Thursday, July 31, 2014

Nepal-India Water Resources Cooperation

Fundamental Principles required to be enshrined in the Treaty in Nepal’s interest

Nepal-India cooperation in water resource development over last 60 years holds little to be satisfied with. Past treaties/agreements, rather than being guideposts for creative action, have become sources of conflicting interpretations and disgruntlement. The Nepali side has been unable to articulate its interests/priorities or to transparently defend and develop its democratic constitutional provisions of parliamentary oversight. On the other hand, the Indian side has remained content with legalistic gains and zero practical achievements on the ground.

There are now good indications that the new regime in India has placed improvement in its neighbourhood relations as a priority and has begun to re-focus on meaningful development. If Nepal is to benefit from this she has to be clear about what her core national interests are and articulate them accordingly. She has also to keep in mind the value of our natural resources for ‘upstream-downstream’ linkages in national economic development as well as needs and rights of future generations of Nepali people.

Historical backdrop
Following agreements/treaties, and revisions thereon, related to water resources have so far been signed between Nepal and India:
 Agreement on Koshi Project in April 1954
 Agreement on the Gandaki Irrigation and Power Project in December 1959
 Revised Agreement on the Gandaki Irrigation and Power Project in April 1964
 Revised Agreement on Koshi Project in December 1966
[The initial agreements on Koshi and Gandaki signed by Matrika and BP Koiralas in 1954 and 1959 respectively had surrendered Nepal’s absolute territorial sovereignty over Koshi and Gandaki rivers, which were rectified by the revisions made during absolute monarchy under Panchayat system in 1966 and 1964 respectively.]

 Mahakali Treaty in February 1996
In the process of ratification of the treaty a 4-point stricture motion was passed by Nepal’s parliament in October 1996 based on which this treaty will have to be amended to incorporate the stipulations in the 4-point stricture motion.

 Power Trade Treaty in June 1997
[However, due to failure to ratify it by Nepal’s parliament it is in hibernation and comparable to Shakespearean tragicomedy now GoN again is seeking to sign entirely new Power Trade Agreement with GoI and had sent a draft in 2010 but was ignored and shelved by GoI.]

 Draft “agreement between GoI and GoN on cooperation in power sector" sent by GoI in March 2014
[Nepal is resisted from signing it due to outrage created by it amongst general populace due to the imperialistic/hegemonistic content of this draft.]

In the mean time Investment Board of Nepal is preparing to sign PDAs for export oriented projects like upper Karnali, Arun III, etc. designed to deprive Nepal of much needed power and condemn her to medieval ages – forcing to export youth for employment who not only get economically exploited but also physically including getting raped and many women return home with unwanted pregnancies/babies.

Fundamental Principles to be enshrined in Treaty
Therefore, it is high time to establish fundamental principles to be enshrined in a framework treaty on water resources between “upstream-downstream” neighbouring countries such that both are in a win-win situation, which inter alia (not intended to be exhaustive, though) are as follows:

Investment in Hydropower
• Government of Nepal and India to implement certain projects jointly, with India providing certain proportion of capital cost as grant and remaining to be financed with low interest debt to be provided by India.
• Nepal to allow Indian investors to implement hydropower projects in Nepal with 100% investment
• This shouldn’t preclude implementation of projects by investors from Nepal and third countries
• Efforts to be made to implement such project at competitive cost, transparently to ensure generation of power cost effectively

• Projects jointly developed by Nepal and India with Indian government financing (grant and debt) to be fully owned by government of Nepal.
• Projects implemented with Indian private sector investment or FDI from Nepal and other countries to be owned by project companies.

Electricity trading
• An entity of government of Nepal (perhaps named “Nepal Electricity Trading Incorporated”) to purchase all electricity generated by all projects developed by private sector from any country built on the rivers of Nepal.
• Nepal to use such electricity to meet her requirement to achieve, initially, normal economic growth and eventually accelerated economic growth [Nepal now is in suppressed economic growth scenario].
• Remaining electricity to be exported to India.
• This shall not preclude Nepal exporting electricity to third counties.
• Nepal and India to remove barriers in the trading of electricity and do away with licensing and taxes/duties in the cross border trading of electricity.

Tariff for purchase by “Nepal Electricity Trading Incorporated”
Nepal Electricity Trading Incorporated to purchase all such electricity at tariff, which will be fixed, based on the principles of basic minimum cost plus reasonable profit to owners of the project.

