Nepal-India relations : Hydropower development

Dwarika N Dhungel

The rosy picture drawn by some development experts that Nepal could gain millions of dollars by export of hydro-electricity to India, is being given wide media coverage. This, in the wake of the Patna meet on Emerging Trends in India-Nepal Relations organised by the Policy Planning Division of the Ministry of External Affairs, India, in which some 40 Nepali delegates participated. Some of them had gone to the extent of saying that “Bihar would require 10,000 MW electricity in a few years. If we can develop and export that much of hydropower, Nepal would be able to make revenue of Rs 250 billion. This scribe was a member of Nepali contingent that went to Gangtok to take part in a separate dialogue on Economic Reforms and Development Dynamics: A Cross Border Perspective between India and Nepal, organised by University of Sikkim, Gangtok, from April 18-20, 2008.

Coincidentally, generation of 10,000 MW in 10 years is also the target of CPN-Maoist. The goal is not impossible but it will require a Herculean effort and trillions of dollars. In this regard, one of the hydropower experts has said that “hydropower plant... requires a lot of time for study and huge funds and the demand increases rapidly” (THT, April 28). Hence how the CPN-Maoist mobilises the funds to achieve this is a million dollar question. Nitish Kumar, the Chief Minister of Bihar, hazarded a reply. In his inaugural speech at the Patna meeting, he said, “If water resources of the two countries are properly harnessed, the economy of Nepal will increase manifold as Nepal has the potential to produce about 85,000 MW hydel energy which it could sell to India.

Indeed Nepal has a large number of sites for development of hydropower, but unfortunately only about 1% has been exploited so far. If total potentiality is harnessed, in addition to meeting domestic demand, a certain percentage of Indian demand could be met. It could benefit India and Bangladesh in terms of augmenting the lean season flow of the Ganges, flood control and irrigation benefits as Nepal has plenty of sites for storage projects. This was accepted by Jairam Ramesh, Union Minister of State for Commerce during the meeting at Patna. He said that “even within the SAARC there was a need for a mechanism to facilitate sub-regional interactions between States as Bihar and Uttar Pradesh with Nepal and the northeast with Bangladesh”.

Not to mention more than 150 years of official relationship with India in water resources, there is a history of over 40 years of power cooperation. The cooperation in this sub sector is not only at the government level and but also between private sector and Indian government agencies. There is an agreement of exchange of power, although Nepal’s request for increasing the quantum to 150 from current 50 MW to which India has agreed in principle, is yet to materialise.

There are agreements between the two countries for development of about 6,740 MW Nepal’s entitlement of 50 % of Pancheswor’s 6,480 MW+Saptakosi High Dam’s 3,500 MW) hydroelectricity. A license for development of 750 MW West Seti project — identified purely as an export-oriented, is with Snowy Mountain Engineering Company of Australia. The Indian government and private agencies have bagged the license for two projects with a capacity of 702 MW (402 MW Arun 3 and 300 MW Upper Karnali). It is reported that survey licenses for another 3,500 MW are to be awarded to Indian firms. Also, applications for 26,000 MW are with the Department of Electricity, most from Indian firms. If that is true, India will have control over most of economically feasible projects (42,792 MW out of 43,000 MW).

However, when actual facts and figures are considered, it is hard to believe that the level of cooperation between the two countries is so meagre. During a period of 16 years (1990 to 2006), the export from Nepal was 1,546 million units. The import was 2,659 million units (Pun, 2008). Likewise in the fiscal year between July 2005-06, according to NEA, the export from Nepal was 98,416,000 units, whereas the import was 272,880,380 units. Also, Nepal’s request for additional 40 MW to meet the current (April-May, 2008) load shedding has been under negotiation. In addition the Mahakali Treaty of 1996 is in a state of coma. The study on Saptakosi is hanging in the air. The West Seti, despite more than 10 years of existence, is yet to take off the ground.

Several Indian experts said that India can meet her energy demands from other sources but for water she does not have any alternative. This, according to an IIM/Kolkotta professor, should be understood by Nepal while developing her water resources. I agree. Nepal and India need to collaborate in water resources, but Nepal should not be swayed by rosy scenarios. And it should postpone major decisions on water resources until the next general election, because during the upcoming constitution-making debate, this issue is likely to figure prominently.
Dhungel is senior researcher with IIDS
Published in the Himalyan Times daily, May 14, 2008