसम्म गर्ने, नमिल्ने भएपछि फर्काउने, जुन औपनिबेशिक दोहन हो, यसो गरिंदा हात लाग्यो शुन्यको अवस्थामा पुगिन्छ, जसको मतियार नेपाल सरकार बनेको छ । देशमा कमलरी राख्ने चलन गैरकानूनी भैसक्यो तर जलश्रोतलाई कमलरिकरण गर्न सरकार उद्यत छ । यसमा व्यवस्थापिकाको मौन सहमति देखियो भने न्यायपालिकाले असंवैधानिक ठह¥याएन ।

यस पंक्तिकारले सर्बोच्च अदालतको अवहेलनामा कारवाहि भोग्न तयार भएरै पनि भन्न पर्ने हुन्छ —सरकारको यस्तो असंवैधानिक काममा उक्त अदालत साक्षी बसेको देखियो । के निजी क्षेत्रले हात हाल्दैमा जलश्रोत सम्बन्धी सम्झौताले संसदीय अनुमोदनबाट उन्मुक्ति पाउंछ ? उल्टोबाट हेर्दा प्राकृतिक श्रोत सम्बन्धमा निजी क्षेत्रसंग गरिएका सम्झौताको संसदीय अनुमोदन आवश्यक नठहर्ने हो भने यो धाराको प्रयोजनै रहन्न । प्राकृतिक श्रोत सम्बन्धी सबै सम्झौता निजी क्षेत्र (बिदेशी सरकारको स्वामित्वमा रहेपनि) संग गरे पछि संसदीय अनुमोदनको आवश्यकै नपर्ने हुन्छ ?

यदि निजी क्षेत्रसंग करारीय सम्झौता गरे संसदको अनुमोदन लिनु नपर्ने हो भने सरकारले निजी क्षेत्रसंग (१) शान्ति र मैत्री, (२) सुरक्षा एवं सामरिक सम्बन्ध र/वा (३) नेपाल राज्यको सीमाना सम्बन्धमा पनि करारीय सम्झौता गरे संसदीय अनुमोदन आवश्यक हुन्न । त्यसो भए कसैले ईष्ट इन्डिया कम्पनिको मोडेलमा बिदेशी सरकारको स्वामित्व रहेको वा नरहेको सरकारी वा निजी स्वदेशी बिदेशी कम्पनि खडा गरेर (१) शान्ति र मैत्री, (२) सुरक्षा एवं सामरिक सम्बन्ध र/वा (३) नेपाल राज्यको सीमाना सम्बन्धमा सम्झौता गरेमा संसदीय अनुमोदन आवश्यक ठहर्दैन । यसो भए नेपालको भविष्य के हुन्छ ? सरकारले कुनै निजी क्षेत्रलाई नेपालको पूरै वा केहि भूभाग ठेक्कामा दिएपनि संसदीय अनुमोदन अनावश्यक नहुने भयो ।

यो पनि तर्क हुन सक्छ कि (१) शान्ति र मैत्री, (२) सुरक्षा एवं सामरिक सम्बन्ध र/वा (३) नेपाल राज्यको सीमाना सम्बन्धमा जोसंग सम्झौता भएतापनि संसदीय अनुमोदन आवश्यक पर्ने तर प्राकृतिक श्रोतको सम्बन्धमा भएका सम्झौता मात्र अनुमोदन आवश्यक नहुने । के यो युक्तिसंगत तर्क हो ? नेपाल एक सार्वभौमसत्ता सम्पन्न मुलुक हुनाले निजी क्षेत्रसंग भएको करारीय सम्झौता होस् वा अर्को राष्ट्र वा बहुराष्ट्रहरुसंग भएको सन्धी, धारा २७९ को विषयको सन्धी÷सम्झौता संविधानले संसदीय अनुमोदन आवश्यक छ भने पछि यसलाई छल्न मिल्दैन ।

Ratna Sansar Shrestha
२०७३ कार्तिक २५ गतेको नागरिकमा प्रकाशित

Monday, August 29, 2016

Following Up on the Open Letter to the Prime Ministers of Nepal and India

Rt. Hon. Pushpa Kamal Dahal, Prime Minister of Nepal
His Excellency Narendra Damodardas Modi, Prime Minister of India