Transmission of Electricity
• All export and import of electricity to be routed through Integrated National Grid of Nepal (no dedicated transmission line to be built for any specific project) and record such exchange to be maintained on both sides of the border by installing requisite metering facility.
• If necessary, India to build DC/AC conversion facility at her own cost.
• Both Nepal and India agree to non-discriminatory access to interconnection for all participants in the trading.
• Quantum and parameters of supply, points of delivery to be mutually agreed

Export tariff
• Nepal to export electricity at prevalent commercial rate or avoided cost
• The tariff shall also reflect time of use (time of day and seasonality) concept – which would range from peak tariff for peak energy (peak hours or high demand season) to low tariff for off peak energy (off peak hours or low demand season).

Reservoir project
Reservoir projects results in positive externalities like:
• flood control and
• lean season augmented flow, which will avail water for drinking and sanitation, irrigation, navigation, etc. in in India (even Bangladesh in some cases) during dry season.

Nepal will also suffer from negative externalities like:
• inundation,
• involuntary displacement and
• restriction on consumptive uses in upstream reaches.

Nepal will lose land twice in inundation and for resettlement/rehabilitation of displacees. Therefore, assessment has to be made to monetize cost of negative externalities and benefit of positive externalities. India will be required recompense Nepal for negative externalities and share benefit of positive externalities.
If it is not possible to monetize cost of negative externalities and benefit of positive externalities, since GoI is generally unwilling to share any such data, the payment from India to Nepal will have to be based on the quantum of lean season augmented flow that India receives on the basis of international precedents (e.g. Lesotho Highland Water Agreement).

Firm commitment will have to be made by India that there shall be no restriction on consumptive uses of water in the upstream reaches.

After implementing reservoir projects like Pancheshwar or Sapta Koshi High dam, India will have to provide inland navigation facilities in and through her territories for Nepal including access to high seas

Himalayan range and the mountains of this region consist of young mountains. Therefore, rivers of this region carries heavy silt load, which will require de-commissioning of storage/reservoir projects after expiry of the lives of such dams. Owners of the projects are required to arrange necessary budget for the purpose by setting aside certain reserve annually to de-commission dams which will be placed in escrow account acceptable to GoN.

Necessary security for all physical infrastructures built in the territory of sovereign Nepal will be provided by GoN; no foreign security to be allowed inside Nepal.

Parliamentary Ratification
Ratification of such a treaty by Nepal’s parliament by 2/3 majority will be mandatory under article 156 of Nepal’s Interim Constitution.

Projects cannot be built any more in the lines of Koshi and Gandaki projects in the territory of sovereign Nepal which inundate land in Nepal, also displacing the inhabitants and while India benefits from flood control and water for irrigation. Besides, it is also not possible to leave the control and security of such projects in the hands of India (e.g. in Koshi barrage). Further, in order for Nepal to really benefit by exporting power, Nepal will have to be able to buy cheap power from good projects directly and export at premium rate based on demand after using electricity necessary for Nepal to achieve normal economic growth and, subsequently, accelerated economic growth. Moreover, reservoir projects have to be built as multipurpose projects and downstream beneficiary will have to “pay” upstream riparian for suffering from negative externalities and providing positive externalities to the lower riparian.

Otherwise, Nepal can always build reservoir projects tailored to her own need with lower dam height that require submergence of smaller quantum of land and displacing fewer people.

Published in “Peoples Review” weekly of 31st July 2014.

Wednesday, July 30, 2014

मोदीसंग (भारतसंग) के माग्ने ? Is Nepal a beggar country? Are we a country of beggars?

There has been a raging debate to as to what to “beg” from Indian PM Narendra Modi or our neighboring country India when he comes to Nepal for an overnight trip, including to worship at Pashupati Nath temple early next week.

I wonder why are we debating, arguing about what to beg for!

Nepal could have been a self-sufficient country without needing to beg if we had used our resources prudently and with long-term vision. But most of our politicos have “sworn” to squander our resources for some personal gains (also to family and near and dear ones).

Actually Nepal has been “beggared” from our own resources by repeated mistakes of our politicos beginning with Matrika, BP and Girija Koiralas (sons of same father) in Koshi, Gandaki and Tanakpur “treaties” (the last leading to disastrous Mahakali treaty in which Nepal’s sovereign right has been surrendered for some benefit to these politicos, including hydrocrats) respectively. We now have another Koirala brother of past PMs (not of the same father, though) as PM who is going to lead us Nepali people to “beg” once more.

