Perils Of Populism
Maoist minister's refusal to budge from impractical stand compels ADB to announce its intention to pull out from the Melamchi project
By SANJAYA DHAKAL
The missteps by then ruling party UML in 1995 had cost the Arun III hydropower project. Over one decade later, people of Nepal are languishing in constant load shedding due to shortage of power and the government is once again preparing to invite foreign investment to build the 300 MW project.
Whether the current stubbornness demonstrated by Maoist minister could cost the country another mega project – Melamchi Drinking Water Project – is the issue of burning concern right now.
Just as nobody today hails the cancellation of Arun a decade ago, no Kathmandu resident a decade from now will judge favorably if Melamchi suffers the same fate.
Guided by populism and impractical stand, Minister for Works and Physical Planning Hisila Yami has said she does not want to hand over the management of valley's drinking water to a foreign company called Severn Trent Water International – an issue that was already settled when the previous cabinet approved the decision.
"This is like canceling an already agreed deal to buy a much needed house because suddenly one finds that the color of its window is not good," an economist said in reference with Yami's stand.
As soon as the ST withdrew its bid expressing disappointment "by the failure to conclude the tender process," the ADB, on Tuesday, issued a strong statement saying that it would not be possible to carry on with project activities, after its current funding commitment on the multi-million dollar Melamchi Water Supply Project (MWSP) expires on June 30.
The ADB has said "the inability of the Government to authorize the signing of the duly negotiated management contract at this very late stage creates considerable uncertainty on the way forward."
"A key provision of the loan agreement signed between the Government of Nepal (Government) and ADB on 24 January 2001 was that the restructuring of the Nepal Water Supply Corporation and award of a private sector management contract for delivery of water services under competitive procedures must be completed prior to initiation of civil works contracting for the construction of the diversion tunnel from Melamchi Valley to Kathmandu. This provision of the loan agreement recognized that the chronic water shortages affecting Kathmandu are caused not only by a lack of supply infrastructure and bulk water resources, but also by the poor management of water services" the ADB says in its statement.
The ADB says that signing of the private management contract was the very last stage of a long process to achieve the agreed institutional reform for efficient utilization of Melamchi's water. "This long process, which has required six years of effort, cannot be completed now that the water utility operator is unable to obtain approval from the Government to sign the duly negotiated contract and the final bid validity has been withdrawn on 15 May 2007 (after nine extensions made since March 2006)," it says.
"ADB has also made strenuous efforts and shown maximum flexibility to sustain the Project at several critical times when it has been at risk over the past six years. However, the inability of the Government to authorize the signing of the duly negotiated management contract at this very late stage creates considerable uncertainty on the way forward. As it stands now, it would not be possible to carry on with project activities, with the Project due to close on 30 June 2007," the statement adds.
The agreement to award the foreign company the contract to manage valley's water distribution was a precondition for the ADB to invest in the US$ 340 million project. The ADB is the leading donor of the project and has agreed to provide loan of US$ 140 million for the purpose. However, senior Maoist leader and Minister for Works and Physical Planning Hisila Yami refused to honor the agreement (approved by previous cabinet led by the incumbent Prime Minister GP Koirala) to award contract to Severn Trent claiming it had bad track record elsewhere.
The Melamchi project aims to bring in 170 million liters a day (MLD) water to the Kathmandu valley. The valley has been suffering from acute shortage of drinking water – while its demands have shot up to 240 MLD, the supplies have stagnated at 90 MLD.
As Melamchi project is now sliding down the drain – even Finance Minister Dr. Ram Sharan Mahat has said that chances are now slim of its revival – the Maoists will now need to answer to the people of Kathmandu on how it plans to resolve the acute shortage of drinking water. It certainly cannot say that using NGO-driven ideas like rainwater harvesting, using stone spouts and underground sources can be viable alternative for a sprawling metropolis like Kathmandu which has over 3 million population.
Besides, the decision by the ADB to pull out from the project will send very negative message out to the international community and foreign investors, who are already watching the moves by Maoist ministers with a degree of trepidation.
