Water Resources and Parliamentary Ratification

Article 279 (1) of the Constitution of Nepal stipulates that treaties or agreements signed by the State or Government of Nepal (GoN) shall be ratified, accepted, approved or acceded to (ratified) in accordance with federal laws. Similarly, Article 279 (2) stipulates that the treaties or agreements related to the subjects mentioned in clauses (a) through (d) shall be ratified by a two-thirds majority of the total members of both houses of the Federal Parliament. The natural resources and division of its use is mentioned in clause (d) of the said Article 279 (2). However, the proviso clause of Article 279 (2) stipulates that if a treaty or agreement related to natural resources and division of its use does not cause any pervasive, serious or long-term impact on the nation, it can be ratified by a simple majority of the members present at the meeting of the House of Representatives. According to the Nepal Treaty Act 1990, an agreement signed between GoN and another state or government or between intergovernmental organizations is called a treaty. Whereas, any contract signed by GoN with a Nepali or foreign, natural or artificial person falls under the category of agreement pursuant to the Section 504 of Civil Code Act 2017. GoN has entered into several project development agreements (PDAs) with Nepali or foreign companies related to various hydropower projects and a number of writ petitions were filed in the Supreme Court claiming that such PDAs require parliamentary ratification pursuant to Article 279. However, various benches of the said court, including the Constitutional Bench, misinterpreting the constitutional provions, ruled that ratification of PDAs is not necessary. In this backdrop, it has become imperative to contemplate whether Article 279 is applicable with respect to such PDAs. Water resources and division of their use According to clause (d) of Article 279 (2) of the Constitution, the treaty or agreement related to the natural resources and division of its use should be ratified by the parliament. Since water resources in the context of the present article are the main natural resources of Nepal, what kind of treaty or agreement related to the water resources and division of its use requires the parliamentary ratification is discussed below. The term "natural resources and division of its use” mentioned in clause (d) of Article 279 (2) of the Constitution refers to the following 2 types of treaties or agreements: 1. Treaties or agreements related to water resources 2. Treaty or agreements related the division of the use of water resources. 1. Treaty or agreement related to water resources: It is natural for GoN to enter into a treaty or agreement regarding Nepal’s water resources. If a treaty of agreement is signed in the interests of this country, its people and the economy, the ratification is unnecessary. It is neither the intention of the constitution framers. Because GoN has to sign a multitude of treaties or agreements to harness Nepal’s water resources for the benefit of this country, its people and the economy of this country, which has been done and will continue as such in the future too. And, ratification of all of them is not necessary and nor even possible. In the 1990s, GoN entered into agreements with foreign investors for Khimti and Bhotekoshi hydropower projects. Since the hydropower generated by them was to be used in Nepal, the question of ratification did not arise. Accordingly, if PDA for Upper Karnali hydropower project was to supply most of the electricity in Nepal and to export only surplus electricity (which would have gone waste), no ratification would have been necessary. But the said project is export oriented and 88% hydropower is to be exported, and, hence, this country, its people and her economy will be deprived from the most of the hydropower generated by that project. Therefore, ratification of this PDA is mandatory pursuant to Article 279. One needs to note Resolution 1803 (XVII), which provides that States shall strictly and conscientiously respect the sovereignty of peoples and nations over their natural wealth and resources in accordance with the Charter of the United Nations and the principles contained in the resolution passed by the United Nations General Assembly in December 1962. Since it is natural for Nepal to use the water resources for development of Nepal and the benefit of Nepali people, it is not only the right of GoN, but also a natural obligation of GoN to enter into such treaties or agreements. Also, the intention of the constitution framers was not to require parliamentary ratification of treaties or agreements that use Nepal’s water resources for the development of Nepal and Nepali people. Therefore, if another country, her people and their economy stand to benefit from the water resources of Nepal through a treaty or agreement, ratification is necessary. Similarly, if this country, its inhabitants and the economy of this country are deprived from the benefit from the water resources of Nepal under a treaty or agreement, ratification is necessary. Such treaties or agreements may be for a fixed period or for an indefinite period. Similarly, ratification of treaties or agreements to give a share in Nepal’s water resources to another country or entrust a river in whole or in part thereto is mandatory. Such treaties or agreements may be for a fixed term or for an indefinite period. 2. Treaty or agreement related to the division of uses of water resources: It is natural for the GoN to enter into a treaty or agreement regarding division of use of Nepal’s water resource. After considering what kind of uses the water resources can be put, it should be decided what kind of activity amounts to division of use of water resources. (a) Generating hydropower is an example of the use of water resources. Hydropower is generated either by diverting river water or storing it in a reservoir. Pharping powerhouse was built more than a century ago to generate hydropower. (Note: Water used to produce hydropower can be reused, because generating hydropower is not consumptive use of water.) The electricity generated by this powerhouse was initially supplied to the then palaces in Kathmandu. Now it is said that 98% of Nepal's population have access to electricity. Also, when electricity generated in Nepal is not adequate to meet the demand here, it is imported from India and surplus is exported. The export of surplus electricity does not amount to division of use of water resources. In July 1994, the concept of export-oriented hydropower projects was developed and GoN signed an agreement with Snowy Mountain Engineering Corporation from Australia to build the 360 MW West Seti project as an export-oriented project. Export-oriented project means the project exports most or all of the hydropower generated. This entails handing over the project site and a section of the river or a certain amount of water for a specified period of time, giving a license to construct the project, providing land and/or