Nepal is entitled to “consideration” for several things like contribution to Ganga River and defense. Nepal contributes more than 70% water in Ganga River during dry season (8 months in a year). By simply implementing Harmon doctrine, Nepal could have created problem for India in this respect as India has done to Bangladesh. But we are simple, honest and god-fearing people and we, generally, don’t know deviousness (certain hydrocrats, however, excel in this).

India has budgeted $39.2 billion (equivalent to NRs 3 trillion 724 billion) for security/defense for current fiscal year and half of that goes to “secure” India from Pakistan and China (e.g. in Siachen glacier and north east India). However, if Nepal hadn’t played the role of a buffer between China and India the cost of Indian defense would have at least been higher by 25% (NRs 931 billion). India pours $ 833 million into Bhutan for playing buffer in similar manner. Nepal deserves a bigger amount than that. But this “service” isn’t recognized.

Pondering about it, I became impelled to think that perhaps it is in the destiny of people of Nepal to be rendered “beggar”. Because it is the people of Nepal (WE) who have elected politicos who take pride in being able to beg highest amount (especially the finance ministers who can “beg” highest amount goes about preening as if he has made an achievement to his credit – we have yet to have a female finance minister); not make Nepal a self-sufficient country. Then there are people who make sweeping statement that Nepali people “have an inferiority complex” (wonder if that person includes himself or not in this generalization!).

But we should resent such an attitude and endeavor to stand on our own feet on the strength of the natural resources that our Mother Nature has bestowed on us, if we don't wish to exhaust our self respect any further.

Tuesday, July 29, 2014

To sign or not to sign Power Trade Agreement (PTA)!

Hot debate is ensuing in Nepal – in the parliament and in the street – as to whether to sign or not to sign Power Trade Agreement (PTA) with India. A lot of ink is being used up by print media and significant quantum of air time by electronic media for and against signing of PTA.

Nepal had sent a draft PTA in 2010 to India, which was simply shelved and ignored while hydrocrats in Nepal were readying themselves to have it signed during recent visit of minister of external affairs of India. But India came up with an ace up her sleeve by proposing to sign an agreement on cooperation in power sector which succeeded to raise a huge storm/ruckus and even resulted in cancellation of meeting of energy secretaries of Nepal and India in Delhi, scheduled to be held on 20th July. There are those who opine that Nepal will have to live in darkness if PTA isn’t concluded while others don’t see a need for it.

Relevant facts are as follows:
• Investment Board of Nepal is preparing to sign project development agreements (PDAs) for a number of export oriented projects like Upper Karnali, Arun III, etc. Obviously being export oriented projects, these do not need PTA to export power.

• Another reason cited in the context is the potential of generating spill energy during wet/rainy season by the projects with which power purchase agreements (PPAs) have already been signed by Nepal Electricity Authority. This one is a logical reason to have PTA in place.

However, India has time and again made it amply clear that she isn’t interested in "spill energy," rather is interested to purchase power. Therefore, there is very little chance of India agreeing to purchase “flood” energy. NEA tried to sell spill energy from Kali Gandaki A project in early 2000 without much success.

• A way out to mitigate it is to explicitly stipulate in the PTA that India will purchase electricity in rainy season only.

• If India agrees to buy “spill” energy, the tariff will become a very contentious issue. As Indians too are highly patriotic, they will endeavor to purchase spill energy at very low tariff, as, they will argue that the marginal cost of generation of power during rainy season will be nominal.

However, it is clear to all that during the time Nepal spills energy, it is peak electricity consuming season in India, with rampant load shedding (even resulting in riots, arson, etc.) and, therefore, deserves “peak tariff”. But the way hydrocrats of Nepal have been negotiating and agreeing to, the chances of spill energy of Nepal fetching better tariff is less than slim.

• It is also argued that PTA is also necessary to mitigate load shedding in Nepal by importing power from India. This is a very weak logic as India herself is suffering from power scarcity and the chances of India exporting power to Nepal in significant quantum is almost non-existent which will condemn her own populace to darkness and hamper her own industrial development. There are places in UP of India where people “get” power once every 20 days for a few hours. Even current Indian PM’s constituency of Varanasi is gripped by a huge power crisis.

