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COVER STORY |
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COVER STORY |
A DECADE AFTER ARUN DEBACLE It's
already been a decade since the cancellation of the Arun III Project by the World Bank,
but its ghost is still haunting poor people living in remote parts of Nepal.
Although there was massive opposition from Nepalese civil society, international
environmentalists, and other INGOs, it was the letter by the general secretary of the UML
Madhav Kumar Nepal to the World Bank, which hit the death knell for the Arun project. On
whatever grounds the anti-Arun pressure groups proposed its cancellation, the debacle of
the project dashed the hopes of tens of thousands of poor people whose income would have
risen drastically had the project been developed. As there is no other project capable of
linking the remote eastern districts like Sankuwasabha and Bhojpur with the rest of the
Kingdom and the Tibetan Autonomous region - the poor people of the region were the big
losers in the high tension Arun battle By KESHAB
POUDEL "Well,
sir, once the road is built up to Num, then we need not carry our annual bag of salt for
seven days from Hile, a town of eastern Nepal 400 miles east of Kathmandu," replied a
Sherpa in 1994 to then World Bank Vice President Joseph Wood, who had asked, through an
interpreter, what a group from Chepuwa Village near the Nepal-China border would expect
from the Arun III project. (See Vidyut 2058 a half-yearly publication of NEA).
"He
had neither the grand dream of employment nor of bagging a small but valuable
sub-contract. He is merely overwhelmed with the seven days' drudgery of carrying his
precious bag of salt for survival. I, therefore, believe there are no winners here though
there were a lot of chest thumping organizations like the INHURED International and the
International Rivers Network congratulating each other when the World Bank withdrew from
Arun III. But there are, I believe, grievous losers from this project and they are us,
Nepalese, the many poor but silent villagers from the Arun river valley like that innocent
Sherpa high above Num!" writes S.B. Pun, former managing director of Nepal
Electricity Authority (NEA) in his article published in Vidyut. Had the project
gone ahead according to the original schedule ten years ago, Arun III would have, by now,
see the light of day, and the lives of the poor people of Num could have been much easier.
But what should
have been a dream year in the history of Nepal's power sector has now turned into a
nightmare. Although some new projects are supplying the power, Nepal's power sector will
have to pass through many years of crisis and suffer from load shedding and high tariff.
Other major loss is the highway - which was supposed to be built in the area - to boost
the economic activities in the region. One section of the people hold the view that this
strategically important road is responsible for the debacle of Arun III as it was widely
reported during the period that India saw the construction of highway as being against its
security interest. Even at the
last minute then Minister of State for Water Resources Hari Prasad Pandey proposed to
change the approach road from the planned valley route 122 KM to 198 KM old surveyed ridge
route. What prompted Pandey to propose the amendment in the road is yet to be known
because the completion of road would have reduced the distance of Tibeto-Chinese border 40
K.M away. Although the
lead role was taken by non-governmental organizations and international organizations, it
was a letter from general secretary of CPN-UML Madhav Kumar Nepal to the World Bank on
October18, 1994 asking it to hold off on the project until elections could be held that
was most responsible for the premature death of the project - which had already consumed
billions of rupees for a decade long investigation and study. "We are also committed
that, if we are elected to form the government, an evaluation of investment versus the
outcome, as well as problems relating to environment, settlement etc. will be made prior
to any final decisions," Nepal wrote.
As Arun
III hydro project has already been killed and there is no possibility of construction of
the road, the people of Num and other remote parts of the district continue to walk seven
or more days to carry Although
CPN-UML general secretary Nepal's ideology is close to Nepal's northern neighbor and was
groomed amid ultra-nationalist and India-bashing environment, his actions ran in stark
contrast to his ideology and stand. The truth of the matter was that the nationalist and
communist leader had killed a project, which would have opened a road link to the People's
Republic of China. It is a tragedy
for the Kingdom of Nepal as the factories in the eastern region are deprived of
electricity, complicating the fight against poverty there. The opposition of CPN-UML,
international non-governmental organizations, and non-governmental organizations, which
campaigned on behalf of the poor, in the end, only hurt those who they claim to protect. Following the
withdrawal of the project, Arun valley's quest for a link to the rest of the country has
all but vanished along with its overall development programs. The road is a prerequisite
to alleviating rampant poverty in the region. The future of
Arun valley is now bleak. If Nepal and India ever finalize a deal on the Saptakosi High
Dam, the Arun valley and its surroundings will be forever submerged beneath the Kosi's
waters. It will be interesting to see how the anti-Arun lobby will respond to the proposed
construction of what would become the world's highest dam. Arun III was
initially envisioned as a 402 MW run-of-the-river project at a time when Nepal's system
peak was barely 180 MW. "Some should undertake a thorough autopsy of how the 402 MW
Arun III with the 192 km road was born in 1985 at the expense of the feasibility - already
completed - of 225 MW Sapta Gandaki, located near highway north of the Narayanghat; and
yet was still delivered a fatal blow," said Pun. The project was
later scaled down to 201 MW with a total project cost of 797 million dollars. Thanks to
the delay in the project implementation, the cost has now ballooned to 1.82 billion
dollars.