This is a follow up to the Open Letter that was submitted to the Prime Ministers of Nepal and India on 22nd November 2014 (attached). Since then, some interesting developments have taken place which, while re-confirming the veracity of our concerns have reinforced the arguments put for the in that Open Letter. The Project Development Agreement (PDA), which was kept secret (from the public as well as Parliament and the Supreme Court) by the authorities in the Investment Board on the pretext that it was a “commercial agreement” – a clear violation of the provisions for parliamentary hearing and approval in the constitution of Nepal both old and new – has been forced open into the public domain by activists who filed a case to this effect with the National Information Commission. Its reading confirms our worst fears that the PDA does not serve the interests of either the government or of the peoples of both Nepal and India, but only that of an (unduly) profit making body. Few burning issues can be summarized as follows:

• PDA preempts harnessing of full potential of the site (4,180 MW) as multipurpose project, which will deprive both Nepal and India from lean season augmented flow and flood control.

• 900 MW RoR (in violation of the tender provision for 300 MW wherein precluded parties might have made a better offer for the bigger version) project would also deprive both Nepal and India from dependable quality electricity, with downstream flood and erosion consequences for Nepal.

• With the provision for export of even 12% free energy under clause 11.15.4, this project will not help mitigate load shedding in Nepal.

• Provision for financial/fiscal facilities under clause 9(2) amounts to Nepali subsidizing India. Sum total of subsidy is Rs 76.5 billion, which is more than half of the inflated project cost of Rs 140 billion.

It has also become clear that the developer GMR is anything but: it does not have any credible financing plan that co-investors and funders can trust, only shenanigans of spuriously raising the costs to recover profits ultimately from the taxpayers and the unsuspecting co-investors. There are many other mischiefs indulged in by this spurious development enterprise which have been highlighted in our Open Letter of 22nd November to which we draw your collective attentions anew.

Nepal’s chronic load shedding has reached a stage near fatal to her commerce and industries. Furthermore, water shortage in Nepal and India’s North Ganga plains has reached levels of severe stress. Neither of these ills can be alleviated without storage of monsoon water in the Nepal hills and their release in the dry season, which is exactly what an optimal development of Upper Karnali as a 4000MW+ multipurpose storage project will do and which the current PDA with GMR will NOT do. Thus we put forth the case before Your Excellencies: not annulling the PDA with GMR forthwith will cast an unfortunate shadow of mistrust and suspicion on the officials and leaders of both countries.

We will seek redress in the courts, including the court of public opinion, nationally and internationally. We are writing this "reminder" because of the impending visits to New Delhi and to Kathmandu subsequently of the two Prime Ministers. We hope this matter will be taken up with due seriousness. We certainly will through Nepali, Indian and international academia, media and civic movements.

27 August 2016

Cc: Energy Minister of Nepal
Investment Board of Nepal
HE the Ambassador of India to Nepal

