Interview taken by Telegraph Nepal and published on June 29, 2011
TGQ1: We have been listening of the 83,000MW (megawatts) rhetoric for decades and decades. Neither can we manage enough financial resources to exploit enormous Hydro-Power potential that we have, nor do we allow foreigners more so the interested Southern neighbor, India, to invest here. Is there any logic behind opposition to the Indian investment in Hydro-Power Sector?
Mr. Shrestha: I think it has to be understood in its proper perspective. The opposition as such is not against Indian investment; neither is it against any particular country. Investment from within Nepal or without Nepal need not be opposed. Of course, in terms of benefitting from return on investment, domestic investment deserves priority, which is rather obvious and desirable. But, when investment from Nepal is inadequate for infrastructure building, then one should be open to foreign direct investment (FDI). As far as I am concerned, I have never opposed investment from any county whatsoever. Actually I was instrumental in bringing Norwegian investment in Khimti project, which now is much maligned though.
My opposition has been and will be against investments from any part of the world for projects that will export water and electricity to India while depriving people in Nepal from using water and electricity. This is an important distinction that people fail to make and some people with ulterior motive deliberately try to obfuscate. The opposition is only against the colonization of our natural resources. Nepal is suffering from energy crisis. And that too for suppressed growth; there is paucity of energy even to meet demand under suppressed growth scenario. Nepal not only should aim to achieve normal economic growth (a level higher than currently obtaining suppressed economic growth) but we should be working towards attaining accelerated economic growth.
Matter of fact is: Nepal is not even a developing country. It is rather an under-industrialized backward country. Therefore, many people are migrating overseas for lack of employment opportunity. And why is there lack of employment? Because, there is lack of industrialization. And, why don’t we have industrialization? Because, we lack necessary power for the purpose. Therefore, what I am saying is that adequate power for our own country’s industrialization should be prioritized in order to generate necessary employment opportunities such that conducive environment could be created for our youth to return to the motherland after stemming the outflow of the youth in search of employment.
Look at the current situation. We are undergoing severe load shedding even under suppressed economic growth scenario. Our industries are not operating at full capacity. And, new industries aren’t coming up for lack of power. So our first target is to mitigate load shedding even under suppressed growth scenario. Second level is to make ample power available to meet the demand for normal growth and move on to accelerated economic growth by generating power for internal consumption in ever increasing necessary quantum.
Let us take a look at numbers. Nepal Electricity Authority has projected peak demand for this year to be more than 950MW which is based on suppressed growth rate. At this point in time, to meet the demand for normal growth we will need at least 2,000MW. I can give you some details in this respect. We have three industrial corridors (Morang-Sunsari, Bara-Parsa and Rupandehi-Nawalparasi). Each of these industrial corridors needs additional 200MW for the industries there to operate at full capacity and enable new factories to be set up. Altogether, we need additional 600MW just for these industrial corridors at this very point in time. And we always talk of Balance of Trade Deficit and Balance of Payment deficit, and the prime reason for this is our over dependence on imported fossil fuel. For example, look at cooking Gas (LPG). One study has concluded that we need at least 640MW electricity to displace LPG consumed just in Kathmandu valley as of today. Therefore, just to attain normal growth level, Nepal need more than 2,000MW as of today itself. If we were to assume the energy demand growth rate to be 10% per year, then Nepal will need 3,000MW after 5 years in order to maintain normal growth. We should also be aware that the run of the river (ROR) type projects generate 1/3rd of the installed capacity in the dry season. That implies to meet the demand projected by NEA after 5 years of 1,510 MW under suppressed growth scenario, the installed capacity will have to be 4,500 MW. Similarly, to meet future demand of 3,000MW after 5 years under normal growth scenario we will need to have installed capacity of 9,000MW. If Nepal is to aim to attain economic growth level commensurate to our immediate neighbors then we will need to achieve accelerated growth for which even 15,000 MW in 5 years time will not be adequate.
Let’s now talk about Upper Karnali project. What we have been saying is that the electricity generated by this project should be used to meet Nepal’s internal demand, instead of exporting it and condemning Nepal to continue to stay in dark and also unindustrialized. We are not opposing GMR for the sake of opposing only. I don’t care whatever company comes and invests in Nepal. But, the point is Nepal needs that electricity as I explained earlier. We are not saying GMR should not be allowed to invest. On the other hand, what should be the interest of GMR? It should be nothing more than a fair return on their investment and security of the investment. We don’t have any problem with that. But, if they insist on exporting power to India thus depriving Nepal from much needed power then I oppose that idea but not the investor. It is in this backdrop, not only GMR in Upper Karnali, I am in opposition to the modalities of several other projects, such as Arun-III, Tama Koshi-III, Likhu, Balefi, West Seti, lower Arun and other projects that are dedicated for export. And, let me further clarify: I am also not against export per se. But, I am against exporting power by ignoring the need of power for our own economic growth, even the suppressed growth; forget accelerated growth, even normal growth.
