Sunday, July 20, 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.

1 comment:

Ashis Adhikary said...

Isnt this a BOOT project. If yes how long does it go? And what after BOOT period does all the trading rights and ownership rights remain to Nepal. Please clarify.