Monday, March 19, 2012

RE: FW: West Seti getting dragged into controversy unnecessarily

March 19, 2012

Dirgha Raj Prasai
Kathmandu

Dirgha Raj jee

Good to hear from you. Thanks a lot for wishing me good health and prosperity.

I disagree with you that I have done a lot for our motherland. Simply because people are yet to understand whether a specific concept benefits the motherland or not. I am endeavoring for them to understand it.

On the other hand you too do have a point. People with colonial intellectuality will always work for the benefit of other countries, instead of the motherland.
With best regards,


Sincerely,



Ratna Sansar Shrestha, FCA

Senior Water Resource Analyst

www.RatnaSansar.com



-----Original Message-----

From: Dirgha Raj Prasai [mailto:dirgharajprasai@gmail.com]

Sent: Thursday, March 15, 2012 7:18

To: Ratna Sansar Shrestha

Subject: Re: FW: West Seti getting dragged into controversy unnecessarily

Respected Mr. Ratna Sansar Shrestha jee !

Good Morning !

I hope your good health and prosperity.
I think, you have done a lot for the country fighting against the traitors who called so-called politicians and intellectuals. They are all the supporter of unequal Mahakali treaty. So, you know- we Nepalese analysts are suffering from their confused and anti-nationalistic roles. Actually, these persons who are surving the agendas of RAW and CIA for Job and money.

So, I extend thanks !

You wrote- 'May god help Nepal from notorious type of intellectuals in Nepal !'

OK ?

Thank you.

Dirgha Raj Prasai
On 3/15/12, Ratna Sansar Shrestha wrote:

> Dear Colleague
> West Seti is getting dragged into controversy again. However, this time it is for different/wrong reasons.

Wednesday, March 14, 2012

Sponsored controversy re West Seti Project

West Seti is getting dragged into controversy again. However, this time it is for different/wrong reasons.

There are some people suffering from "intellectual servitude" who are agonizing over the fact that India will now be deprived of high quality electricity (power/energy) at rock bottom tariff from this project. It is time for intellectuals devoted to the motherland to make themselves heard over the din of the opposition that it is "intellectual poverty" to expect load shedding and lack of industrialization in Nepal (hence lack of employment which is getting translated into huge balance of trade and balance of payment deficit for lack of meaningful “production”) to be mitigated by exporting power. In my reckoning Nepal will have to consume/use 5,000 MW to attain normal growth rate (contrasted from suppressed growth rate that is prevailing in Nepal now) in 5 years time and 10,000 MW to achieve accelerated economic growth, which was envisaged even by Dr Bhattarai (“leapfrog” was the word he used) who didn’t even lift a finger for the purpose, though.

There is another type of intellectuals suffering from “servitude” who deny that Nepal can even consume/use power from this project, just 750 MW; therefore, their one line agenda is: Nepal should be exporting power. They forget that Nepal is not only an under-industrialized country it is actually bereft of any industrialization that add value to the economy, except for slip-slap industries, producing things like the Mustang jeep that Dr Bhattarai “glides in”, which doesn’t add an iota of value into Nepal’s economy. Nepal needs to use electricity in increasing quantum not only to industrialize at higher level, but to electrify transport to displace fossil fuel, to electrify agriculture sector (for irrigation services, for cold storage, for agro processing), to process minerals like lime stone, to process herbs, et al.

There is another group of people suffering from both intellectual poverty and servitude (a case of double whammy) who pontificate that if an Indian investor is to invest in a hydropower project, then Nepal has no choice but to export it to India. Three Gorges International has just proved how wrong these people are, as no power from West Seti project will be exported to China; not even by “satellite”. Hence, this group too has started to oppose new “incarnation” of West Seti project.

There is a saying: you don’t need enemies, when you have such friends. May god help Nepal from this type of intellectuals!

However, the saving grace lies in the fact that Nepal has intellectuals aplenty who don’t suffer from intellectual poverty; neither Nepal lacks intellectuals who aren’t bound by intellectual servitude

Tuesday, March 13, 2012

लौ न कसैले भनिदिनोस् -म आदिवासी कि जनजाति ?

March 13, 2012 7:00


To: 'Bedh Prakash Upreti'
Kathmandu
Dear Bedh Prakash
Thanks a lot for your encouraging words.
I am used to call a spade a spade; that too without mincing words. In the context of the captioned matter one needs to think with love of the motherland in sight; firmly embedded in the heart and mind. My heart is pretty small – the size of a fist. But I seem to be one of the patriots of this country who have love for the motherland in huge quantum.
The very fact that you have taken time to send following email to me indicates that you too are of same “breed”. I am very pleased to meet “bird of same feather”.

Much appreciated.
With best regards,

Sincerely,
Ratna Sansar Shrestha, FCA
Senior Water Resource Analyst
http://www.ratnasansar.com/

From: Bedh Prakash Upreti [mailto:bedhp@yahoo.com]
Sent: Sunday, March 11, 2012 9:50
To: rsansar@mos.com.np

Subject: RE: [NNSD] Launa Kasaile Bhanidinuhos, Ma Aa-dhibasi ki Janjati?
Dear Ratna Sansar:
You seem to have a heart and mind as big as the "Sansar" itself. Great !

I agree with your views.

Thank you for stating the reality.