Civil Society Alliance for Rational Water Resources Development in Nepal

1. Prof. Dr. Hari P. Pandit, Institute of Engineering, TU 

2. Mr. Bihari Krishna Shrestha, anthropologist/former Additional Secretary 

3. Dr. Prakash Chandra Lohani, former Minister of Finance/Foreign Affairs 

4. Dr. Ananda B Thapa, former Executive Secretary, WECS 

5. Dr. Dwarika Nath Dhungel, former Secretary Ministry of Water Resources 

6. Mr. Dipak Gyawali, Academician, NAST, former Minister of Water Resources 

7. Prof. Dr. Mohan P Lohani, former Ambassador 

8. Mr. Bharat Basnet, The Explore Nepal 

9. Mr Ajit Narayan Singh Thapa, former MD, NEA 

10. Mr. Lok B Rawat, Chair, KARBACOS 

11. Mr. Ratna Sansar Shrestha, former member, NEA board of directors 

12. Mr Lila Mani Pokhrel, UCPN (Maoist)
13. Mr Amar Narayan Mali, Tourism Enpreneur, Kathmandu
14. Mr Tek Bdr Bishowkarma, SS Nepal
15. Mr Bharat Bdr Shahi, Dailekh
16. Mr Deependra Bdr Kshetry, former Governor of NRB
17. Mr Bakhat Bdr Nepali, Dailekh
18. Er Saroj Shahi, Dailekh
19. Mr Govind Singh Thapa, Kathmandu
20. Mr Jagat Pd Regmi, Dailekh
21. Prof. Dr Surendra KC, Tribhuvan University
22. Dr Gopal Siwakoti Chintan, Tribhuvan University
23. Dr Mangal Bishowkarma
24. Mr Bhairaja Rai, Advocate
25. Mr Purna Bdr Kunwar
26. Mr Tek Bdr Bishowkarma
27. Ms Khuma Subedi
28. Mr Hari Sharan Lamichhane, Journalist
29. Mr Jagat Prasad
30. Mr Chitra Bdr KC, Chair, Rashtriya Jana Morcha

