Monday, November 24, 2014

Open Letter to the Prime Ministers of Nepal and India re Upper Karnali Multipurpose Project

Rt. Hon. Sushil Koirala, Prime Minister of Nepal
His Excellency Narendra Damodardas Modi, Prime Minister of India

We, the undersigned concerned citizens, who have been keenly observing and following developments in the water resources sector including the award of the water related projects for hydro power generation to the national and external private sectors, have had our attention drawn to the recently signed (19th September 2014) Power Development Agreement (PDA) between the Investment Board of Nepal (NIB) and the GMR-ITD Consortium of India, allowing the latter to develop a 900 MW Upper Karnali Project, as a run-of-river (RoR) project.

We feel that the proposed project, as it stands, remains deeply flawed technically, economically, environmentally and socio-politically; and, therefore, if implemented in the present form, would directly undermine the vital interests of the people and economies of Nepal and India and would also set an unpardonable precedent with long-term consequences. The following are some of the major technical and institutional deficiencies built into the current project design:

1. Displacement of "jewel in the crown" multipurpose project
1.1 With the potential of building 2 sites in Karnali Bend, KR1A (240 MW) and KR1B (main power plant 3,532 MW and second power plant 408 MW) total potential capacity stands at 4,180 MW. As a reservoir storage project, this scheme will generate economically and financially valuable peaking power compared to flood energy with a peaking RoR plant. These are mutually exclusive options; hence, building the 900 MW RoR plant would produce relatively expensive 1,000 GWh firm energy annually while the storage option with redesign would produce 9,000 GWh. The current option thus constitutes “killing” the full potential of this site. Due to the ever increasing carbon content and resulting climate change the world is required to reduce generation and use of electricity from unclean/un-renewable sources and increase generation and use from clean/renewable sources. Against this backdrop, it doesn’t make sense to harness this site at one-fourth of its full potential.
1.2 In the Karnali Bend there is a natural head of 140m and the required tunnel length between dam and powerhouse is less than 2km due to which the construction cost will be commensurately lower. Given the unique and highly advantageous topography of the region, reputed international consultants such as the US energy giant, Bechtel International, and those from Canada have dubbed the project as a "jewel in the crown" and one of the most attractive hydro development sites. The current version would thus be a crime of debasing this gift of nature.
1.3 The storage option (with live storage of 4 billion cubic meters) will reduce flood peak on Karnali River by 50 percent with significant flood control benefits for the downstream reaches of Karnali River in both Nepal and India. The reservoir will also generate 500 m3/s lean season augmented flow that can irrigate and additional 1.2 million hectares of agricultural land. Nepal is land-limited and, after irrigating about 200,000 hectares of land in Nepal, India can irrigate an additional 1 million hectares of agricultural land. While reservoir projects are generally accompanied by huge environmental and social costs, the impact of this storage project is relatively minimal for its capacity with positive benefits being relatively much larger.

2. Potential social and environmental disaster
2.1 Nepal’s power planning of the last several decades has bequeathed the country a “flood-drought” syndrome whose recurrent feature is electricity glut of a few years upon the implementation of a single large (for its system) project followed by years of chronic load-shedding. This pathology has become acute in the last few years with power cuts of fifteen hours per day in the roughly 700 MW sized Nepal Integrated National Grid. Currently, the “suppressed demand” in Nepal is between three to five thousand MW, much of which is needed for a transition to a carbon-neutral Nepal fueled by renewable energy to accelerate her industrialization and provide jobs to her youth at home. This “suppressed demand” is being partially met by almost 700 MW of expensive private diesel generators that have skyrocketed import of petroleum and therefore, makes little economic sense. Against such a backdrop, pursuing an export-oriented strategy as underlined by this project and its PDA is suicidal in its very intent, and is, therefore, already provoking adverse public reactions towards not only its own government but also against a friendly neighbor. However, once Nepal has achieved its requirements in power generation, all of the undersigned would see export of surplus power as eminently sensible.

2.2 Designed as a peaking RoR project, the current option is slated to interrupt the river flow for 20-21 hours a day and to discharge the pent up volume for 3-4 hours a day during the lean season. This daily flood pulse and drought will have a devastating impact on downstream irrigation projects, on the local communities and on the wildlife reserves of Bardia National Park in Nepal and Dudhwa National Park in India. The project was initially conceptualized as a 300 MW RoR further 2 kms downstream, which was later changed to the current capacity of 900 MW at the present location. While both the IBN and GMR seem to have acknowledged these problems and have suggested the possible construction of another re-regulating dam immediately downstream within six months, It fundamentally calls into question the technical and financial feasibility and viability of the current project at its very core, thus rendering it evidently unworthy of implementation in its present shape on technical as well as ethical grounds.

2.3 We also find it necessary to point out that the current UKP PDA and related agreements have been entered into by bypassing Article 156 of the Nepal's current Constitution that requires their endorsement by its parliament. We note that a procedure that is not supported by the requirements of the fundamental law of the land constitutes a rather shaky foundation on which to build enduring trans-boundary cooperation in this vital sector for both Nepal and India. Besides, we could not also fail to notice a strange and unfortunate veil of secrecy surrounding the making of the current project that would otherwise mark the historic onset of power trading cooperation between two friendly countries, Nepal and India.

3. Possible way ahead
3.1 As upstream and downstream riparian neighbors, Nepal and India are destined to cooperate in the multipurpose development of the water resources in the Ganga basin for the multi-dimensional benefits for the people of both the countries such as hydropower, irrigation, flood control, navigation, tourism and fisheries. To this end, we are convinced that a more sagacious development of the UKP is crucially in order, and it would also go on to constitute a very healthy precedent for other projects too in future. We also find it necessary to recall that the bane of most of the projects in Nepal in recent years have been enormous cost and time overruns, mainly due to severe disjuncture between the interests of the project developers, local stakeholders as well as the general power consumers. We sense early warning signs of this malaise overtaking UKP as well if the current shortsighted option is not corrected at the earliest.

3.2 In view of the enormous loss that the implementation of the UKP in its present form would cause to the people of both Nepal and India, four alternative options – which had also been submitted to the Government of Nepal and IBN for their consideration earlier – are being proposed, so that even as GMR goes ahead with its maiden undertaking in Nepal, the potential of a better project as mentioned above would not be compromised. These options are: a) building high dam and reservoir by Nepal, and GMR to tap water from tailrace of powerhouse; b) building diversion structure downstream of Ramagad for a capacity of approximately 850 MW that would prevent backwater rising up to the high dam site; and c) building a single project to generate 4,200 MW with GMR sharing the costs and benefits. In case these options do not work, the fourth option would be to have the government of Nepal build the high dam project on its own and to compensate GMR for necessary costs incurred so far.

In the light of the above, we are seeking your statesmanlike intervention for a more rational use of Upper Karnali Project site in the Karnali Bend in such a way that bigger optimal benefits could be reaped by the people of Nepal and India.

22 November 2014

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)

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