Nameste

BP Upreti

Saturday, March 10, 2012

State Restructuring on ethnocentric lines

Three things:


One, as a Newar it is nice to be called aadibashi (aboriginal/indigenous/native) and nicer to have Kathmandu valley named after my ethnocentric (ethnic, linguistic, cultural, religious) community. However, it is not possible for anyone to claim to being native to Kathmandu valley as it was initially a lake. My own ancestors arrived here via Simraungarh over a millennium ago which disproves the claims of Newar to being native to this land – nobody is except for fish, frog, et al.

I have just googled and reconfirmed, for example, that Sherpas migrated more than 500 years ago from Tibet and, therefore, the claims of Sherpas being native to the land there are now inhabiting comes unhinged. In this backdrop, the debate as to who is a native to the land and who isn’t is not worth the time and energy in doing so and provincializing Nepal on the basis of some ethnocentric communities being native to the land is not prudent.
Two, I am a Newar and recognition of my identity is important for me. But I also need to be aware of the fact that it is against the tenets of democracy to recognize identity of only a few ethnocentric communities and not to do so in the case of the identity of other over 90 ethnocentric communities. This amounts to blatant discrimination against the ethnocentric groups whose identities will not get “recognized”; mitigation of which lies in creation of over 90 ethnocentric groups resulting in “provincialization” (fragmentation) of a small country like Nepal in over 100 ethnocentric provinces; setting in centrifugal forces.

Three, Nepal is spending about Rs 1 billion/year on executive (prime ministers, ministers and their “cronies”), legislature, judiciary, and various other commissions now. Upon provincialization each “state” will need their own executive (prime ministers, ministers and their “cronies”), legislature, judiciary, and various other commissions which will entail spending at least about Rs 0.5 billion/year in each state. Spending Rs 5 billion/year (if we are to have only 10 states) when people are dying of famine and for lack of clean water to drink and for sanitation is waste of precious resources. Once provinces are created on ethnocentric lines, then the centrifugal force will set in and every so often Nepal will be carving off new states for the remaining ethnocentric communities and thereby increasing such spending.
The children of our motherland need to introspect on these lines and decide what is good for our motherland.

Ratna Sansar Shrestha, FCA

Wednesday, March 7, 2012

RE: Hydropower potential of Nepal is 105 MW thousands found by Chinese company

March 7, 2012
Krishna Sunwuar
Ace Institute of Management
EMBA program

Krishna jee
Good to hear from you.
When Dr Hari Man Shrestha estimated hydropower potential of Nepal in early 60s, nothing like computer existed; not even calculator (it was he who announced that theoretical potential to be 83,000 MW and economic potential 43,000 MW). He probably was doing his work with the only assistance of slide-rule. Unfortunately, nobody after him tried to study this aspect so far. Besides, coming up with exact number will depend upon building up inventory list of the projects which will call for quite a lot of time, energy and cost because people will have to visit each potential project site on all rivers (there are more than 6,000 rivers in Nepal and each river will have more than one project site).

On the other hand, the installed capacity can easily be increased by simply lowering exceedance by basing on Dr Shrestha’s work itself. Besides, I don’t think the Chinese have gone through the rigorous process I have mentioned above to arrive at the conclusion you have quoted. Nevertheless, what is important for Nepal at the moment is to get on with building projects which have been categorically identified as bankable projects such that (1) those with access to electricity (about 25%) are liberated from the curse of load shedding, (2) those deprived of access to electricity are provided with electricity and (3) most importantly, about 10,000 MW power is availed for Nepal’s industrialization and electrification of transportation in order for Nepal to achieve accelerated growth within 5 years without which Nepal will not be able to rise above the vicious cycle it is stuck in.

I wish you all the best.


With best regards,



Sincerely,



Ratna Sansar Shrestha, FCA
Senior Water Resource Analyst
http://www.ratnasansar.com/



From: Krish krishna.sunuwar@gmail.com
Date: Fri, Mar 2, 2012 at 9:35 AM
Subject: Hydropower potential of Nepal is 105 MW thousands found by Chinese company
To: ratna.sansar@gmail.com
Dear Ratna Sansar!
Six month before, I had chance to attend your presentation on Hydropower of Nepal in Ace Institute of Management. I am one of student EMBA. My name is Krishna Sunuwar. It was very interesting session, I fact I wrote paper on basis of your presentation (http://www.krishnasunuwar.com.np/2011/08/hydropower-of-nepal-slow-development/).
The reason behind writing you is that, recently I come across the news that Chinese company is saying that Nepal's potential hydro power generation is 105MW. They wanted to run servey, but Govt. of Nepal denied. Is this true? Or it just media gimmick created by Three Gorges for controversy.
Thank you sir.
Best Regards
Krishna Sunwuar

