Hydropower Development
Targetting The Poor

By Uttam Maharjan

NEPAL is very rich in water resources. The country occupies the second position in water resources after Brazil and the first position in proportion to the land area. Although it is believed that the country’s hydropower potential is 83,000 MW, out of which 25,000 MW is economically feasible, the country has generated around 400 MW only. This shows that we lag far behind in the generation of hydropower.

Being a poor country, we have neither adequate capital nor technical expertise to operate large-scale hydel projects and powerhouses. That only 15 per cent of the total population of the country so rich in water resources has access to electricity is a paradox that is like a bitter pill to swallow. Also, NEA (Nepal Electricity Authority) is not fully capable of meeting the demand for electricity (380 MW); it can supply only 340 MW.

The private sector, both domestic and foreign, has played an important role in the power sector. Since the enactment of the Water Resources Act, 2049 and the Hydroelectricity Act, 2049., the private sector has stepped into the field. Andhikhola (5.1 MW) and Jhimruk (12 MW) are the first hydel projects completed by the private sector. Now, there are several projects, either completed or on the pipe, such as Khimti (60 MW), Chilime (20 MW), Indrawati (5 MW), Upper Modi (14 MW), Bhotekoshi (36 MW), Puwakhola (6.2 MW) and Tanakpur (12 MW).

There is a provision that stipulates that an individual or firm may sell NEA electricity ranging from 100 to 1,000 KW at different rates in the rainy and dry seasons. And the sale of electricity ranging from one to ten MW may be made as per the power purchase agreement (PPA) between NEA and a producer. This provision has encouraged many to invest in electricity generation.

The government recently declared that it was going to complete 3 mega-hydel projects by the end of the year. These are Upper Karnali, Saptagandaki and Arun III. Similarly, the government is mulling over another mega-hydel project, Upper Tamakoshi. If these mega-projects are completed in time, the power crunch now being faced by the country can be tackled and excess power exported to neighbouring countries.

It is worth noting that foreign companies are interested in big power projects, eyeing India as a potentially big market. But India is willing to buy sufficient quantities of electricity only in case operation, maintenance, security and ownership of power are placed at its disposal, something not acceptable to our country.

The projects run by foreign parties are not benefiting the country in real terms. The PPAs reached with them have far-reaching and long-term implications. The electricity tariff of the country is among the highest in the world. Moreover, donors also impose high tariffs as a precondition for financing hydel projects.

Foreign aid, which is invested in hydel projects, often comes along with harsh conditions. There is no transparency, accountability, effective monitoring mechanism and financial discipline in such projects. Rather, corruption and maladministration would rule the roost.

There is often delay in hydel projects and the cost also tends to shoot up vis-a-vis contract amounts. Nepalese rupee devaluation, additional works and the likes are cited as causes for high costs. Such arguments do not hold water since the contracts undertaken by competent and experienced foreign parties already take into account all such factors as may influence the projects. Viewed thus, only slight price adjustments may crop up.

Small and medium-scale hydel projects are suitable for the country, since low capital and indigenous expertise suffice to operate such projects. Besides, these projects also answer the needs of local people and enlist their participation for quality services.

Several fora on water management have been held around the world. One such forum is the Durban International Conference held in 1992. At the forum, views were expressed on treating water as an economic good, decentralising management and delivery structures, putting greater reliance on pricing and enlisting active participation of stakeholders in water management.

The Water Resource Act, 2049 accentuates decentralised planning and allocation of water resources and delivery of water resources to district water resource committees for efficient use. Likewise, the Agricultural Perspective Plan (APP) outlines efficient use of water, attention to management cost recovery, improvement in the operation and maintenance of existing water systems and investment in small-scale farmer-managed surface and ground water systems.

The ultimate goal of hydel projects must be to transform the socio-economic status of the poverty-stricken people and to overcome problems like population displacement and economic impacts. So new water policies on cost-effective methods of utilising water for agricultural, drinking, industrial, hydropower and watershed management purposes need to be formulated. This will ensure equitable, efficient and sustainable use of water resources.

The government is coming out with a new water resource strategy. The aim of the strategy must be to target poverty alleviation through the effective use of water resources. Experts opine that ad-hoc policies on the use of water resource have badly affected the management of water resources in the past.

NEA recently came out with a new electricity policy. The policy was formulated keeping in mind the internal consumption of electricity and prospects for exporting electricity. Furthermore, experience gained by implementing various stipulations enshrined in the Hydroelectricity Act, emerging concepts on hydropower development, technological development, power export, and ecological conservation were also taken into consideration while formulating the policy.

