A. Foreword: Bheri-Babai and Sunkosi-Marin Diversions, Precedent for other Diversions
Four years after Prime Minster Sushil Koirala inaugurated the Bheri-Babai Diversion Multipurpose Project in April 2015 (Baisakh 2072), Prime Minister KP Sharma (Oli) inaugurated the breakthrough of the 12.2 Km tunnel on 16thApril 2019 (Baisakh 3, 2076) that would divert 40 cumecs (1,437.6 cusecs) of Bheri River water from Hattikhel through the Chure/Siwalik hills into the Babai River at Chiple. It is reported that the deadline for the tunnel breakthrough was achieved a year ahead due to the use of the tunnel boring machine for the first time in Nepal.
An American company built and installed the tunnel boring machine for the Project’s Chinese contractor. At the inauguration ceremony, Prime Minister KP Sharma (Oli) did not forget to mention the Project ‘as a great example of global partnership... synergy between a Chinese construction company, American technology and Nepali manpower.’ The media, however, made no mention whether or not Prime Minister Oli referred to anything about the Bheri-Babai Project’s impact on Nepal’s agriculture and livelihood of the villagers living in that area. The Bheri-Babai Diversion Multipurpose Project plans to irrigate 51,000 ha of Bardiya and Banke farmlands as well as generate 46.8 MW of hydropower.
Five years after the Bheri-Babai tunnel breakthrough, on 8th May 2024 (Baisakh 26, 2081), Prime Minister Pushpa Kamal Dahal with his Ministers and senior officials witnessed the final breakthrough of another diversion project, the 13.3 Km Sunkosi-Marin Diversion Multipurpose Project.
The Project would have a 12 meter high barrage on the Sunkoshi River at Khurkot, a kilometer downstream of the Sunkoshi and Tamakoshi confluence. The barrage would divert 67 cumecs2 (2,408 cusecs) of the Sunkoshi waters through the 7 meter diameter 13.3 kilometer long tunnel to the Marin River, a tributary of Bagmati River, at Kusumtar in Sindhuli district. At the breakthrough ceremony of the tunnel, Prime Minister Dahal said3 ‘This project will provide year-round irrigation to farmlands of five districts of the Madhesh province, and will contribute to the economy and also generate hydropower.’ Beside generating 31 MW of hydropower at the Marin River, the five districts getting year-round irrigation are Bara4, Rautahat, Sarlahi, Mahottari and Dhanusha of the Madesh Province. Bagmati River already has a barrage, built with Nepal’s own meager resources, just upstream of the East-West Mahendra Highway bridge. This Barrage plans to irrigate 122,000 hectares of thirsty farmlands of the five Terai districts on both the left and right bank of Bagmati. Prime Minister Dahal also raised an important but oft-neglected subject of increasing the agricultural production and make the country self-sufficient in food. For the last decade or so our government’s top planners and decision makers have been completely enthralled and engrossed5 with how to produce ten/twenty-five thousand Megawatts of hydropower for export to India. This has, unfortunately, led the nation to unashamedly extend the begging bowl6 to India not only for rice, paddy, wheat and sugar but also for the humble onions when India banned export of these items in preparation for its upcoming 2024 general elections!
Nepal’s 173,000 ha of parched farmlands (51,000 ha in Bardiya/Banke and 122,000 ha in Bara/Rautahat/Sarlahi/Mahottari/Dhanusha districts) would receive round-the-year irrigation once the Bheri-Babai and Sunkosi-Marin diversion projects are completed. No doubt, this would, to a large extent, help the food importing nation to mitigate its food deficiency. An attempt, therefore, is made in this article to delve into the story behind the origin of these two inter-basin water diversion projects. Such water diversion projects would, not only, boost Nepal’s badly neglected agricultural sector but also hopefully set the precedent for other such diversions to irrigate Nepal’s thirsty parched Terai/Madesh. A few such possible key diversion projects7 are: Kali Gandaki-Tinau for Rupandehi/Kapilavastu districts, Sunkosi-Trijuja to expand Chandra Nahar’s additional networks in Saptari, Tamor-Chisang for Morang/Jhapa districts besides, of course, the Sunkosi-Kamala for Siraha/Dhanusha that has been skillfully subsumed as the Sapta Kosi High Dam Multipurpose Project and Sun Kosi Storage-cum-Diversion Scheme. Nepal’s attempts to develop her medium rivers with donors’ assistance for irrigating the thirsty Terai/Madesh have the history of subtle diplomatic ‘NEYTs’ from India: the 60 MW Kankai multipurpose Project, 140 MW Bagmati multipurpose project, 107 MW Bhalubang multipurpose project (62 MW Bhalubang & 45 MW Surai Naka) on West Rapti now subsumed by 280 MW Naumure project, BabaiIrrigation Project, Sikta Irrigation project etc.!