Friday, March 2, 2012

WATER GOVERNANCE IN “FEDERAL” NEPAL - Introduction

- with particular reference to issues related to hydropower generation

The Interim Legislature-Parliament of Nepal amended Interim Constitution of Nepal, 2007 for the first time in March 2007 to adopt federal system by inserting word “federal” in Article 138 (1). This entails demolishing centralized and unitary system and spinning off of various geographic areas into a number of constituent units (states or provinces). With the planned restructuring of the State as such, division of natural resources, including water resources, amongst the constituent units, gained importance and prominence. Nepal is famed for its hydro resource which entails utilization of water resource and an in-depth look at it is imperative from the federal perspective. This ranges from how to address the issue in the future Constitution to technical issues related to how to ensure optimum exploitation of hydropower potential as a potential site could lie in more than one constituent unit. Prior to dealing with specifics of water governance in “Federal” Nepal with particular reference to issues related to hydropower generation a few terms needs to be defined.
WATER
Merriam-Webster dictionary defines water as “the liquid that descends from the clouds as rain, forms streams, lakes, and seas, and is a major constituent of all living matter and that when pure is an odorless, tasteless, very slightly compressible liquid oxide of hydrogen H2O which appears bluish in thick layers, freezes at 0° C and boils at 100° C, has a maximum density at 4° C and a high specific heat, is feebly ionized to hydrogen and hydroxyl ions, and is a poor conductor of electricity and a good solvent.” People don’t think of it in such an elaborate form when they drink it to quench their thirst; neither while putting it to various other uses for human beings, animals and plants.

Some consider water a common good while it gets treated all over the world as social and economic good. 1992 Dublin Statement on Water and Sustainable Development has propounded a principle (No. 4) saying that “Water has an economic value in all its competing uses and should be recognized as an economic good.” It goes on to say that “Within this principle, it is vital to recognize first the basic right of all human beings to have access to clean water and sanitation at an affordable price. Past failure to recognize the economic value of water has led to wasteful and environmentally damaging uses of the resource. Managing water as an economic good is an important way of achieving efficient and equitable use, and of encouraging conservation and protection of water resources.”
Water use is often distinguished between consumptive use and non-consumptive use. Consumptive use relates to the water which cannot be used again, because it is lost to the atmosphere (for example “evapotranspiration” by plants, animals and humans, and evaporation from open water bodies) or polluted to such an extent that it cannot be used again further in the hydrological cycle. Whereas water uses from which water can be used again elsewhere in the hydrological cycle (for example through reuse of return flows or recharge of groundwater) is deemed non-consumptive use.

WATER GOVERNANCE
The United Nations Development Programme (UNDP) defines water governance as “the exercise of economic, political and administrative authority to manage a country’s affairs at all levels. It comprises the mechanisms, processes and institutions, through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations and mediate their differences.” Whereas according to Rogers and Hall (2003) water governance “refers to the range of political, organizational and administrative processes through which communities articulate their interests, their input is absorbed, decisions are made and implemented, and decision makers are held accountable in the development and management of water resources and delivery of water services.”

UNDP and International Fund for Agricultural Development (IFAD) have identified four dimensions of water governance: social, economic, political and environmental. The social dimension manifests equitable use of water resources. Apart from being unevenly distributed in time and space, water is also unevenly distributed among various socio-economic strata of society in both rural and urban settlements. How water quality and quantity and related services are allocated and distributed have direct impacts on people’s health as well as on their livelihood opportunities. Australia’s average per person water consumption was 493 liters per day while in USA it was 575 liters daily in 2008 while China's daily per capita consumption in 2006 was 86 liters. The weighed daily water use per inhabitant in urban Kathmandu is estimated at 73 liters only (Joshi et al 2003). From this one could fairly easily estimate that weighed daily water use per inhabitant in rural areas will be much lower.
The economic dimension draws attention to the efficient use of water resources and the role of water in overall economic growth. Prospects for aggressive poverty reduction and economic growth remain highly dependent on water and other natural resources. Studies have illustrated that per capita incomes and the quality of governance are strongly positively correlated across countries. Better governance exerts a powerful effect on per capita incomes.
The political empowerment dimension involves granting water stakeholders and citizens at large equal democratic opportunities to influence and monitor political processes and outcomes. At both national and international levels, marginalized citizens, such as indigenous people, women, slum dwellers, etc., are rarely recognized as legitimate stakeholders in water related decision-making, and typically lack voices, institutions and capacities for promoting their water interests to the outside world. Empowering women, as well as other socially, economically and politically weak groups, is critical to achieving more focused and effective water management and actions to ensure greater equity.

The last dimension is one of environmental sustainability which shows that improved governance allows for enhanced sustainable use of water resources and ecosystem integrity. The sufficient flow of quality water is critical to maintaining ecosystem functions and services and sustaining groundwater aquifers, wetlands, and other wildlife habitats. A worrisome sign is that water quality appears to have declined worldwide in most regions with intensive agriculture and large urban and industrial areas. With the reduction and pollution of natural habitats, the diversity of freshwater flora and fauna is becoming increasingly threatened. Poor people’s livelihood opportunities, in particular, depend directly upon sustained access to natural resources, including water – especially since they tend to live in marginalized areas that are prone to pollution, droughts and floods. The essential role of water for maintaining a healthy environment is being increasingly emphasized in the change of attitudes towards wetlands, which is an encouraging sign.
In many countries water governance is in a state of confusion: in some countries there is a total lack of water institutions, and others display fragmented institutional structures or conflicting decision-making structures. In many places conflicting upstream and downstream interests regarding riparian rights and access to water resources are pressing issues that need immediate attention; in many other cases there are strong tendencies to divert public resources for personal gain, or unpredictability in the use of laws and regulations and licensing practices impede markets and voluntary action and encourage corruption. In many developing countries the modality of public private partnership is being used for private profit at public cost.