The policy stresses power development by harnessing vast water resources, equitable sharing of benefit accruing therefrom, exploration of internal and external markets, making transparent government activities related to the private sector, cheap generation of electricity, rendering of quality services and promotion of power export. What is more, the policy envisages identifying rural electrification with economic activities as a step towards rural development. The new provision that NEA will not be bound to purchase electricity from the private sector if it has already surplus electricity is a welcome sign.

The new electricity policy and the upcoming water resource strategy are expected to target maximum benefit at the poor, marginalised people.

Towards Sino-Indian Détente

By Nishchal Nath Pandey

CHINESE scholar Ma Jia Li categorized six "Ts" that are crucial in the realm of Sino-Indian relations. Territorial issues (boundary questions), Triangular relations (China-US-India and China-Pakistan-India), Threat perceptions (military, nuclear and economic), Trade, NPT and CTBT and Tibet. The border dispute and its speedy resolution was one of the major themes of Indian President K. R. Narayanan’s state visit to Beijing in May 2000. A former Indian diplomat offered perhaps a more realistic assessment of the boundary dispute when he noted that "the border issues are so complicated and difficult they could be set aside for a while as both countries concentrate on areas of common interests." In all prospects, Prime Minister Zhu Rongji’s January sojourn focused primarily on areas of economic cooperation. Chinese Premier set a target of increasing the volume of bilateral trade from annual 3.5 billion dollars to 10 billion dollars. Furthermore, a MoU was signed on exchanging hydrological data on the Brahmaputra river’s flow through Chinese and Indian territory. This will, it is hoped enable forecasting and management of floods in India’s North East. India and China have also established a bilateral Joint Working Group on Terrorism and will co-operate with each other on intelligence sharing and exchange of know-how on dealing with terrorism in South Asia. Therefore two countries that have even gone to war in the past have moved forward quite remarkably in the right direction of not only establishing normal but pragmatic relationship based on goodwill, cordiality and mutual benefit but at the same time share almost the same thoughts on merging the global scenario especially in the "post-Post Cold War" period.

There are several arguments on the future course of Sino-Indian relationship and of course on the influence that it will have on South Asia in particular. A pessimistic situation would be a gradual erosion of mutual trust as a result of reckless comments or over stressing by either side on thorny issues like Kashmir and Tibet. Everybody knows China’s relations with Pakistan nurtured through thick and thin by the top leaders of both the countries. A MoU was formulated between China and Pakistan during President Musharraf’s visit to Beijing last December providing Pakistan 55 million dollars in aid showing the warmth and cordiality existing between the two. However, although China’s relationship with Pakistan has been an issue of debate in New Delhi, through pragmatism based on realism of the challenges and common opportunities of the new era this hasn’t been an encumbrance to forge a relationship of the 21st century on its own. Veering closer to the position adopted by the permanent members of the Security Council, China advocates peaceful dialogue between India and Pakistan to settle disputes, including Kashmir. CV Ranganathan, India’s Former ambassador to China states, "an armed conflict between the two poses dilemma for China".

The most plausible scenario would be a combination of competition and cooperation between the two Asian giants in the field of economics, sharing of expertise and idea in areas such as Information Technology. This would lessen the chances of Nepal having to incessantly counter arguments coming in from some quarters of the Indian industry that Nepal has become a transit point of Chinese goods into India. When the bilateral trade between the two itself grows substantially then it would be thoughtless to put the blame on Nepal.

President Putin’s visit to India in 2000 brought the idea of a "strategic triangle" involving Russia, India and China. Recently, Russia’s Foreign Minister, Igor Ivanov, and Deputy Prime Minister, Ilya Klebanov, visited India and signed a number of agreements in the defence, science, technology and trade fields while at the same time discussed about this concept. Not much has come about from Beijing on this subject however implications of this new venture will have to studied carefully not only for South Asia but more so for its global ramifications.

