Opinion (Spotlight Weekly)

Donors And Nepal's Melamchi Plan

By AB Thapa

It might not be possible to totally disagree that our country's failure to address the growing economic problems is the key factor that has resulted in the present unrest in Nepal. People's widespread frustration can have disastrous consequences for any country and it can even pose serious threat to the world peace if it spreads over several countries. The situation that developed in Europe after the First World War that led to the next World War is a clear proof to it.

The economic situation of Germany during the first five years after the First World War made the political situation even more precarious. Germany was not able to meet reparations requirements, as a result France invaded the industrial center of the Ruhr in 1923, seizing control of all its coal deposits. Before July 1922, the value of the Reichsmark had already dropped from about 4 to 493 to the dollar, but during the next 16 months it plummeted to virtually nil. The inflation was so high that millions of marks were required to buy even the most basic item. As a result, German money frequently had more value as kindling than as legal tender. The resulting inflation wiped out the savings, pensions, insurance, and other forms of fixed income of most middle-class and working-class Germans.

In 1924 the Dawes Plan was implemented to ease the German reparations. The worldwide depression of the 1930s, however, plunged the country once more into disaster. Millions of unemployed Germans, disillusioned by capitalist democracy, turned to the National Socialist German Workers' Party (NSDAP), the party of National Socialism, or Nazism. By 1930 the Nazis were the second largest party in the Reichstag

A Lesson Learnt

United States program of financial assistance helped to rebuild European nations devastated by World War II (1939-1945). It is commonly called the Marshall Plan, named after U.S. Secretary of State George Catlett Marshall. After the war, Europe's agricultural and coal production had nearly stopped, and its people were threatened with starvation. The United States must have drawn lessons from the events that followed the period after the First World War. They must have realized that they would have been completely left alone and thus they would have found themselves defenseless in the struggle against the countries subscribing to principles completely alien to them if the Europe is not helped to become economic and political power.

After careful planning, Marshall announced in June 1947 that if Europe devised a cooperative, long-term rebuilding program, the United States would provide necessary financial assistance. The Congress of the United States appropriated more than $13 billion in aid. Seventy percent was spent for goods in the United States. The Economic Cooperation Administration distributed the money, and the Organization for European Economic Cooperation (OEEC) spent it. The largest amounts of money went to Britain, France, Italy, and West Germany, in that order.

The program achieved both its immediate and long-term aims: When the aid ended in 1952, the region's industrial production stood 35 percent above prewar levels, and West Germany was independent, and economically booming. In 1961, the OEEC was succeeded by the Organization for Economic Cooperation and Development (OECD). The OECD broadened the scope of cooperation among member nations.

Foreign Assistance to Nepal

After the advent of democracy in 1951, Nepal has been receiving generous financial and technical assistances from several donor countries and international development agencies like the IDA, ADB, KFW etc to carry out various programmes to improve the living condition of the people living in our country. Many donors have fully realized that Nepal is at the very bottom in the list of the poor countries so the economic condition of our country is too weak to allow us to carry heavy burden of foreign debts. As a result, such donor countries have been providing us mostly aids in grants. Apart from it, many donor countries and international development agencies have been helping us to implement different types of programmes with utmost vigilance to insure that full benefits would accrue to Nepal from the programmes they are handling. Foreign assistance has also been channeled to Nepal through regional institutions like the ICIMOD, IUCN etc.

Nepal's Active Participation Encouraged

In the past, donors had always been trying their utmost to insure that various programmes taken up in Nepal are in the best interest of our country. They never failed to agree to incorporate any positive amendments proposed from the Nepalese side to the whole programme if they were really in the interest of our country. They always backed up even if it would be awfully difficult to accommodate such changes. A case in point could be the Kankai Irrigation Project. The ADB had provided assistance in grants in 1970s to carry out the feasibility study as well as the detailed design including the preparation of the tender documents. The ADB had agreed to provide assistance in grant even to carry out the detailed design in the hope that the construction of the project could be significantly advanced forward . As a result, the entire design works including the preparation of the tender documents were completed in the home office of the consulting firm appointed by the ADB and thus the Nepalese side did not have opportunity to be involved in the design works Later on Nepalese side found that there is a good scope to improve the design of the Kankai Irrigation Project. It was established that the capacity of the major structures and the canal which constituted roughly about 70 % of the total project cost could be raised by 60 % without any increase in the project cost if the project design was substantially modified. Despite the fact that the construction tender had already been awarded and the contractor had even started the construction works at site, the ADB concurred with the government proposal to amend the entire design of the canal system and structures.