Effective water governance is imperative due to increasing demand, scarcity of fresh water and corruption. In Nepal Middle Marshyangdi Hydropower Project implementation, for example, is a poignant example of corruption in a specific subsector of water resource. The impunity manifest in lack of any punitive action against the responsible has added insult to injury. It has become well accepted that integrated water resource management could go a long way in the effective water governance, except for the moral hazard.

LIMITATION
It is obvious from the title of this study that its focus is on hydropower generation and that too in “federal” Nepal. Moreover, it is mainly based on available secondary data, studies, reports and information available in the public domain as well as unstructured interviews with key informants.

Chapter 1 of the report submitted to Forum of Federations, part of which was published by FoF

Thursday, March 1, 2012

Water In, Of and For Nepal - WATER GOVERNANCE IN “FEDERAL” NEPAL

“Water, water everywhere but not a drop to drink”
The Rime of the Ancient Mariner

According to Food and Agriculture Organization (FAO) data water availability per person per year (Appendix 2) in Nepal was 9,122 m3 in 2002. Whereas it was quite low in the neighboring countries; 2,961 m3 in Pakistan, 2,642 m3 in Sri Lanka, 2,259 m3 in China and1,880 m3 in India. Even compared to other affluent Asian countries water availability in Nepal is quite high (ranging from 3,383 m3 in Japan to 149 m3 in Singapore). However, Nepal is suffering from water poverty; water scarcity is rampant. Only a pampered few have access to piped water (the taps are dry most of the time) and rest are dependent upon the conventional sources like unsafe wells, lake, river, spring, etc. Generally, piped water is deemed safe and clean, contrasted with conventional sources. However, this is untrue in Nepal and, consequently, deaths due to water and sanitation-related diseases are also widespread; advertisements exhorting people to drink only boiled water has become a dependable source of revenue for electronic as well as print media.

The contradiction inherent in Nepal being known as rich in water resources while people are water-poor is due to the fact that about 80% of Nepal's annual rainfall takes place during monsoon season, approximately from June through to September, and the remainder of the year is pretty dry. In other words, Nepal suffers from flood during 4 months of wet season and the drought rest of the year; manifestation of the temporal problem. Additionally Nepal also has spatial problem; water not available even during wet seasons where needed and available where not needed. A real life tragicomic situation of “water, water everywhere but not a drop to drink!”

WATER RESOURCES
The situation obtaining in Nepal forces one to ponder why she is deemed rich in water resources! Nepal is not rich because of the water flowing in the rivers in hugely different quantities in the wet season and the dry season (a difference of a huge magnitude) but she is rich in water resources potentially due to her terrain and topography: (a) due to water falling from higher elevation affording “head” for electricity generation along with the “flow,” (b) narrow gorges affording ideal and cost effective locations to build reservoirs to store water in the wet season for use in dry season (solving temporal problem) to increase cropping intensity and to generate peak-in energy and (c) such reservoirs affording flood control facility in the lower riparian areas. This is corroborated by the fact that, although all the water flowing in Nepal drains into River Ganga in Indian states of UP, Bihar and West Bengal, these areas are not famous for being rich in water resources as the terrain and topography there does not afford opportunity to add temporal and spatial value to the flowing water; neither to control flood nor to generate electricity cost effectively.
The main natural resource with potential to chart Nepal’s destiny is the water resources, in the backdrop of depleting forest, non-existent minerals (except for good quality limestone which is raw material for energy intensive cement industry – capable of consuming hydropower in substantial quantum which in turn requires exploitation of water resources). Section 7 (1) of Water Resources Act, 1992 has fixed following “priority order” for the utilization of water resources:
i. drinking water & sanitation
ii. irrigation
iii. agricultural uses including animal husbandry and fisheries
iv. hydropower
v. cottage industry, industrial enterprise, and mining uses
vi. navigation (water transportation)
vii. recreational uses
viii. others

The case of irrigation too isn’t different from water and sanitation situation described above. Of 3.97 million hectares of cultivated area in Nepal there is some irrigation only in 0.5 million hectares (Appendix 3), that too mostly during wet season. Similar is the case of other agricultural uses of water, including for animal husbandry and fisheries. Out of the theoretical potential of 83,000 MW hydropower, merely 644.136 MW has been developed, according to Nepal Electricity Authority (NEA 2010) so far. Industrial use of water is very limited. The only water transportation facility exists in the reservoir of Kali Gandaki A project and some water sport based tourism (mainly rafting and canoeing), existing on some rivers is the only recreational uses of Nepal’s water resource.

The last priority of “others” includes customary, cultural and spiritual uses which deserve to be accorded higher priority. In Nepal custom and culture, including festivals, of all ethno-cultural-religious-linguistic (ethnocentric) groups are woven around water body (river, well, spring, lake/pond, fountain, water-fall, etc.). Even traditional fairs are held/organized in and/or around water bodies. Water from various rivers is required for rituals ranging from enthronement/coronation of kings (prior to abolition of monarchy) to cremation of the indigent subsequent to death. Famous ancient architecture can be seen on the embankments of rivers and ponds/lake and terraced structures of stone spouts have carvings and even carved idols on stone and metals in abundance.

WATER CONTEXT
A proper context needs to be established by taking a cursory look at the history and major events related to Nepal’s water resources in general and hydropower in particular, including trans-boundary conflicts and cooperation within the country.