To conclude, in the above backdrop, proposed PTA, if signed will also gather dust like a number of agreements and treaties signed with India till date.

Saturday, July 26, 2014

Implementing Pancheshwar Project in Nepal’s Interest

Former PM Madhav Nepal trumpeted in 2009 that Nepal would earn Rs53.4 billion/year from Pancheshwar; including Rs35 billion from electricity sale. Reduction by a magnitude compared to proclaimed income of Rs120 billion/year at the time of signing/ratification of Mahakali Treaty. However, even Rs35 billion is a mythical number which is sales revenue of 6,116 GWh electricity at Rs 5.6/kWh and profit/income for Nepal may or may not materialize depending on profit margin and how efficaciously the project is implemented and operated/managed (NEA’s sales in 2012/13 was Rs 24.6 billion but it was in red by Rs 4.5 billion!).

Positive Externalities
Storage/reservoir projects result in positive externalities like (1) flood control and (2) augmented flow in lower riparian areas during dry season, which provides ample water in dry season for (a) drinking water and sanitation, (b) irrigation, (c) fisheries and animal husbandry, (d) generation of peak-in power, (e) recreation, (f) navigation, etc.

India is planning to irrigate 1.6 million ha and Nepal only 93,000 ha. In total 564 m3/s of the water stored in the reservoir will be used jointly by Nepal and India.

Negative externalities
Similarly, storage projects also result in negative externalities: (1) submergence of land, (2) involuntary displacement and (3) restriction on use of water for consumptive purposes in upstream reaches. Under 1929 Nile Water Agreement, “Egypt has right to inspect upstream Nile-related water projects, e.g. in Sudan, with potential to compromise river flow.” Similar situation could arise in Nepal if the concept of right to “existing prior consumptive use” is to be asserted by the lower riparian country. In South American countries, there is restriction even on rainwater harvesting.

Further, submergence coupled with involuntary displacement entails “loss” of land twice: in submergence and for resettlement/relocation of the displacees. 86.5 square km of Nepal’s territory will be submerged and 22,765 persons (2,926 households) will suffer from involuntary displacement if Pancheshwar is built.

Beneficiary of positives and incidence of negatives
In this backdrop, if the positives accrue to Nepal, benefitting larger section of the population, impact of negatives on a smaller populace is for Nepal to internalize (after proper resettlement/rehabilitation of displacees), especially since the storage project will result in temporal transfer of water from wet season (4 months a year) – also resulting in flood control – to dry season (8 months a year) due to Nepal’s hydrological cycle of flood during 4 months and drought rest of the time.

However, if the positives accrue to downstream country/countries, it is not possible for Nepal, where project is to be built, to bear the impact of negatives. The downstream country/countries enjoying positives will have to share the benefits with Nepal and also recompense for suffering negatives.

Recompense for downstream benefit
Nepal and India are entitled to equal share of water under Mahakali Treaty, but India irrigating 1.6 million ha will be using 251.17 m3/s in excess of her entitlement, which calls for India to recompense Nepal.

Since it is difficult to assess the value of positives accruing to India and also since India is reluctant to share any data/information related to it, in order to compute downstream benefits it will be expedient to follow precedents set by Columbia Treaty or Lesotho Highlands Water Project Treaty. For the sake of simplicity, Nepal and India could replicate the formula enshrined in the latter: payment of $25 million/year to Lesotho for 18 m3/s of water by South Africa. At that rate, India will have to pay $233 million/year (for augmented flow during 8 months of lean season from Pancheshwar), equivalent to Rs 22 billion/year.

Financing modality, Nepal
As total estimated cost of implementation is $ 2,980 million (according to DPR 1995), Nepal’s half share is $1,490 million, equivalent to Rs 141 billion. Nepal will borrow $1,118 million (Rs 106 billion) and invest equity of $372 million (Rs 35 billion); at 3:1 debt to equity ratio. India will have to “advance” recompense amount payable in future for the requisite period to enable Nepal to invest equity for project implementation, which would be deducted from recompense amounts payable by India after completion/commissioning.

Maximum of Nepal’ share of annual average electricity generation of 6,161 GWh for internal purposes to take far western and mid western development regions to a higher plane of economic prosperity and “export” rest at commercial rate or avoided cost of peak-in power.