B. Bheri-Babai Diversion Multipurpose Project
i) Death of Nepal’s Babai (Saryu in India) Irrigation project8:
Though the Bheri-Babai Diversion had been identified early on, it got tied down by the Karnali Chisapani Multipurpose Project since Bheri is an important tributary of Karnali and its diversion would impact the benefits accruing from the Karnali Chisapani Project. However, for the last fifty years or so, the 1,800MW(1966)/3,600MW(1978)/10,800MW(1989) Karnali Chisapani Multipurpose Project also got bogged down with various critical issues: energy sale agreement with India, financial arrangement for implementation, displacement of people in the reservoir area and for India the most important ‘arrangements for the management of construction and operation of the project.’ Hence, leaving aside the Bheri-Babai Diversion, Nepal in 1980 requested the World Bank for implementation of the Babai Irrigation Project to irrigate a cultivable command area of a mere 13,300 ha in Bardiya on the left bank of the Babai river. A month before negotiations on November 6, 1980, India’s Executive Director at the World Bank raised concerns that the implementation of the Babai Irrigation Project would ‘adversely affect downstream users9 in the State of Uttar Pradesh.’ The Bank indicated, as per its Operational Manual Statement OMS 2.32, that the rights of the downstream users would be protected while designing the project. India raised no objection when the Credit 1093-NEP for Nepal was approved.
The Bank’s Project Brief of January 17, 1983 mentioned that the proposed Babai Irrigation Project in Nepal would have ‘no significant adverse effect on the water flows of the Babai/Sarju river in India’. In February 1983, prior to the Bank’s appraisal mission, India’s Executive Director at the Bank again raised India’s concern about the proposed project and argued that the Bank’s appraisal mission ‘consider building a reservoir on the Babai River’ to provide irrigation water for both the countries. In March 1983 the Bank’s appraisal mission after visiting the site was of the opinion that the ‘Babai Irrigation Project, even without the storage reservoir, would have no adverse effect on the downstream users in India’. This finding was repeatedly communicated to India’s Executive Director at the Bank who continued to register India’s objection to the project.
The Bank in April 1984, despite its own ‘no adverse impact’ findings, suggested that Nepal have a dialogue with India on the use of the waters of the Babai River so that the project could be processed. Nepal, well aware of India’s diplomatic ‘NEYT’, was not keen on this course of action but agreed that the Bank, to solve the impasse, could provide India with the project’s technical parameters. In September 1984 the Bank provided India with the summary of the Appraisal Report and technical discussions were held in February 1985 at New Delhi between the officials of the Bank and the Government of India. India requested additional information on the water flows of Babai River and these were provided in July 1985.
Then in October 29, 1985, the Bank as per its Operational Manual OMS 2.32 informed India that despite her concerns the Bank ‘intended to process the project’ and gave India six months (up to April 28, 1985) to register final comments on the project. Just three days before the expiry of the dateline on April 25, 1985 India informed the Bank that, based on the information provided, it appeared that the Babai Irrigation Project would be harmful to its interests and once more recorded her objection.