BI-NATIONAL TREATIES
Koshi Agreement was signed in April 1954 (and amended in 1966) between Nepal and India to “construct a barrage, head-works and other appurtenant work[s]” called Koshi Project “for the purpose of flood control, irrigation, generation of hydroelectric power.” The treaty was silent with regard to quantum of land to be irrigated and electricity generated. However, according to SK Malla, 969,110 hectares is irrigated in India and only 24,480 hectares in Nepal (Malla 1995). Similarly, Nepal was supposed to receive half of electricity from a 20 MW power plant. But the installed capacity of the power plant built at Kataiya in India got scaled down to 13.6 MW and Nepal’s entitlement got reduced to 6.8 MW (Pun 2004). Due to which the treaty gets roundly condemned all the time in Nepal.

Plans are afoot to build a 269-meter high Koshi High Dam, with gross reservoir volume of 13,450 million m3, to generate 3,000 MW power and to build 3 power houses of 100 MW each on each of the three canal power houses, thereby generating 18,239 giga-watt-hours (GWh) energy in total. There is also plan to irrigate 0.546 million ha in Nepal and 0.976 ha in India (JPO 2002). Besides, this project also will result in power benefit, flood control benefit and navigation benefit. However, Nepal will have to internalize all the cost of inundation of 80 villages in 11 districts and displacement of 0.4 million people (including indigenous and tribal people). In this backdrop, prima facie India is likely to benefit disproportionately with Nepal bearing all non-cash costs.
Therefore, the benefit sharing of this project needs to be structured on the lines of Columbia Treaty between Governments of Canada and the United States of America, executed in January, 1964. Under Clause 1 of Article V, Canada is entitled to one half the downstream power benefits and specific payment for flood control. Clause 1 of Article VII defines “power benefits” as “the difference in the hydroelectric power capable of being generated in the United States of America with and without the use of Canadian storage.” Additionally Canada also receives “Payment for Flood Control” of substantial amount from USA under Article VI.

It is laudable that India has accepted “absolute territorial sovereignty” of Nepal on the water of this river pursuant to the stipulation in Article 4 (i) which states that “HMG shall have every right to withdraw for irrigation and for any other purpose in Nepal water from the Kosi river and from the Sun-Kosi river or within the Kosi basin from any other tributaries of the Kosi river as may be required from time to time.” This is a very important provision of this treaty which is in Nepal’s favor. While India has “the right to regulate all the balance of supplies in the Kosi river at the barrage site thus available from time to time and to generate power in the Eastern Canal” thereby limiting Indian entitlement to water from this river.
Gandak Agreement “on the Gandak Irrigation and Power Project” was executed in December 1959 (and amended in 1964). Unlike Koshi treaty, Article 7 of this treaty spells out the quantum of land to be irrigated in Nepal. It stipulates that 40,000 acres (16,187 ha) shall be irrigated through Western Nepal Canal and 103,500 acres (41,884 ha) through Eastern Nepal Canal in Nepal. Article 8 of this treaty also envisaged construction of a 15 MW power plant of which 10 MW power was earmarked for Nepal. Interestingly though, there is no mention of the quantum of land that will be irrigated in India. But according to Government of Bihar publication (GoB 1960), in total 3.9 million acres (1.6 million ha) land is irrigated in UP and Bihar. Whereas, only 39,000 ha is actually irrigated in Nepal (UN 2000). This kind of unequal benefit sharing has upset people in Nepal forcing them to demand abrogation of such an unequal treaty.

In this treaty too there is a silver lining in as much as the provision of Article 9 is concerned. India has accepted Nepal’s absolute territorial sovereignty over Gandak River with a restriction on inter-basin transfer of water from this river during dry months. It stipulates that “His Majesty’s Government will continue to have the right to withdraw for irrigation or any other purpose from the river or its tributaries in Nepal such supplies of water as may be required by them from time to time in the Valley. For the trans-Valley uses of Gandak waters, separate agreements between His Majesty’s Government and the Government of India will be entered into for the uses of waters in the months of February to April only.”

Mahakali treaty was executed in April 1995 in the wake of GoN’s failure to get Tanakpur agreement (chosen to be called an “understanding” by the then government which was made public through a joint communiqué of October 1992) ratified by the parliament. Under of Article 1 Clause 1 this treaty Nepal is to “have the right to a supply of 28.35m3/s (1000 cusecs) of water from the Sarada Barrage in the wet season (i.e. from 15th May to 15th October) and 4.25m3/s (150 cusecs) in the dry season”. This treaty too is deafeningly silent as regards the total quantum of water available in the river and the area of land to be irrigated in India.

Prior to execution of this treaty India was allowed to use 2.9 hectares of Nepali land for the construction of eastern afflux bund of Tanakpur power station, 120 megawatt (MW), and in return India agreed to supply 70 GWh electricity free of cost to Nepal, pursuant to Clause 2 of Article 2 of the treaty.

Article 3 stipulates that both parties “have equal entitlement in the utilization of the waters of the Mahakali River” in conformity with principle of equal sharing (rather than equitable sharing) agreed in the run up to signing of this treaty. However, a qualifying clause on “without prejudice to their respective existing consumptive uses of the waters” ended up with Nepal getting short changed. Because India was already using 93% of water illegitimately and upon execution of this treaty Nepal’s share shrank to 3.5% (instead of 50%) with India getting the rest.