The joint effort of the Ministry of Water Resources and the engineering team selected by the donors to carry out the detailed design works had helped in the past to enhance significantly the effectiveness of the Marshyangdi Hydroelectric Project now in operation. Attention of the Ministry of Water Resources was drawn to the design of the Marshyangdi Hydroelectric Project at that time when the detailed design of that project rated at 63 MW had already been completed. The civil work tender documents were ready and they were going to be issued at any time to the pre-qualified bidders. According to the recalculation of the Ministry the proposed size of the civil works would allow to have the installed capacity of the power station well over 63 MW. After a series of correspondence between the Ministry and the consultant's head office it was agreed to come to a compromise to accept the rated capacity at 69 MW. One of the Marshyangdi Project officials stationed at Kathmandu who is even now in the Government service performed the role of the intermediary facilitating the exchange of documents between the Ministry and the consultants. Later on the consultants appeared to have fully realized the significance of the Ministry's concern. They raised the capacity of the electro-mechanical equipments of the Marshyangdi project on their own well over 69 MW to 75 MW. Now the Marshyangdi hydropower can generate 75 MW.

The Melamchi Mismanagement

The strategy document of the Ministry of Physical Planning (Dated November, 2000) explains about the inter basin transfer of water from surrounding areas, which comprise the diversion of all three rivers of the Indrawati basin ( Melamchi, Yangri and Larke) but not just only the Melamchi river. It has also been clearly stated in the UNDP supported Melamchi project study report that around the time 2011 the total system demand (in Kathmandu valley) is expected to reach the total supply from in-valley surface sources and Melamchi. After that the next stage of the development of the Melamchi will be required. This entails the diversion from the Yangri and Larke.

The whole country has been waiting with greatness eagerness the completion of the Melamchi plan since the last 10-12 years. Every activity of this project was being closely watched by the residents of the Kathmandu valley, by various organizations established to protect the right of the consumers, and most of all by the Nepalese press playing avant-garde role in defense of the interest of the Nepalese people. Despite all these things the concerned government agencies did not hesitate to lease the Yangri and Larke rivers to private developers for the development of hydropowers. Surprisingly hardly any INGOs or NGOs or the Nepalese press have raised their voice against such decision. It was not even asked why such decision to lease the Yangri and Larke rivers for power generation had to be taken. Despite the eagerness of the donor countries and institutions to help Nepal in every possible way in the task of providing basic facilities to common people, some of the donors' representative are not seen to be very keen on handling the Melamchi project with great care. They seem resigned to accept anything even if the Melamchi project would prove to be a white elephant.

A New Opportunity

It is a sheer luck that the Melamchi planning mistake could even now be corrected. For this purpose the high head Langtang diversion project now being studied by the NEA for power generation should be slightly modified and linked with the headwork of the Melamchi tunnel. If the alignment of the tunnel to draw Langtang water at Ghore Tabela for power generation is changed and the water after the power generation is led into the Melamchi river as against the original plan to discharge into the Trisuli river, there might be even slight decrease in the total combined cost of the Melamchi water supply project and the Langtang power project. However, such rerouting of the Langtang power tunnel could open up completely new vistas of possibilities for the generation of cheap electricity.

The proposed new plan could allow to provide Melamchi water to the residents of Kathmandu in abundant quantity for free. It would be possible to generate electricity mostly in dry seasons when the demand for electricity is the highest.

What To Do The Next?

The whole concept of the Melamchi tunnel would remain intact. A brief study should be immediately carried out to find out the most suitable cross sectional area of the tunnel and also the most desirable location for the entry point of the Melamchi tunnel into the Kathmandu valley. The original UNDP plan to build the Melamchi tunnel power station should be revived. After few such adaptations the present Melamchi plan could be allowed to proceed.

There is an urgent need to act immediately to suspend the license given to a private developer to use a part of the lower reach of the Langtang river for power generation. After the construction of such small scale Langtang power project, both alternatives of the big scale Langtang development including the one being studied by the NEA would be precluded. It is explained about it in an article published in the SPOTLIGHT on August 16, 2002 under the heading "Threat To Super High Head Langtang Projects" It is really an embarrassment to all of us Nepalese that one wing of our government after finding the Langtang diversion at Ghore Tabela to be an excellent medium sized high-head hydropower project conducts very expensive studies to implement that project whereas at the same time another wing of the government virtually trying to bring down that project leases that very site to a private hydropower developer to build a small project despite the fact that both those government wings are under the same ministry.