My objection is against those foreign investors that come with hidden agenda. Nepal should intensively use its own power to attain accelerated growth and then whatever is left is for export. We can’t store electricity right? So we must export the surplus. But the foolishness lies is keeping Nepal in dark and pushing the nation back to the medieval ages while exporting power. Let us look into these projects from financial perspectives. These projects will be exporting power to India at around NRs 2.00 per unit. And I am sure you are aware that in the name of mitigating load shedding currently we are importing electricity at NRs. 10.72 per unit. Don’t you think this is sheer foolishness? I am against this foolishness as it is highly illogical. If this project and others are implemented as dedicated for export then in a very near future Nepal will have these “investors” exporting power at around Rs 2 and we will be importing the same power to meet our ever increasing power need at exorbitant rate. I simply cannot stand the prospect of such a scenario; most stupid thing to be doing. Let us have projects implemented, let us also invite foreign investment for the purpose but let us also keep the nation’s priority first and foremost.
Do we have the funds needed to invest in our projects? If we have then where is it?
People always say that there is no money in Nepal. That is only partly true. Such statements come from visionless people. Let me once again stress that I am not against foreign investment but firmly believe that people in Nepal should be afforded opportunity to invest in hydropower projects first and benefit therefrom. Let me try to give you one example of where the fund is. Nepal receives remittance to the tune of NRs. 300 Billion each year. Just 10% of it (Rs. 30 billion) is adequate to construct 300MW project. In ten years, we can easily construct 900MW just by using 10% of the remittance each year. But, if we were to leverage the money, we can use this Rs. 30 billion as equity (one third) and borrow Rs 60 billion (two-third). With Rs. 90 billion we can implement 900MW. Thus from 10% of remittance received each year, we can construct 9,000MW in a decade. Who says Nepal doesn’t have money? These people say so with their eyes firmly closed; failing to see possibilities right in front of their collective noses. One needs to remember that remittance that is flowing into Nepal now is being invested in unproductive sectors, for example real estate.
TGQ2: You have been quite often saying during your public interaction that Upper Karnali has the total capacity of over 4000MW. However, the GMR was initially granted the right to construct 300MW project. And now plans are to construct 900MW project. What is it all about?
Mr. Shrestha: Upper Karnali is called a “Jewel in the Crown.” It is the biggest gift of Mother Nature to our country. If you look at the map you will notice that Karnali River flows from North to South. At a particular point it turns east and makes an about turn after 50 km just to come back to almost the same point and heads south. Therefore, by constructing a tunnel of just 2 Kilometers at that point this project can be constructed cost effectively. You need to remember that longer the tunnel higher the cost. And, higher the cost of the project higher will be the generation cost. There is no other site comparable to this. And, this is an ideal site for 4,180MW storage project. By implementing it as multipurpose project, it will not only generate 4,180MW but also irrigate 1.5 million ha during the dry season.
Of the total cultivable land in Nepal of 4 Million hectares, only 12% has access to irrigation and that too during the rainy season only. Only, 0.5% has access to irritation during dry season. But, if Upper Karnali is constructed as a storage project, it will generate regulated flow of 500 cubic meters per second of water which can irrigate 1.5 million hectares of land in the dry season. We can increase cropping intensity, have multiple cropping (cash crop, off season fruits, vegetables etc.) by implementing it as storage project. The fate of far western and mid-western development region of the country could be dramatically and drastically changed by implementing it as such. Even farmers from those areas are going overseas, why? Simply for lack of employment. Currently, the region can plant only one crop a year, being dependent on rain. If the region has adequate water for irrigating their fertile land, as stated, they can harvest three or more crops per year. That will provide impetus to the Nepali diaspora to come back home.
The capacity of 4,180 MW was arrived at by Himalayan Power Consultants under a study commissioned by Nepal Electric Authority with financing of the World Bank. This project should be constructed as a multi-purpose storage type; which will afford us an opportunity to exploit multidimensional use of water. Unfortunately, it was given away as a 300MW project and these people are saying it can be optimized as a 900MW project. But Nepal will be deprived from the opportunity to irrigate the land and electricity needs. Just imagine the amount of royalty Nepal would get by exporting all 4180 MW of electricity. We will receive 4 times less royalty by fixing the capacity at 900MW. This is a sheer idiocy.
TGQ3: It is also being talked that India is more interested in irrigating their lands from Nepali water by converting Nepal into a reservoir than investing in generating electricity? Also tell us something on India’s River Linking project?