Clause 2 of Article 3 envisages constructing Pancheshwar Multipurpose Project with “power station of equal capacity on each side of the River” while clause 3 stipulated that “the cost of the project shall be borne by the parties in proportion to the benefits accruing to them”; not equally. But there is no mention of basis or quantum of water that will be shared by each party from this project for the purposes of irrigation (using water stored in the reservoir during dry season). However, Ajaya Dixit has mentioned that 93,000 ha will be irrigated in Nepal and 1.61 million ha in India upon completion of this project, which is supposed to generate 6,840 MW (Dixit 2004), thereby contradicting the understanding that both water and electricity will be shared equally. This treaty is also silent with regard to flood control benefit accruing to India as a result of construction of the reservoir which will submerge 8,650 ha land in Nepal (43% of the land required for the reservoir) thereby displacing 65,000 people.

ECONOMIC LIBERALIZATION AND HYDROPOWER DEVELOPMENT
GoN formulated Hydropower Development Policy in 1992 and proclaimed Electricity Act, 1992 and Water Resources Act 1992 to implement the policy after which 404.518 MW was added to the integrated national power system (INPS); bringing the cumulative total to 697.846 MW (including 53.41 thermal). Prior to this, hydropower was in the domain of public sector, being a part of the infrastructure. Till this point in time the total installed hydropower capacity in INPS was 239.918 MW only; cumulative total of the projects built in 80 years since 1911 when the first one was built in Pharping (500 kW). Compared to first 80 years, Nepal accomplished remarkably well in less than 2 decades. But this period was a turbulent one too; marked by a number of milestones.
Cancellation of Arun III, by the World Bank on August 1, 1995, is a significant milestone which paved the path for private sector investment in the hydropower sector, both domestic and foreign. As the World Bank had imposed restriction on construction of projects of more than 10 MW installed capacity while Arun III was under implementation; NEA wouldn’t have been in a position to build projects like Modi (14 MW), Kali Gandaki A (144 MW) and Middle Marshyangdi (70 MW). Similarly private sector wouldn’t have been allowed to construct Khimti (60 MW), Bhote Koshi (36 MW) and Chilime (20 MW) projects. Additionally, there won’t have been necessary financing for Kali Gandaki A, as ADB used fund earmarked for Arun III for this project. Similarly, both Khimti and Bhote Koshi wouldn’t have been possible as the World Bank would never have agreed to breach its own covenant. Moreover, if Arun III was built, Kreditanstalt fur Weideraufbau (KfW – German development bank) wouldn’t have been in a position to help Nepal build Middle Marshyangdi project, as it diverted funding earmarked for Arun III, to Middle Marshyangdi. Therefore, post aborted Arun III, Nepal succeeded to increase generation capacity by 293.68 MW in total, with a total average annual generation of 1,793.36 GWh at the total cost of $ 729.81 million which works out to the average cost of $ 2,485 per kilowatt (kW), completed in 4.05 years in an average by the time Arun III was supposed to be commissioned, as can be seen from the table in Appendix 4 (Shrestha 2009). Contrasted with this, the anticipated achievement, had Nepal taken Arun III route, would have been addition of only 220 MW in the decade ending in 2005, including Arun III, with an average annual generation of 1,845.86 GWh at the total cost of $ 1,130.77 million, with the average cost working out to $ 5,143 per kW, to be completed in 5.17 years in an average. Due to this it does indeed come as a relief that the World Bank was right in cancelling Arun III. Additionally, it is also obvious that liberalization of hydropower subsector would not have been this successful but for cancellation of Arun III, which resulted in a breakthrough for first two hydropower projects with foreign direct investment (Khimti and Bhote Koshi).
GoN has signed agreements with private sector for the development of export-oriented hydropower projects (Arun III, Upper Karnali and West Seti). A Memorandum of Understanding (MoU) for Arun III project, 402 MW, (201 MW project at the same site was cancelled in the previous decade by the World Bank) was signed in March 2008, the proponent of which has agreed to provide 21.9% electricity free of cost to Nepal. The capacity of this project has been, reportedly, optimized at 900 MW. Similarly, MoU for Upper Karnali, 300 MW, was signed in January 2008 with a provision for 12% free energy to GoN and 27% free equity to NEA. This project too, reportedly, has been optimized at 900 MW. Further, GoN signed project agreement for West Seti project, 750 MW, in June 1997 under which GoN is to receive 10% free energy.

Export of power by these projects entails sharing of output (electricity) by using water resources and this activity attracts the provision of article 156 of the Constitution that requires parliamentary ratification of agreements signed by the government for sharing of use of water resources (electricity generation being deemed use of water resource). Signing of these agreements hasn’t gone down too well with the harried electricity consumers too, who have stoically suffered the load shedding of up to 18 hours a day. These agreements have also failed to find favor in Nepal as these projects will be exporting good quality power to India at less than US 5 ¢ while Nepal is importing power from India at tariff ranging from US 11 ¢ to US 15 ¢.