Ownership structure
Nepal government will fully own the half of the project to be built on its side and also will operate/manage it including security. It must be remembered that implementation of export oriented multipurpose Karnali Chisapani project (10,800 MW) was aborted at the penultimate hour as, according to Jagat Mehta former foreign secretary of India, India indicated that she would have to deploy her security forces to ensure the project’s security since the project would be of vital security interest to India (security of Koshi barrage in Bhim Nagar in Nepal is in Indian control). Firm commitment will have to be secured from India in this respect to ensure that India again doesn’t try to deploy her security forces to “secure” Pancheshwar project on Nepal’s territory again.

“Bhutan Model”
Bhutan model also is acceptable; India providing 60% of the project cost as grant and 40% soft loan to Nepal and project to be owned/operated by Nepal (including security). Nepal also will have prior right over electricity and will “export” remaining electricity at commercial rate or avoided cost of peak-in power.

Alternative model
If India “refuses” to recompense for negatives and to share positives as well as “import” power at commercial rate or avoided cost of peak-in power, there is no point in implementing it. In which case the installed capacity should be lowered based on requirement of water for consumptive purposes during dry season of Nepal and, thus, lower dam height resulting in reduction in the magnitude of negatives.

Nepal’s best interest
It is obvious that Nepali people who wish the project to be built in Nepal’s interest will agree with this scribe and people of Nepal who wish the project to be built in Indian interest, who are present day traitors, should be ignored.
Obviously, there is no point in implementing projects in Nepal on Koshi and Gandak modalities under which India builds project on Nepal’s sovereign territory and operates it (keeping the project under its full control including security) and “give” nominal/token water and electricity to Nepal and expect her to be grateful. Present generation of Nepali people, having learnt bitter lessons from past blunders committed under Koshi and Gandak treaties, aren’t agreeable to replication of that modality in this age and time. There are many patriotic Nepali people who would rather shed their blood by sacrificing theirs lives, rather than allowing repetition of past blunders.

Published in Spotlight magazine Vol 08, No 4 (25 July 2014)

Developing Megawatts to Brighten Nepali Future

Anil Shah
Mega Bank

Anil jee

As a banker you should know that Nepal isn't fully dependent on foreign financing. One significant example is IFC's plan to float bond in Nepal for Rs 50 billion. Huge potential for raising fund exists in remittances too, which has hardly been tapped. It is not to preclude FDI, though.

Secondly you have jumped to the conclusion that we need to “sell”, implying export, electricity. You should have first consulted those who know how much power Nepal needs. My calculation shows that Nepal needs 5,200 MW right now to meet latent demands in various sectors. 60% people don't have access to power from grid and then there is challenge to reduce load shedding suffered by 40% who have access to grid - additional 1,500 MW is required for this purpose. A number of industrial corridors in Nepal require another 1,000 MW (to increase capacity usage from below 50% to a decent level and to allow new industries to be established), which is the reason behind failure of banks to use excess liquidity. Just to displace LPG from urban, suburban and peri-urban areas we need another 1,000 MW. If we start electrification of transportation, we will need another 500 MW. Where is the "power" to export? I am not against export of power per se, especially since it is not possible to store or is prohibitively costly to do so. Only after Nepal using power in this quantum she can rise above suppressed economic growth scenario obtaining now to normal economic growth scenario. My projection shows that in 5 years’ time Nepal will need about 10,000 MW to maintain normal economic growth rate. I don’t want to waste my time talking of power need for accelerated economic growth.

You are absolutely wrong that we suffer frm inferiority complex – I cannot speak about you in this context, though. Those of us who are holding a discourse on the subject aren’t doing so because we suffer from inferiority complex; rather we wish to ensure that we don’t get cheated once more like in Koshi, Gandak, Tanakpur, Mahakali, et al treaties. If people contemplate a little in-depth it is Nepal’s fault that Nepal got cheated – Indian patriots did what a patriotic Indian would do in the best interest of India. Similarly, Narendra “Bhai” Modi is also going to do the same. On the contrary in Nepal we have many people who proclaim their patriotism from the rooftops, go about waving flag at a drop of hat but are ready to sign on dotted lines even without understanding manifestations and ramifications of the document that is being put forward for signature. The current draft is one which if signed will cause a number of our future generations to curse us – this generation – for failing to do necessary “due diligence” (to borrow a banking term). Of course, this wouldn’t apply to those whose children have already abandoned Nepal.