After
nine excruciatingly long years, the Nepali government and the World Bank negotiated an
agreement in June 1993. At the last minute, the baby Arun was aborted a decade after it
was conceived. On August 3, 1995, the World Bank formally announced the death of Arun III.
In a press release by World Bank's president James D. Wolfensohn: "Large complex
projects required institutions like the World Bank to weigh the benefits against the risks
and then decide on their feasibility. The judgment made over a year ago in the case of
Arun came out in favor of the project after substantial internal debate. Irrespective of
whether that was the right or wrong decision at the time, I conclude that under today's
circumstances and with the information at my disposal, the risks to Nepal were too great
to justify proceeding with the project." This ended the epic tale of Arun III, mother
of all hydro projects. But Deepak
Gyawali, water resources expert, resources economist and a former minister, says "it
had lost viscera (heart, lungs and kidneys) by birth and though there were attempts to
present it as a living organ through artificial respiration, now the World Bank took it
off the Resuscitator Machine which has left the policy makers and planners in doubt that
Arun died very recently. Indeed, it was dead by birth." Issues
Against Arun III The anti-Arun
III lobby raised the issue of what would have been a Rs. 7.84 per KWh tariff at a time
when the going rate was just Rs. 3.17 per KWh. Interestingly, today's rate is Rs. 6.73
even without Arun III. The present tariff is Rs. 9.25 per unit for domestic use for those
who consume over 250 units per month and Rs.6.10 per unit for small industries. "The fatal
stab was delivered by the UML led government itself when its sitting Minister of Water
Resources stated before the parliament that at US$ 4000/- per KW Arun III is one of the
costliest projects in the world. The fact that Arun III was really a 402 MW project, and
its cost could easily come down below US$2500 per Kwh was conveniently forgotten,"
said Pun. The US$1.82
billion project received support from many donors. The World Bank, the lead agency,
initially agreed to provide 175 million dollars in loans and the Asian Development Bank
was to chip in another 127 million dollar loan. Japan was to provide a 163 million dollar
loan and Germany a 124 million dollar grant. France, Finland, and Sweden had together
pledged 46 million dollars. Project costs
escalated thanks to the road components attached with it. If the price of the road were
subtracted from the hydro project, experts argue, it is still cheaper than any project in
Nepal. The important fact that the road itself would open the valley to other projects was
completely ignored. When the debate
over the construction of road was going on, no one mentioned that the road would have
opened up the access road for the 307 MW Lower Arun and the 335 MW Upper Arun - dubbed as
one of the best hydro projects in the world. From human
displacement and economic sustainability, to transparency and Nepal's technical
capability, the NGOs raised all kinds of issues against the project. Nepalese NGOs had
then argued that the project would displace more than 450,000 people from Arun Valley but
the Census of 2001 shows that the total population of the entire Sankhuwasabha district
was little over 150,000. "The saga
of Arun III, Nepal's mother of hydro plants, had an inglorious death. When this mighty
Arun-III was felled, no one dared to raise a finger, and no one questioned the
accountability factor, in the true fashion of the friendly smiling Nepalese, life went on
as usual with the load shedding proceeding as before," said Pun. "Just three
months after the cancellation of small 201 MW Baby Arun hydro-electric project, the World
Bank approved the mammoth 1450 MW Ghazi-Barotha hydroelectric project in Pakistan. The
controversial 11 km Jamuna Bridge in Bangladesh, like Nepal one of the world's poorest
nations, was also approved by the Bank. Why is it that 'large complex projects' are
executed in other countries, creating job opportunities for many; but are stalled in
Nepal?" Amid massive
opposition from Nepalese Civil Society, pressure from international non-governmental
organizations and finally a letter of Nepal Communist Party CPN-UML general secretary
Nepal, the World Bank's new president simply found it easier to abort the Arun III project
than wade through all the controversy. A decade after
the abrupt abortion of the project, the country is now starting to feel the pain.