As an international multilateral institution, the World Bank had been, so far, playing by the rule of the books. After conveying India’s objection to Nepal, the Bank then abruptly made an about turn and stopped playing the ‘honest broker’ role. Despite its own finding that the Babai Irrigation Project ‘would have no adverse effect on the downstream users in India’ and despite the six months’ notification to India that the Bank ‘intended to process the project’, the Bank in June 1986 shamelessly informed Nepal about ‘GOI’s objection to the Project as well as the Bank’s decision to postpone further its processing.’ The Bank’s lame excuse was the ‘serious budgetary constraints faced by HMGN and the ongoing dialogue for the prioritization of projects carried out under the thenproposed Structural Adjustment Credit.’ The proverb ‘Jiske hath me lathi, uske bains-Whosoever has the stick in hand, owns the buffalo.’ aptly summed up Nepal’s travails on the Babai Irrigation Project.
ii) India’s ‘Perpetual Nightmares10’ on Nepal’s ‘Diversion Upstream’:
The following April 24, 1983 minutes11 of the meeting between Nepal’s Water Resources Secretary Madhusudan Dhakal and India’s Irrigation Secretary MG Padhye provide insights into India’s ‘perpetual nightmares’regarding Nepal’s construction of ‘diversion upstream which would reduce the supply and ultimately affect the irrigation beneficiaries in India’:
‘The Engineer-in-Chief, UP, Shri D.R. Singha stated that a pump canal for serving 25000 ha in UP territory was under construction and it was learnt that HMG of Nepalwas constructing a barrage for diversion upstream which would reduce the supply andultimately affect the irrigation beneficiaries in India. The Director General of Irrigation, HMG of Nepal stated, Nepal was irrigating Bardiya district since a long time and utilizing the waters. A barrage was being planned to improve the management of the irrigation system which is already existing in the area. The Secretary, Irrigation, GOI requested for the exchange of data on existing and planned uses as was earlier agreed to. This would help in quantification of problems of sharing of water resources. He also requested that details of the storage study may bemade available. He explained that what is uneconomical from one point of view could become economical in an entirely another context, as the criteria for economical evaluation may also differ. Secretary, Water Resources, HMG of Nepal stated that thiswas not agreed before and reiterated the earlier stand.’ Despite the World Bank abandoning Babai Irrigation Project at the last minute, not unlike the Arun III hydropower project after a decade of involvement, and despite the above ‘sleepless night queries’ of India, Nepal through her own meager resources started construction of the Babai Bridge cum Weir in BS 2045/046 (1988/1989). The Babai bridge cum weir together with the 28 km main canal was completed in BS 2053/054 (1995/1996) at a cost of Rs 63 crores.
iii) Resurrection of the Bheri-Babai Diversion Project:
It is indeed heartening to note that the Irrigation Department started discussion on the economic viability12 of letting the Bheri water continue to flow into Karnali river or divert it into Babai river. The average generating head at Chisapani dam is about 200 meter but that at the Bheri-Babai diversion only 100 meter thus the Bheri-Babai diversion would generate only 50% of the energy attainable at Chisapani dam. Though the Bheri-Babai project area can also be fed by the Karnali Chisapani Project’s proposed eastern canal system, if the Karnali project is implemented ‘soon’ then the Bheri-Babai diversion would not be viable. But if the Karnali project takes a ‘long time’ then the diversion would become viable. Nepal requested India to accept the World Bank’s 24 volume 1989 report of the 10,800 MW Karnali Chisapani Multipurpose Project but India refused13 expressing the following reservations in the Report : i) Probable Maximum Flood value ii) sedimentation rate iii) Seismicity iv) dam height/reservoir capacity be fixed to meet the existing and committed Indian irrigation demand as well as take into consideration the probable upstream storage reservoir sites on Karnali v) initial optimum installed capacity to be in the range 5,400 MW to 7,200 MW with provision for ultimate installed capacity of 10,800 MW and vi) studies also of 500 MW generating unit size.
Thus, the Bheri-Babai diversion got resurrected in BS 2064/065 (AD 2008/09) when the Irrigation Department initiated14 the detailed design study and the National Planning Commission approved the project in BS 2065/066 (AD 2009/’10). The Bheri-Babai Diversion Project was established at Birendranagar/Surkhet in BS 2068/069 and Prime Minister Sushil Koirala inaugurated the Project works in Baisakh 2072. The agreement with the Chinese contractor to drill the 12.2 Km tunnel using the Tunnel Boring Machine for the first time in Nepal was signed on 15th Magh 2072 (29th January 2016). Four years later in Baisakh 2076 Prime Minister KP Sharma (Oli) inaugurated the breakthrough of the tunnel. Unfortunately, due to several shortcomings in the project formulation, the Bardiya/Banke farmlands are not expected to get Bheri waters for another two three years.