Water and petroleum cannot be compared till we are able to sell water as Sheikhs sell petroleum. And that is the crux of the issue. If the current draft is signed India will get valuable lean season augmented flow of water free of cost while Nepal will suffer from negative externalities like in Koshi and Gandak projects. This is not an opportunity at all, but a trap under which Nepal would lose internationally recognized “absolute territorial sovereignty” (also know as Harmon doctrine) over her famed 6,000 rivers.

There is an inherent contradiction in your statement about “unprecedented gegawatts of electricity lighting up the future of our nation”. How can such electricity light up future of our nation when the electricity will be exported? This is a clear disconnect. If you mean lighting up India then I would have to, grudgingly, agree with you. The main problem Nepal is facing is that Nepali citizens feel more patriotic towards India and I would like to trust that you aren’t one of them.

Finally you must have learnt that 3 parties have decided against signing current draft, although you wanted Nepal to sign it right away without much discussion.

Wish you a successful foreign trip.
With best regards,


Ratna Sansar Shrestha, fca
Senior Water Resource Analyst

Thursday, July 24, 2014

power sector cooperation with India

Prof. Surya Subedi

Surya jee

I listened to your interview with BBC yesterday night and I disagree with you.

The draft is like an iceberg just the tip of which is visible and hiding a huge mass which will "sink" the ship of Nepal's resources.

One important aspect that has not been incorporated harms Nepal. Therefore, following will need to be added:

India to recompense for negative externalities that Nepal suffers if a reservoir project is built.

With best regards,


Ratna Sansar Shrestha, fca
Senior Water Resource Analyst

Monday, July 21, 2014

Draft agreement for "Cooperation in Power Sector" with India

If any one is to deem the draft agreement sent by India harmless, the person would be above blame as the draft showers “love” on the small neighbour by the “big brother”; however, it intends smother with love to death.

The draft is dangerous not only because of what is stipulated in it but also by what has been cunningly not stipulated (left out):

• Sharing benefits of positive externalities accruing from a storage/reservoir projects – famously called downstream benefit – and recompensing Nepal for suffering negative externalities by building storage projects in Nepal like Pancheshwar, Naumure, Koshi High dam, etc.

• It does deal with export of power from Nepal in the name of “trade” but only exclusively to India – precludes export to third countries like Bangladesh, China, etc. An effort aimed at converting Nepal a captive supplier of high quality cheap power.

The above should be understood in conjunction with the provision for transportation of arms and ammunition, required for Nepal through India in “famous” 1950 treaty. There is no stipulation requiring Nepal to seek Indian permission to source arms and ammunition from third countries and/or importing from other routes. Even then India embargoed Nepal for importing some arms and ammunition from China in 1989; in their endeavour to bring Nepal to her knees in which India failed.

Further, following 2 provisions are detrimental to Nepal’s interest:

Article III (a) specifies that “the parties shall encourage and facilitate investments in each other’s country in the fields of power generation and transmission, including joint venture investments between the two countries subject to their extant policies and legislation” which sounds harmless. However, the provision has been twisted in clause (b), which refers to “harnessing of Nepal’s hydropower potential through facilitation and speedy construction of hydroelectric power projects in Nepal either with 100% Indian investments or joint venture with Indian entities.” In this manner, Nepal’s investment in Indian hydropower sector has been precluded. Further, it aims to “harness Nepal’s hydropower potential” – sort of giving exclusive right to harness Nepal’s hydropower potential to India. Furthermore, there is no reference to harnessing Indian hydropower potential. Nothing could be more lopsided that this.

Article IV, titled “power trade and tariff” starts out with cooperation on a bilateral or multilateral basis in development of policy, again sounding very innocent/innocuous. But the dagger is hidden in clause (c) in which there is talk of only Nepal exporting and India importing not the other way around. Further it specifies that “the rate at which this power will be sold by Nepal to India shall be mutually determined … taking into account the cost of the project including their financing costs, O&M charges, depreciation at rates applicable to similar projects in India, prevalent market conditions and other relevant factors”. Basically India is agreeing to import power from Nepal “deemed” to be “surplus” at minimum cost plus. What is glaringly missing is at what rate India will be exporting power to Nepal; which means it will be charging full commercial rate on exports to Nepal. Effectively Nepal will be exporting at rates ranging from 1 US¢ to 3 US¢ while India will export at the commercial rate of 10 US¢.

