National 4 (Spotlight Weekly)

"Arun III Debacle Was A Huge Loss For The Country"

— Dr. Ram Sharan Mahat

Former finance minister Dr. Ram Sharan Mahat was one of the proponents of Arun III. Dr. Mahat still defends the project as economically beneficial to Nepal. Excerpts:

How do you look back on the debacle over the Arun III project?

The debacle of Arun III project was a big loss for the country. It 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 worst. In other words, the developmental boost which eastern development region would have got has been sacrificed. US$ 150 million from the United States and almost similar amount of money that were promised by international communities for Arun II have also been lost. At the same time, the economic development this project could have catalyzed also has been lost. The project could have given us a lot of self-confidence in terms of our ability to implement big projects. Subsequently, this would have enhanced our national developmental capacity.

What changes do you see following the demise of Arun III?

After the demise of Arun III, we tried to salvage the situation by lining up other projects like Kali Gandaki A together with Arun III. The investment of the private sector helped to avert the power crisis but the cost of other projects particularly the projects run by private sector has been very high. The NEA is forced to buy power from private joint ventures at a cost higher than the selling price of electricity. This has led to huge loss of revenue by the NEA. I think at least two billion rupees is lost each year because of the bulk purchase of high-priced electricity by the NEA. This is a huge loss.

Would there now be different scenario if the Arun III had been implemented?

If Arun III had come into force, it would have raised at least 4 billion rupees as social capital. This would be a net gain to the government and added to the treasury. Thus, this money would have been made available for the development of infrastructures sector like road building, drinking water, education and health.

How could we have benefited from the Arun III?

Half of the Arun III money was made in grants and other half was in soft loans. So according to rough calculation of the time, seventy percent of the money committed to the Arun III were grants for all practical purposes. In other words, this grant money that would have been available for Nepal has been lost. We would have invested this grant money for capital investment project - which would have generated a huge amount of money to the government available for the investment in other sectors. We have lost that opportunity.

Was not Nepali Congress responsible for delaying the project?

Nepali Congress did its best and used its energy to expedite the implementation of the project. In fact, all the negotiations had been done by the Congress government for the implementation of the project. But the UML was opposed to the project. UML General Secretary Madhav Kumar Nepal wrote a letter to the World Bank asking for delaying the decision of the project.

Who is responsible for the debacle of the project?

I entirely blame the UML and its lack of foresight and immaturity for killing the project. After the elections, the UML came to power and they postponed the decision of the project and they did not accord immediate priority to it. In fact, I was the one who had registered the motion of pubic importance in the House of Representatives then regarding the project asking for immediate decision. I knew that any delay could have cost the project, because opposition to the project was increasing particularly from the civil society. There was new management in the World Bank who did not have the same attachment and commitment to the project like the previous one. When the UML government opted for dilly-dallying and unnecessary bargaining with the World Bank, the board of the World Bank cancelled the project.

How do you see the role of civil society, INGOs and NGOs?

These proponents of small projects who are opposed to big hydro projects will be there all the time. They opposed Kali Gandaki A project, Melamchi Project but the government should make the decision and the government should decide what is best for the country. They should be able to resist such pressures. There are many international organizations working against the high dam and hydro projects. We know that without the development of hydropower in Nepal, the prospect of economic growth will be very limited. This is a prerequisite for high economic growth for Nepal, which will mean building big dams and big projects.