Zhu Rongji is the one who prepared it for admission to the World Trade Organization, pushed through unpopular reforms to reorganize failed state owned enterprises and banking institutions and re-focussed the country’s plans to suit the changing paradigms in international affairs especially after the horrible events of nine-eleven. Hu Jin Tao, the current vice-president and the youngest member of the CPC Central Committee in 1982. Long years of work in remote and poor areas inhabited by ethnic minorities have tempered Hu’s character as well as made him a staunch supporter of the policies of reform and door opening. The coming in of the new generation in Beijing will further impact on China’s policies towards Indo-China relations and South Asia as a whole. Basically, they were neither in the helm of affairs during the Sino-Indian conflict in the sixties nor were they in responsive positions in Beijing throughout the long years of the cold war that existed between the two till the early eighties. For South Asia as a whole, a gradual warming up of relations between China and India, known as the military and economic giants of the 21st century, an increase in the volume of bilateral trade and investment including tourism will definitely have positive corollary effects especially for the smaller countries like Nepal. The only visible challenge is that if we fail to work out a proper strategy to cash in from this and an implementable course of action to suit our industries, businesses and our economy on the whole, the cordiality between the two huge neighbours (markets) may still be valueless for our ailing economy.

Rise And Fall Of The Rana Regime III

By Guna Dev Bhattarai

MOHAN Shumshere was deadly against the Nepal Government Act of 1948. Some Youths such as Tripurbarsingh, Gopal Prasad Rimal and others formed the Nepal Praja Panchayat in 1948 and began to work in keeping with the Constitution of 1948 A.D. In the meantime B.P. Koirala with some of his trusted followers came to Kathmandu to activate underground activities. Koirala and the leaders of the Praja Panchayat Party were arrested. But Koirala was released under the pressure of India.

Mohan Shumshere paid a short visit to India. Pt. Jawarharlal Nehru advised him to introduce some reforms in keeping with the age. He realised that India was not going to linger the autocratic rule of the Ranas. As such Mohan Shumshere introduced some reforms which did not satisfy the Indian Government and the people of Nepal in particular. He wanted to have good relation and support of Great Britain and the U.S.A. but they would not do anything against the will of the people and particularly at the cost of Indian friendship.

Though king Tribhuvan was fully determined to wipe out the Rana regime it was not plossible for him to get directly involved in any particular political activity Nevertheless, he cautiously began to come in contact with the revolutionary forces. Chandreswor Prasad Singh, the Indian ambassador to Nepal, and some leading military officers were in touch with the king. Pt. Nehru might have directed Chandreswor to convince the king that the former would help Nepal to be relieved from the bondage of Ranaism.

On 21st Kartic, 2007 B.S. King Tribhuvan, on the pretext of going to picnic at Balaju, with all other members except Prince Gyanendra, took political asylum in the Indian Embassy. It was a unique event in the histroy of Nepal. Mohan Shumshere having failed to call back king Tribhuvan crowned Prince Gyanendra king of Nepal. Prince Gyanendra who was crowned king by the approval of the special Bhardars was not recognised by many countries and India in particular. Consequently king Tribhuvan with the members of the royal family reached Delhi by air and was warmly received by the Indian Government. The arrival of king Tribhuvan in India encouraged the revolutionalry forces to launch military movements in the country. If Mohan Shumshere had introduced some reforms in keeping with the time he might have been popular and retained his premiership but his temperament did not let him adopt liberal policy. The policy irritated Pt. Nehru and the latter began to connive with the activites of the anti-Rana forces. During Mohan Shumshere’s visit to India there was misunderstanding between him and Pt. Nehru regarding the security of India and Nepal. According to some versionus of the media Mohan Shumshere had said that Nepal should fear more from the south than from the north. If the versions were correct Pt. Nehru might have been perturbed.

Pt. Nehru realised that, if the movement lingered for a long time, the poor and oppressed Nepalese might be lured by communists. That is why he asked the leaders of the Nepali Congress Party to stop their movement and reach an agreement with the king and the Government of Nepal. The Nepali Congress Party with a bit of hesitation follwed the advice of Pt. Nehru.

Accordingly King Tribhuvan, with all the members of the royal family, returned home safe and sound. The king was warmly received by the Prime Minister and a large number of the people of the valley. King Tribhuvan once again became the head of the state. Consequenty, on February 18, 1951 (Fagoon 7, 2007 B.S.) he proclaimed that the system through which king Surendra had granted administrative power to Jung Bahadur and his successors ceased to exist. Then the king formed an interim Council of Ministers comprised of the Ranas including a non-Rana herson and the leading members of the Nepali Congress Party which would help the king in day to day administration. The ministers would be collectively responsible to the king for their action and they would remain in office as long as they won confidence of the king. Thus king Tribhuvan restored his power and dignity and side by side the emergance of demorcacy ushered in a new era in Nepal.