To conclude, Koshi and Gandak treaties, concluded by 2 Koirala brothers, Matrika and BP respectively created 2 bad projects. But after the original treaties were amended in Nepal’s interest under absolute monarchy (which recently has been abolished), these treaties have established “absolute territorial sovereignty” over Koshi and Gandak rivers (in the latter there is restriction on inter-basin transfer in the months of February, March and April).

By concluding Mahakali treaty, Nepal’s absolute territorial sovereignty over this river was surrendered. However, the “agreement between government of the republic of India and government of Nepal on cooperation in power sector”, if signed will result in surrendering absolutely territorial sovereignty over 6,000 rivers of Nepal (Nepal is famed to have 6,000 rivers). It basically amounts to Sikkimization of Nepal’s water resources.

Sunday, July 13, 2014

My "unpublished" letter to editor re Arun III and Supreme Court

२०७१ आषाढ १९

प्रिय सम्पादक
हिमाल खबरपत्रिका

हिमाल खबरपत्रिकाको ११–१७ ज्येष्ठ २०७१ अंकमा “संकटग्रस्त न्यायपालिका सुधारको मार्गचित्र” शिर्षकमा भरतराज उप्रेतीले समस्याको श्रोत पहिल्याउंदै के कसरी न्यायपालिकाको सुधार गर्न सकिन्छ भनेर लेखेको लेख प्रकाशित भएको थियो, जुन समसामयिक एवम् सराहनिय छ । न्यायपालिकामा केहि बिसंगति बिकृति देखिएको अवश्य पनि हो र सुधार अपरिहार्य छ ।

तर उनले “क्षेत्राधिकार प्रयोगमा त्रुटि” उपशिर्षकमा “एक जना न्यायाधीशको इजलासले अन्य मुलुकका सर्वोच्च अदालतमा मुद्दा हेर्ने गर्दैनन्” भन्दै “एकल न्यायाधीशको अन्तरिम आदेशकै कारण सरकारी स्वामित्वको करीब ४५० मेघावाट क्षमताको अरुण तेश्रो जलबिद्युत योजना तहसनहस भयो” भनेकाछन्, जुन सत्यबाट धेरै टाढा छ ।

हुन त विश्व बैंकले २०५२ साल भदौ तिर लगानि गर्ने अनिच्छा देखाए पछि २०१ मेगावाट क्षमताको (निजले भने झैं ४५० “मेघावाट” क्षमताको होइन) अरुण तेश्रो तुहिएको सांचो हो । तर निजले भने झैं सर्वोच्च अदालतको अन्तरिम आदेशले “तहसनहस” भएको कपापि होइन ।

उक्त “योजना” सम्बन्धमा “उपलब्ध सम्पूर्ण तथ्य तथ्याङ्क र विवरणहरू विपक्षीहरूबाट मगाई बुझी निक्र्यौल गरी पाऊँ” भन्ने रिट निवेदन (सम्वत् २०५० सालको रिट नं. – ३०४९) परेकोमा माननीय न्यायाधीश श्री हरगोविन्द सिंह प्रधान र माननीय न्यायाधीश श्री केशवप्रसाद उपाध्यायको संयुक्त इजलासबाट प्रचलित कानूनको रित बमोजम जानकारी दिने आशयको फैसला भएको थियो (नेकाप अंक ४, भाग ३६, नेपाल कानुन पत्रिका, २०५१ मा प्रकाशित) र उक्त रिट निवेदनको सन्दर्भमा कुनै पनि अन्तरिम आदेश जारी भएको देखिन्न । यहि मुद्दामा निज आफैले पनि नेपाल बिद्युत प्राधिकरणको तर्फबाट कानून व्यवसायी भै बहस गरेको र अरुण तेश्रो सम्बन्धमा अन्य कुनै मुद्दा परेको वा फैसला भएको देखिन्न । यस्तोमा सर्वोच्च अदालतले कुनै पनि अन्तरिम आदेश नदिएको र यस्तो जारी नभएको अन्तरिम आदेशले अरुण तेश्रो योजना तहसनहस भयो भन्नु उहांलाई सुहाउने कुरा होइन । आफै सर्वोच्च अदालतको पटक पटक अस्थायी न्यायाधीश भैसकेका व्यक्तिले यसरी आधारहिन तरीकाले सर्वोच्च अदालत प्रति जनमानसमा अनास्था सिर्जित हुने काम गर्नु शोभनिय छैन ।