West Seti project is a storage project and it not only generates 3,636 GWh of peak-in power and but also augments dry season flow of the river by 90 m3/s (Thapa 1995). Because of failure to conceptualize and develop this project as a multipurpose project, the dry season augmented/regulated flow generated by this project will fall in Indian lap (free of cost) which makes this project subject to parliamentary ratification for one more reason. Moreover, this quantum of augmented flow during the dry season (8 months) is worth $ 83 million (equivalent to Rs 6 billion approximately) annually (Shrestha 2009) based on the principle set forth by the treaty between Lesotho and South Africa. South Africa pays to Lesotho $25 million (in 1991 prices) each year to Lesotho for the supply of 18 m3/s of water (both for the purpose of irrigation and water supply) from Lesotho Highlands Water Project (Wallis 1992).

Execution of agreement for Upper Karnali project too has generated controversy as the particular location is a site for 4,180 MW storage project (HPC 1989) and development of it as a run-of-the-river project (that will generate 1.91 GWh) is mutually exclusive with storage project which will not only generate 17 GWh peak-in energy but will also generate augmented/regulated flow of about 500 m3/s, capable to irrigate 1.5 million hectares of land during the dry season in the lower riparian area. If Nepal is to make the water available to India (instead of using it for irrigation purposes in Nepal), Nepal could potentially earn Rs 52 billion annually (Shrestha 2010) if the rate agreed between Lesotho and South Africa is to be used as the reference price. However, no arrangement for this has been made.

All three agreement and MoUs are executed to export power from Nepal to India; the importer in India is PTC India Ltd., an Indian government enterprise. If agreements are to be signed at the State level for this purpose, parliamentary ratification of the agreements, explained above, will become mandatory. Therefore, there is a cross section of people who opine that GoN and Government of India (GoI) have resorted to this arrangement (signing back to back agreement with an intermediary) to avoid the process of parliamentary approval.
LEGAL PROVISIONS RELATED TO WATER AND HYDROPOWER
There are provisions related to water and hydropower in the bodies of law ranging from constitution to various Acts and Regulations. Similarly, International Labor Organization (ILO) Convention C 169 constitutes international law and there is provisions related to natural resources with respect to indigenous and tribal peoples.

INTERIM CONSTITUTION
Nepal’s Interim Constitution, 2007 has reposed the State with the responsibility “to use existing natural resources including water resources of the country for the interest of the nation” in Clause (o) of Article 33. Similarly, Article 35 (4) stipulates that “the State shall, while mobilizing the natural resources and heritage of the country that might be useful and beneficial to the interest of the nation, pursue a policy of giving priority to the local community” under State policies.
Moreover, Article 156 (2) requires “the ratification of, accession to, acceptance of or approval of treaty or agreements on” division of natural resources and their use “by a two-thirds majority of the total number of members of the Legislature-Parliament.” The proviso clause thereunder specifies that if the treaty or agreement referred to “is of ordinary nature which does not affect the nation extensively, seriously or in the long-term, the ratification of, accession to, acceptance of or approval of such treaty or agreement may be done at a meeting of the Legislature-Parliament by a simple majority of the members present.” One school of thought is of the opinion that even export of power is division of use of natural resource and agreement for the purpose attracts this provision while others deem it merely international trade in electron.

ELECTRICITY ACT 1992
GoN promulgated Electricity Act 1992, along with Water Resources Act 1992 to herald economic liberalization in the power sector envisaged by Electricity Development Policy 1992. The former was enacted “to develop electric power by regulating the survey, generation, transmission and distribution of electricity and to standardize and safeguard the electricity services.” While the latter legislation was aimed “to make arrangements for the rational utilization, conservation, management and development of the water resources and to make timely legal arrangements for determining beneficial uses of water resources, preventing environmental and other hazardous effects thereof and also for keeping water resources free from pollution.”

ELECTRICITY BILL 2009
GoN tabled Electricity Bill 2009 last year, to improve upon and to incorporate lessons learnt during implementation of the previous Act and also to implement provisions of Hydropower Development Policy 2001. GoN has also table Nepal Electricity Regulation Commission Bill 2009 in the parliament. However, these have yet to be passed by as parliamentarians have proposed 142 amendments to the bill which have not been deliberated upon. The important amendments proposed are related to energy security and relieving the country from dependency on imported fossil fuel, to ensuring optimum exploitation, to making legal provision for parliamentary ratification envisaged by Article 156 (1), to setting up a GoN enterprise to engage in international trade in power/energy, to facilitate local participation in investment in hydropower project, as well as to ensure integrated water resource management.

ILO CONVENTION C 169
ILO has specified that this convention “may be cited as the Indigenous and Tribal Peoples Convention, 1989”. It is a legally binding international instrument which deals specifically with the rights of indigenous and tribal peoples. It has already been ratified by Nepal. Clause 1 of Article 15 stipulates that “The rights of the peoples concerned to the natural resources pertaining to their lands shall be specially safeguarded. These rights include the right of these peoples to participate in the use, management and conservation of these resources.” It is silent with regard to investment in hydropower projects by the indigenous and tribal peoples.

POLICY, PLAN AND STRATEGY RELATED TO WATER AND HYDROPOWER
Nepal didn’t have a written policy related to water and hydropower till 1992 when a policy was formally formulated to herald economic liberalization in this sector. This was supplanted by a new policy in 2001. Although, hydropower is the subsector of water resources, Nepal still lacks policy for water resource and it is referred to only in passing in this policy. Water and Energy Commission Secretariat (WECS) of GoN has prepared a draft water resource policy which was unveiled in April this year. In the meantime water resource strategy and national water plan have already been approved by GoN.