Friday, August 12, 2016

भारते मुद्रा (भारू) को प्रचलन बन्द गरिनु पर्छ

पानी पर्न छाड्यो । चर्को गर्मी हुन पनि कम भयो । ऋतुको हिसाबले न धेरै गरम न विशेष जाडो हुने याम शरद ऋतु शुरू आयो । केटाकेटीले औंला भाची हिसाब लगाए दशैं आयो, खाउला पिउँला. . . . आदि । स्कूल, कलेज, सरकारी कार्यालय आदि लामो समयसम्म वर्षको एकपटक बन्द पनि यही बेला बडा दशैंको नाममा बिदा हुन्छ ।
यसका साथसाथै धेरै योजनाहरू बन्न थाल्छन । कसैको घर गर्इ दशैं मनाउने वा टिका थापी फर्कने वा कसैले यो लामो बिदाको फाइदा उठाउन देशान्तर भ्रमण गर्ने । पछिल्लो वर्गमा प्रबुद्धवर्ग पर्छन् । यो देशान्तरमा पनि छिमेकी मित्रराष्ट्र भारतको भ्रमण गर्न रूचाउँछ । त्यसमा पनि घुम्न जाने भन्ना साथ विशेषतः दार्जिलिंगको नाम नै सबभन्दा अगाडि मुखमा आउँछ । नआओस पनि कसरी ? आफ्नै देशको कुनै भागमा घुमेको जस्तो लाग्छ । जता हेर्यो सबै आफ्नै जस्तै, आफ्नै भाषा बोल्ने, आफ्नै संस्कृति मिल्ने ।
तर दार्जिलिङ्ग जाने भन्यो कि दुइटा समस्या भने अघिल्तिर तेर्सिरहन्छ । पहिलो त भारू को जुन वास्तवमा समस्या नै होइन । अर्को भारतीय दूतावासबाट १५ दिन अगाडिदेखि दरखास्त हाली वरी─इजाजत लिने । यो भने ठूलै झन्झटको काम हुन्छ । बिदाको मूडमा बनाउने कार्यक्रम कहाबाट अग्रिम निश्चित हुनु र समयमै दरखास्त हाल्नु । परेन फसाद । हुन त १९५० को नेपाल भारत शान्ति तथा मैत्री सन्धी हेर्ने हो भने त नेपाल र भारतका नागरिक एक अर्कालार्इ परस्पर नागरिकहरूले पाएको सम्पूर्ण हक अधिकार हुन्छ भनिएको छ । तर कुन्नि हो कसरि दार्जिलिङ्ग जस्ता क्षेत्रलार्इ निषेधित क्षत्र घोषित गर्दा १९५० को सन्धी लत्याइन पुगेछ । होस्, भो यो कुरा यहाँ कोट्यार्इ नबसु ल ।
बरू यो कलमचीलार्इ पाठकले एउटा संसोधन गर्ने मौका भने दिनै पर्यो । ज्यू, दार्जिलिङ्गमा नेपालीलार्इ मुग्लान पसे नस्तो पटक्कै लाग्दैन तर एउटा खल्लो भने भारू कै हुने रहेछ । आफ्नै दार्इ भार्इ जस्तो लागे पनि नेपाली रूपिँया देख्दा नाक खुम्च्याएको हेर्न पर्दा भने रनक्कै रिस उठी हाल्दो पो र छ । जति आफूलार्इ सम्झाए पनि नहुने । हुन पनि रक्सौल, नौतन्वा, जोगवनी जस्ता ठाउमा चल्ने नोट नेपाली भाषा बोल्नेहरू चै लिन्न भनेको कता कता नसुहाएको जस्तो लाग्ने ।
तर एउटा देशको नोट अर्को देशमा नचल्नु कुनै अचम्म मान्नु पर्ने कुरा भने होइन नै । त्यसैले लिएन । तै पनि नयाँ सडक र विशाल बजारका ठूला ठूला बडेमाका दोकानहरूमा भने कुकुरले गुहु हसुरे झै गरेर भारते नोट लिएर लुकाएको, अझ खुल्लम खुल्ला लेनदेन गरेको देख्दा भने के अनुभूति हुन्छ पाठकले नै अनुमान पारौं । अझ कतिपय यस्ता दोकान पनि भर्इ सके जहाँ हाकाहाकी भारू माग्ने पनि भर्इ सके । हुन पनि कहिले काहिँ काठमाको मुटु भनिने त्यस ठाउँमा पुग्दा त नेपालमा नै छु कि मुग्लान पो भासियोकि भन्ने दोधारमा पुगिन्छ । लेनदेन हुन्छ भारू । बोलिन्छ हिन्दी । दार्जिलिङ्गमा नेपाली नोट चल्दो हो त काठमाण्डौको मुटु भन्दा बढि नेपाल त त्यही हिलस्टेसन देखिने थियो । तर के गर्नु हुन त भारत के एक् अंग नै हो र चल्छ पनि भारू नै ।
अब एक पटक बाँकी कुरामा फर्कौ । अर्थात पैसाको कुरामा । भारतको सीमावर्ति बजारहरूमा बाहेक भारतको कुनै पनि भागमा नेपाली नोट चल्दैन । अहँ, आशै गर्न पर्दैन । बैंक नै भए पनि आश नगरे हुन्छ । त्यँहा त लाखौंमा भएपनि नेपाली नोटले एक छाक पनि व्यवस्था हुन्न । बरू "साब भोक लागेका है" भनेर हात पछारेको खण्डमा भने कोही दयालु भेटिएमा "ले लो" भनेर दश नयाँ पैसा फ्याँक्ला, एक कप चिया खान पुग्ने भनौ ।
यसको ठीक उल्टो नेपालमा भारू हुनु र नेरू हुनुमा केही विशेष फरक हुन्न । बैंक नैं पनि खोजी हिड्नु पर्दैन । अझ बरू भारू हुनु त सुन चाँदी नै हुनु जति कैं हुन्छ । नेपालको कुनै पनि कुना काप्चा भए पनि भोकै मर्ने चिन्ता हुन्न । यो कस्तो बिचित्रता तथा विडम्बना ! आफ्ना प्रबुद्ध अर्थ─शास्त्री मित्रहरूले एउटा "थियोरी" व्याख्या गरेर यस स्थितिको ब्याख्या गर्लान । तर अाफ्नो बुद्धिले भने भारतमा नेपाली नोट नचले पछि नेपालमा भारतीय नोट नेपालमा पनि चल्नु हुन्न । बस् ।
नेपाल एउटा सार्वभौमसत्ता सम्पन्न स्वतन्त्र मुलुक हो । नेपाली मुद्राको खुल्ला प्रचलन भारतमा नभएपछि भारते मुद्रा नेपालमा खुल्ला प्रचलन गर्न दिनु हुन्न । नत्र विदेशी विनियम (नियमित गर्ने) ऐन, २०१३ को के काम? ...........लार्इ अर्थ─शास्त्रलार्इ अघि ...... ....... बलियो मुद्रा र .............. मुद्राको प्रश्न उत्तर उठाउँछ भने पनि ..... स्थिति छैन । किनभने त्यस्तो त डलर, स्टर्लिङ, पाउन्ड आदि पनि खुल्ला ...............।
राष्ट्रिय कारोबार नै बन्द हुने छैन । ............. ढाका र ...............रूपियाँ ........... ......... ........... ............... नै व्यवहार गरिन्छ त्यही गर्नै पर्यो र भारते रूपियाँलार्इ पनि । ......................