यस पंक्तिकारले यस तर्फ निजको ध्यान आकर्षित गर्दा पनि सर्वोच्च अदालतले यो लगायत अन्य कुनै मुद्दामा अन्तरिम आदेश जारी गरिएको र सोहि कारणले अरुण तेश्रो तहस नहस भएको वा मेरो भनाई अन्य कुनै प्रकारले खण्डन गर्न नसकी सक्छौ भने अदालतको अवहेलनामा निवेदन गर्न सक्छौ भन्ने उत्तर दिएका छन् ।

हिमाल खबरपत्रिका जस्तो एउटा प्रतिष्ठित संचार माध्यमले सर्वोच्च अदालतको प्रतिष्ठामा आँच आउने यस्तो आधारहीन कुरा प्रकाशित गर्नु उक्त खबरपत्रिका कै पनि प्रतिष्ठामा आघात पु¥याउनु हो ।


रत्न संसार श्रेष्ठ

Tuesday, July 1, 2014

Re: IFC permitted to issue Rs 50 billion in local currency bonds

Dear colleague

I have learnt that IFC is proposing to “charge” a spread of 5.5% on local currency bond. Which means it will pay about 8-9% to people in Nepal who buy such bond and it will use same money to lend for projects in Nepal at 13.5-14.5%.

It basically mean that those who buy such bond will get 5.5% less than what the borrowers pay or the borrowers will pay 5.5% more than who buy the bond.

It is almost like the Hindi proverb: िजसकी जुती, उसकी सर

I wonder how can an multilateral like IFC justify such a thing. What is more distressing is the fact that ADB is also waiting in the wings to pull wool over eyes of the nepali people, who save their hard earned money, in similar fashion.

With best regards,


Ratna Sansar Shrestha, FCA

Senior Water Resource Analyst

On Thu, May 8, 2014 at 10:23 PM, Ratna Sansar Shrestha wrote:

Dear colleague

Captioned news was published on 3rd April about granting of approval by GoN to International Finance Corporation (IFC), a member of the World Bank Group, to issue local currency bonds of up to Rs 50 billion (US$ 500 million) for five years ( Following I had sent my comment on the topic too NNSD which wasn't deemed publishable by its moderator Arjun Dhakal. Therefore, I am sending my following comments to you directly.

As it is a local currency bond, it will not entail foreign exchange risk, due to that very reason only people and agencies from Nepal will “buy” these bonds, as buyers from overseas would be averse to the exposure to foreign exchange risk.

The above “development” is very strange in the backdrop of the fact that policy/decision makers (politicos-bureaucrats) as well as private sector of Nepal proclaim that Nepal is a very poor country and go all over the world armed with begging bowl for financial assistance from bilateral and multilateral agencies. This move flies in the face of the oft repeated statement that Nepal is cash strapped poorest of the poor country.

It is actually appreciable that a multilateral agency like IFC as well as GoN has accepted that Nepal isn’t as poor as have been portrayed by the decision/policy makers as well as bilateral and multilaterals.

The matter of grave concern lies in the fact that a world class institution like IFC is going to charge “spread rate” approved for bank and financial institutions of Nepal by Nepal’s central bank to cover operating cost of IFC. There are two aspects that must be noted. One, IFC is going to “charge” to collect money from Nepali people to invest in Nepal. If policy/decision makers had vision, they would have formulated policy and developed institutional mechanism such that the infrastructure projects in Nepal do not have to pay additional “spread” to IFC; channel fund from people in Nepal for investment in projects directly. Secondly, IFC being populated by people enjoying 5-star facilities, its operational cost will be relatively very high even compared to CEOs of Nepal’s banks who draw salaries in vulgar amounts, will not be in a position to relax the spread that it requires. Therefore, Nepal and Nepali people will get cheated in two ways: the bond purchaser will be afforded relatively low rate and infrastructure projects will be charged interest plus exorbitant “spread” of IFC.

What would have been appreciated by the people below poverty line in Nepal is lending by IFC from its own coffers in local currency at rates that are softer than charged by banks in Nepal.

With best regards,


Ratna Sansar Shrestha, FCA

Senior Water Resource Analyst