forests, granting tax exemptions, providing subsidies, etc. Under such treaties or agreements, Nepal may receive some free hydropower, and most of the hydropower will be exported. Since most of the hydropower generated by using Nepal’s water resources will be exported, it amounts to division of use water resources, and ratification becomes mandatory. So far, besides 900 MW Upper Karnali, which was subject of verdict of the Constitutional Court, 900 MW Arun 3, 490 MW Arun 4, 679 MW Lower Arun, 750 MW West Seti, 450 MW Seti River 6 and 480 MW Phukot Karnali, in total 7 projects with 4,649 MW capacity, have been rendered export oriented. Due to these agreements or understandings, this country, its people and the economy of Nepal are going to be deprived from using most of the hydropower generated by those projects. Therefore, as mentioned in clause (d) of sub-section (2) of Article 279 of the Constitution, this constitutes division of use of Nepal’s water resources. The phenomenon can be compared with a treaty or agreement that entrusts Nepal’s agricultural land, one of the natural resources, for a certain period (or for an indefinite period) to export most or all of the produce. Due to this, this country and its people would be deprived from the produce of that land. Therefore, it amounts to division of use of Nepal's natural resources. But if someone is entrusted with Nepal’s agricultural land and most of the produce is supplied in Nepal and only surplus is exported, it does not amount to division of use of Nepal’s natural resources. Under the PDA of the Upper Karnali Hydropower Project mentioned above, Nepal will receive only 12% electricity and 88% would be exported. Therefore, this agreement is a clear example of division of the use of Nepal’s water resources mentioned in clause (d) of Article 279 (2) of the Constitution and ratification of the said PDA is mandatory. But the constitutional bench has ruled that ratification is unnecessary by misinterpreting the constitutional provisions. (b) The modern way of using water resources is to produce oxygen and hydrogen by electrolysis of water. Oxygen and hydrogen can be produced by using any water body, inter alia groundwater, lakes, rivers, etc. Oxygen has been in use to treat people since 1917, which is widely bought and sold in Nepal too. But so far, oxygen has not been produced in large quantities by electrolysis of water in Nepal. Similarly, rockets were launched into space using hydrogen gas in 1958. Kathmandu University developed the capacity to produce and store hydrogen and has also demonstrated that vehicles can be powered by hydrogen. As hydrogen can also be used as energy, it is certain that it will be used and traded in large quantities in Nepal soon. (Note: electrolysis of water to produce oxygen and hydrogen is consumptive use of water.) In case a treaty or agreement is signed to produce oxygen and hydrogen by electrolysis of Nepal’s water, and if these gases are primarily sold in Nepal and only surplus is exported, it will not amount to division of use of water resources. But if a treaty or agreement is signed to allow setting up an electrolysis plant to use Nepal’s water to produce these gases in order to export most of these, it will amount to division of use of Nepal’s water resources and ratification will be mandatory. (c) In case reservoir projects are implemented, the lean season augmented flow discharged from the reservoir has multidimensional uses. Drinking water and household uses, animal husbandry and fisheries, irrigation, mining and industrial use are the main consumptive uses. Similarly, the augmented flow facilitates navigation. Besides, as the rainy season water is stored in the reservoir, lower riparian areas benefit from flood control. Out of the annual average rainfall of 1600 millimeters in Nepal, 80% falls between June and September, and only 20% during the rest of the year, causing floods during the rainy season, while the rest of the year is almost dry. Therefore, the water released from the reservoir during the dry season becomes invaluable. In this scenario, where a treaty or agreement allows the construction of reservoir projects, it is natural to use the water released from the reservoir for consumptive uses in Nepal itself and to save Nepal’s from flood. However, if due to a treaty or agreement downstream countries benefit from lean season augmented or flood control, this amounts to division of use of Nepal’s water resources and Article 279 becomes applicable. Koshi and Gandak dams are vivid examples of it. Moreover, the proposed 10,800 MW Karnali Chisapani or 1,200 MW Budhi Gandaki can also be taken as examples, which are multipurpose projects. The reservoir projects, besides hydropower, generate lean season augmented flow and also result in flood control during monsoon in lower riparian areas. Due to the magnitude of these projects India stands to benefit from lean season augmented flow and flood control. Therefore, Article 279 becomes applicable. Export and export-oriented projects Hydropower generated using water is not a natural resource in itself, neither are oxygen or hydrogen natural resources; like agricultural produce in itself is not a natural resource. Therefore, exporting goods such as grain, hydropower, oxygen or hydrogen in the course of normal business is not a division of the use of water resources. But if a treaty or agreement is signed for an export-oriented project, then it is not an agreement to export commodities. Under such treaty or agreement project site and a section of the river for a certain period is handed over and a license to implement the project is issued, land and forest is given, taxes are exempted and other facilities are given. Export of hydropower or agricultural produce is normal business activity. While handing over agricultural land or hydropower sites mainly to export all or most of agricultural produce or hydropower (including availing lean season augmented flow and flood control benefit to downstream countries) amounts to division of use of Nepal’s natural resources and attracts Article 279. Conclusion Nepal's water resources are nature’s gift to Nepal to enrich this country and its people and the economy of this country. It is natural to use the water resources of Nepal for the prosperity of this country, its people and the economy of this country. But if another country, its inhabitants and the economy thereof benefit by harnessing Nepal's water resources, this action amounts to colonial exploitation and parliamentary ratification of such treaties or agreements is mandatory. Therefore, it is hoped that GoN would keep the above interpretation of Clause (d) of Article 279 (2) in mind while concluding PDAs and seek parliamentary ratification of these in the days to come. It is also hoped that the Supreme Court too would interpret the constitutional provision correctly and hand down verdicts accordingly. Published in People’s Review on August 7, 2024 https://www.peoplesreview.com.np/2024/08/06/water-resources-and-parliamentary-ratification/ Ratna Sansar Shrestha