HYDROPOWER DEVELOPMENT POLICY 1992
To introduce economic liberalization in the hydropower subsector in particular and water resource sector in general, Hydropower Development Policy was formulated in 1992 as it was deemed “necessary to make alternative arrangement to meet the interim demand of the country till the above projects.” By the above in this sentence reference was made to Arun III (402 MW) and Kaligandaki (110 MW ) projects which were expected to “come into operation after their completion”, within a period of 7-12 years. It was also felt “necessary to construct new small hydro electric projects to meet the demand to those hilly and remote Himalayan regions where the national electricity system has not been extended in the near future. Apart from this, it is utmost necessary to extend proper distribution system in the rural areas where electrification has not been done and also to develop hydro-power of the country by motivating national and foreign private investors in the electricity sector.” As mentioned above Electricity Act and Water Resources Act were promulgated to implement this policy.

HYDROPOWER DEVELOPMENT POLICY 2001
Stating that: “In the course of implementation of Hydropower Development Policy 1992 it has been experienced that the policies and legal framework needs to be refined and retuned in line with new concepts seen in world market and its impact on technological developments, export of electric energy, possibility of promotion of foreign investment and commitment to environment conservation” the new policy was formulated in October 2001. However, in the absence of necessary legislation to implement this policy (as Electricity Bill 2009 is still languishing in the parliament), the policy of 1992 already supplanted by this policy is still getting implemented.

WATER RESOURCE STRATEGY 2002
GoN formulated Water Resource Strategy (WRS) in 2002 “to identify effective, scientific, sustainable and consensus-based mechanisms to facilitate the implementation of action-oriented initiatives and programs and in doing so, successfully bring about this reconciliation.” Nepal’s national goal was identified as “living conditions of Nepali people are significantly improved in a sustainable manner” by this document aiming to achieve short-, medium- and long-term purposes and ten strategic outputs have been described in it. Following indicators were laid down for hydropower subsector:

• by 2007, 820 MW hydropower capacity developed to meet projected demand, including 70 MW for export;

• by 2007, laws making national contractors/consultants participation mandatory in all types of projects promulgated;

• by 2007, 25% of households supplied with electricity;

• by 2017, 2230 MW hydropower developed to meet projected demand of 2230 MW, including 400 MW for export;

• by 2017, 38% of household supplied with electricity;

• by 2027, 60% of households have access to electricity; and

• by 2027, Nepal is exporting substantial amounts of electricity to earn national revenue.

Merely the status of hydropower generation by mid-July 2010 of 644.436 MW would suffice to indicate how well the strategy is faring.

NATIONAL WATER PLAN 2005
GoN developed National Water Plan (NWP) in 2005 which was said to be “prepared to encompass program in all strategically-identified output” in WRS “so that tangible benefits can be delivered to all the people in line with the basic needs.” Specifically, the NWP was developed “to operationalize the output objectives” of the WRS, described above. Integrated Water Resources Management (IWRM) was “adopted as one of the principal themes” of it. Following targets were set for hydropower subsector:

By 2007

• Hydropower generating capacity is developed up to 700 MW to meet the projected domestic demand at base case scenario without export;

• Legislation making participation of national contractors/consultants mandatory in all types of projects is enacted;

• Thirty-five per cent of the households are supplied with INPS electricity, 8% with isolated (micro and small) hydro systems and 2% with alternative energy sources;

• Per capita electricity consumption of 100 KWh is achieved.

By 2017

• 2,100 MW hydropower electricity is developed to meet the projected domestic demand at base case scenario, excluding export;

• Fifty per cent of the households are supplied with INPS electricity, 12% with isolated (micro and small) hydro system and 3% with alternative energy;

• Per capita electricity consumption of 160 KWh is achieved; and

• NEA is corporatized.

By 2027

• Up to 4,000 MW hydropower is developed to meet the projected domestic demand at base case scenario, excluding export;

• Seventy-five per cent of the households are supplied with INPS electricity, 20% with isolated (micro and small) hydro system and 5% with alternative energy sources;

• Per capita electricity consumption of over 400 KWh is achieved;

• Nepal exports substantial amounts of electricity to earn national revenue; and

• NEA is unbundled and privatized.

Interestingly, the target for electricity generation by 2007 has been set at 700 MW in it, reducing it from the indicator fixed by the strategy of 820 MW. Unfortunately, even by 2010 the generation capacity is only 644.436 MW. From this it becomes rather easy to infer whether the plan implementation is on track or not.

PERIODIC PLANS
In the context of the efforts made for the planned development of the country, so far ten periodic plans have been implemented and eleventh one is under implementation. All of the plans up to tenth plan were of 5-year duration, except for the second one which was only for three years (1962-65), introduced after a 1-year plan holiday in 1961/62. Planned development began in Nepal in 1956 and the last one (10th five year plan) ended in July 2007, following which a 3-year Interim Plan was implemented through till July 2010 which aimed to increase the hydropower installed capacity from 560 MW to 704 MW. National Planning Commission (NPC) is yet to make public the status of achievement of this plan. However, according to NEA, cumulative total installed capacity has reached 697.846 MW by the close of interim plan; a 99 percent achievement of the target which became possible due to completion of projects slated to be completed in the previous plan periods like Middle Marshyangdi (70 MW).

Chapter 2 of the report submitted to Forum of Federations, part of which was published by FoF