Mr. Shrestha: If you look at the map of India, it is broad in the northern Gangetic plains and it narrows down in the South. If you look at the topography and soil of the Deccan plateau, only the coastal areas have some fertile lands. Otherwise, it is all rocky and hard hills compared to soft hills of Nepal. But if you look at the Gangetic plains, there is very good fertile land, which, therefore, is called the granary of India. But it lacks water for irrigation during dry season. Nepal’s rivers contribute about 40% of the water to Ganga River during the wet season. However, during dry season Nepal contributes about 70%. It is, thus, evident that water flowing from Nepal is very important to India. Again let us comeback to our Upper Karnali discussion, if it is constructed as a multipurpose project and Nepal uses its waters for irrigation and other consumptive purposes, the Indians, falsely, perceive that the quantum of water flowing down to India will be reduced. Therefore, the Indians and those Nepalese that are more faithful to Indian interests than Nepal’s national interest don’t want it to be constructed as storage project. As you have rightly pointed out, India is keen on exploiting Nepal’s water, not electricity. People here talk about industrialization of India and say that they need our power to grow, which is totally untrue. Most of the Indians hide this fact. There are also very few honest people in India. The former water resource minister Saifuddin Soz had clearly stated, while talking to a BBC, that Indian priority from Nepal is flood control and irrigation, electricity is just a byproduct. But, unfortunately people in Nepal, whom I call hydrocrats fail to understand this or they are more faithful to Indian interest in Nepal’s water than their own motherland. They talk of potential electricity market in India and scheme to keep Nepal in dark and keep it always unindustrialized.
If you look at their River Linking project closely, they talk about linking rivers of whole India and also generating 34,000MW of power. But, out of which they plan to generate 32,000 MW from rivers within Nepal which suffices to show importance of water flowing in Nepal to India.
So they want to convert Nepal into a reservoir of water?
One example is the Koshi River. There was the news about 87 thousand Cusec water flowing down the river a few days back creating havoc. It is because of the Barrage there. The Barrage was constructed to control the natural flow of water to control flood in India and so as to irrigate land. Which land to irrigate? Of course India! By constructing the barrage, it has controlled flood in India, irrigated its lands while inundating our cultivable land and involuntarily displacing huge number of local inhabitants. That is their basic aim.
TGQ4: There are also discussions on constructing South Asian Grid of 100,000MW capacity? Considering that neighbors around perceive India as a bully neighbor. Is it possible?
Mr. Shrestha: Of course it is possible. Take it for granted that the hydrocrats in Nepal will bend head over their collective heels to ensure it. But have we ever analyzed whether the project will benefit Nepal? Look closely, in this so-called grid there is India which is starved for power. There is Pakistan, which is also starving for power. There is Bangladesh without any prospect of hydropower. So there are only two countries perceived to have surplus power, Nepal and Bhutan. People present this as mutually beneficial, but it will primarily be used to export electricity to India from Nepal and Bhutan. When our power demand gets saturated we can use the grid to export electricity but not before that.
TGQ5: Let us change the topic now. The Indian media is ballooning recent report by a so-called “prestigious” Foreign Policy Magazine which claims in its annual ranking that India’s immediate neighbors, Pakistan, Bangladesh, Nepal and Sri Lanka are in the list of “most failed states”. Don’t you think that since India shares its borders with all these independent nations and thus it has a role to play in the abnormal situation that these countries are undergoing currently?
Mr. Shrestha: The reason is quite simple. It is India’s hegemonic attitude that is the prime cause of instability in the neighboring countries and its overriding ambition to colonize Nepal’s natural resources. They do not want strong neighbors around them. Look at Nepal’s problems, who is creating them? I don’t know if you are aware or not, the Maoists, during insurgency, were, reportedly trained in Chakrata of Himanchal Pradhesh by the Indian government. They did exactly the same in Bangladesh. They are doing the same thing in Pakistan. Who created LTTE in Sri Lanka? India has imperialistic ambitions.
Why don’t they even think setting neighbors ablaze will burn them finally?
You remember that Indira Gandhi was killed by her own Sikh guard to avenge the death of Bhinderwale who was initially trained by the Indian Army. Rajeev Gandhi was killed by a Tamil who had links with LTTE, which was trained and armed by Indians themselves. So, people while in power do stupid things. They come up with grandiose plans, but they fail to see future ramifications of their decisions.
People always think that I am anti-India that is very far from the truth. I am pro-Nepal. The Kurtha set that I am wearing now is highly popular Indian dress and was purchased in New Delhi. I feel comfortable in it and I have several pairs of it. I own a Maruti Gypsy jeep and an Indian motorbike. Even my refrigerator is of Indian make. People often come to me seeking advice as to where should they source for their equipment etc. I always tell them if you can purchase in Nepal that’s fine, else buy it from India as far as is possible without compromising quality. It is quite cost effective and spares and maintenance is less problematic.