"The debacle of Arun III project was a big loss for the country. There was a huge
waste of our money, resources and energy - which we had invested in Arun III. The eastern
development region, which would have got a big development boost, suffered much. In other
words, the developmental boost which eastern development region would have got has been
sacrificed," said former finance minister and leader of Nepali Congress Dr. Ram
Sharan Mahat, who fought tooth and nail for the project. "Why did
the World Bank dump a project that it had championed all along for ten years during which
the most excruciating details on all aspects of the project (hydrology, geology,
seismicity, GLOF, road stability, environment validity and Macro- affordability) were
studied? No project in the world financed by the World Bank, has been subjected to such
rigorous analysis and debate (restrictions were even placed on helicopters to fly at safe
distance from the river bed so that the mating habits of fishes were not disturbed,"
said Ajit Narayan Singh Thapa, former managing director of NEA. The opportunity cost in
the droppings of Arun III - with no commensurate alternatives is colossal. Arun III would
have produced a firm power of 198 MW (out of the installed capacity of 201 MW) by the year
2002/2003. World
Bank's Role The most awful
side to this story is the failure of the World Bank to convince the government and NGOs.
The Bank seemed to have sacrificed the interest of a small country, which did not have any
one to defend it. For big
developing countries, the World Bank's loan will not matter. They will not care about the
pressure of NGOs. They can do whatever they like. But NGOs and civil society are hurting
the interests of small countries like Nepal - which does not have resources and money of
its own to launch mega projects. In case of
Narmada Sarovar in India, the government pushed the project ignoring the call from
national and international NGOs - which do not have to bear any responsibility. Likewise
in Qinghai Dam project in China, the Chinese government implemented a project on its own
ignoring the unnecessary pressures from NGOs and rights group. How the WB will protect the
interest of poor countries like Nepal remains to be seen. NGOs'
Role The lead role
was taken by Nepal-based agencies like Alliance for Energy, INHURED International, the
Arun Concerned Group with the strong support of the American-based International Rivers
Network, the UK-based International Rivers Network, Intermediate Technology Development
Group, and the Globe International who had very little knowledge about the project sites.
Their influence was so powerful that Nepal's government had little ability to counter
them. The poor people
of Nepal do not know what the international non-governmental organizations with support
from local NGOs were doing to them. These unfortunate and downtrodden people, in whose
name a fund was collected and hundreds of false reports were highlighted, realized only
months after the fact that their dreams of traveling to the rest of the Kingdom had
already been shattered. Once the
project was cancelled, the NGOs and INGOs disappeared with the march of victory leaving
behind a silently mourning population that had been dreaming big about their future and
visualizing the vehicles that would run by their homes. By labeling it
a high cost project, highlighting the dangers of high dams, and pronouncing it
environmentally unsustainable and geographically vulnerable, the anti-Arun lobby was able
to rally strong opposition against the project. Although the project was a simple
run-of-the-river project, it was linked to the storage projects' horror of displacing
hundreds of thousands of people. India's activists of the Narmada Sarovar and
Canadian anti-dam activist Diane Rid also invited Nepal to oppose the project on the
grounds of it being a big reservoir project. The Nepalese
government, for its part, did little to counter the propaganda generated through the
Internet and other media by national and international organizations. Despite the
inaccuracy of their claims, the activists also got support on Capitol Hill. The Bank was
totally encircled, and it was in no position to defend itself from powerful media and
propaganda. "We raised
the right issues regarding the Arun III. The project development approach was wrong.
Although it is still one of attractive and viable sites to generate hydropower, the way
the project implementation was being conceived was wrong. We were against that
approach," said Rajendra Dahal, editor of Himal Khabar Patrika, a fortnightly
magazine and member of Alliance For Energy. "I will still oppose the implementation
of such economically unviable projects." Along with load
shedding and poverty, CPN-UML - which is primarily responsible for the debacle of Arun III
hydropower project - blocked the opportunity to link Nepal and Tibetan Autonomous Region
of China through the shortest road. As the opponent and proponent are still trying to
justify their arguments, the losers are the poor Nepalese of eastern region. As was observed
by Brian Hodgson in his biography Life of Brian Hodgson, British Resident at the Court of
Nepal in 18th century, about Nepalese "my situation is by no means so agreeable as it
might be if these barbarians did but know their own good." |
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