Friday, January 28, 2011

RE: Water Electricity

January 29, 2011
Tilak Shrestha

Tilak ju

No need to feel sorry. For some strange reason most people make similar mistake. Even the chief justice of Supreme Court once, when I was appearing in a hearing on west Seti project, enquired with me if I was an engineer. (I pleaded against the project as it doesn’t serve Nepal’s interest; actually it is detrimental to Nepal’s interest, in connection with a PIL writ petition in the capacity of a legal practitioner on pro bono basis). On the other hand, most of the engineers feel and even talk as if hydropower is their exclusive domain and many of them has made amply clear time and again that I am not welcome to talk, write about hydropower. This doesn’t deter me. It is far from true that hydropower is their exclusive domain. They would have expert knowledge from technical perspective but not from non-technical perspective. This has come to light time and again with them making silly mistakes.

Indeed, a number of engineering disciplines are involved in the implementation of hydropower like civil, electrical, mechanical, geotechnical, etc. Additionally, it also needs technical experts from the disciplines of hydrologists, environmentalists, etc. However, I am none of these and in none of my articles/papers I have penned so far deals with any of technical issues for which I am not qualified. A person becomes an engineer/technical person by studying and I too have acquired certain level of technical knowledge by self study. But I still don’t write on technical issues at all, I merely use the knowledge to check veracity of, for example, financial analysis done by technical people. A good example on hand is Pancheshwar project about which a huge mirage is being created. At the time of signing of Mahakali treaty, the politicos led us to believe that Nepal will benefit by Rs 120 billion which kept on shrinking to Rs 45 billion and eventually to Rs 35 billion. An ordinary student of economics/finance is, mostly, not in a position to check whether that number is correct or not. However, having understood the technicalities, I happen to know that Rs 35 billion is not what Nepal stands to benefit by; that amount is merely gross sale proceed (by selling 6,161 GWh at Rs 5.60/kWh) and Nepal, other things remaining the same, stands to earn only Rs 7 billion at the rate of 25% which is the rate of return the project proponents say the project will achieve as, according to that person Nepal will have to invest Rs 28 billion in equity. I have arrived at this conclusion from, nothing fancy but, simple arithmetic. I have thrown gauntlet at the person churning out Rs 35 billion story and he hasn’t yet dared to pick it up.

What that engineer, dabbling in financial analysis, has missed is the qualifying clause I have used above: “other things remaining the same”. Nepal doesn’t have necessary funding to invest in this particular project and if Nepal is to borrow money to invest, then the return will further shrink. Additionally, the engineer strutting around as a financial expert, has used the rate of Rs 5.60 wrongly as the highest India so far has offered is US 5 ¢ and at this rate Nepal will be incurring a loss of Rs 5 billion, even if Nepal didn’t need to borrow to invest in equity. I have thrown light on this aspect in my article last Sunday, but, due to space constraint of the daily, I was unable to analyze the impact of time overrun or cost overrun which will put Nepal in a deep hole. One needs to remember that none of the projects implemented so far in Nepal have succeeded to avoid these two risks.

The proponents of Pancheshwar project are also prepared to surrender to India what rightfully belongs to Nepal, to the extent of deeming that irrigating 93,000 ha in Nepal and 1.6 million in India is equal sharing. What needs to be understood is that my intention is not to have Pancheshwar project not implemented. My intention is to ensure that Nepal gets maximum return for each penny it invests and each inch of land that is used to build the project. Similarly, each drop of water that is stored in the reservoir, if built, should work in Nepal's interest; not in that of India. Additionally, each person displaced by the project will suffer quite a lot and I am prepared only to have one Nepali citizen suffer only if 100 other people in Nepal are to benefit. In other words, Nepali people should be prepared to sacrifice for the betterment/benefit of Nepal. The motto is: no sacrifice by Nepali people in vain (in my considered opinion benefit to India is a sacrifice in vain).

One thing is definitely true and I thank you for articulating that I write my articles/papers with passion. I have taken up the issue of water resources, not just hydropower, not merely as a campaign but a crusade. With appreciative readers like you I can continue with my crusade till I survive in this world.

With best regards,


Ratna Sansar Shrestha, FCA
Senior Water Resource Analyst

From: Tilak Shrestha []
Sent: Friday, January 28, 2011 8:45

Ratna JU

Ratna Ju, Sorry about misunderstanding Ratna Ju's qualification. However, I have read many of your articles on 'water and electricity problems' that you are one of the most knowledgeable person on the issue. More than that I do appreciate your passion to do some thing about it.

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