C. Sunkosi-Marin Diversion Multipurpose Project
i) Bagmati Irrigation Project: During 1967-1972 UNDP-FAO carried out the Master Plan of Bagmati Irrigation Project to irrigate 122,000 ha in two phases. Phase I comprised of two Stages with the first Stage constructing the Bagmati Barrage and irrigating 45,600 ha in Rautahat and Sarlahi districts. The second Stage involved irrigating 22,400 ha in Bara. This meant converting 68,000 ha of rain-fed cultivable land into irrigated land. Phase II involved construction of the 117 meter high Bagmati Dam at Noonthar, about 3 km upstream of the present East-West Mahendra Highway bridge and irrigate through the Eastern Main Canal another 54,000 ha in Mahottari and Dhanusha.
Nepal, thus, in 1973 requested the World Bank assistance for the Bagmati Multipurpose Project. The Bank staff determined ‘the Project would likely adversely affect the availability of irrigation waters downstream for users in India.’ However, the Bank was prepared to finance the Feasibility Studies of the Project out of the Funds from the ongoing Birganj Irrigation Project (Development Credit No. 373-NEP) provided the Study ‘undertakes to ensure availability of water at current levels to downstream users.’ The Bank wanted Nepal to discuss the Bagmati Project with India. But Nepal preferred to settle the question of sharing waters of particular rivers in the larger context of relations between the two countries. Due to unsettled riparian issues, the World Bank withdrew from the Feasibility Study of Bagmati Project.
ii) 1981 – Bagmati Multipurpose Project Study by German Mission: Nepal then approached the Government of Federal Republic of Germany and in 1981 the German Mission carried out the Phase 1 Study15 of the Bagmati Multipurpose Project and submitted the following report:
Dam and Reservoir: An embankment type dam of 117 meter high located in the gorge of the Siwalik Hills before Bagmati breaks onto the Terai creating a gross reservoir capacity of 2,400 million cubic meter. The reservoir extended more than 20 km up the Bagmati River along the Kayan Khola and Jamuna Khola with a maximum width of about 5 km. The tributaries Marin, Basan, Chiruwa, Goth, Shokan and Tinkuna Kholas will also be affected. The reservoir will inundate 6,350 ha of cultivatable land including some villages. It was estimated at that time that some 10,000 people living in the reservoir area will have to be resettled.
Hydropower and Irrigation: A 140 MW (4x35 MW units) capacity hydropower plant will produce 540 GWh of energy annually. The connection to the under-construction 132 kV Hetauda-Janakpur-Biratnagar transmission line is only 4 km away. The proposed irrigation area is on either side of Bagmati River between the Nepal hills and the Indian border bounded in the west by Pasaha River, South by the Gandak Canal projecting eastwards across the Bagmati River and North-east by Janakpur and the Marha River. These areas comprise the five districts of Bara, Rautahat, Sarlahi, Mahottari and Dhanusha. The area has existing irrigation systems still in operation, Jhanj Project on the west bank of Bagmati and Manusmara Project on its east bank. The total estimated net irrigable area is about 120,000 ha.
iii) 1983 – India minutes Bagmati Barrage would ‘adversely affect Committed and Proposed Downstream Uses’: India’s perpetual nightmares/concernsregarding the Bagmati Barrage is recorded in the following April 24, 1983 minutes16 of the meeting led by Nepal’s Water Resources Secretary Madhusudan Dhakal and India’s Irrigation Secretary MG Padhye:
Secretary, Irrigation, GOI referred to the earlier discussion on the subject of the barrage being constructed over river Bagmati in Nepal and mentioned that since this project involved consumptive uses of water it would adversely affect the already committed and proposed downstream uses in India. In this connection he also mentioned that in India a project with a barrage over the Bagmati is under construction which has a large irrigation potential. The Chief Engineer, Mr. Harshman Shrestha, Department of Electricity, HMG/Nstated that only preliminary study for a dam had been done. Feasibility study had not been completed. The preliminary studies however suggested the feasibility of a dam in the area. Appreciating the concern of India, Secretary, Water Resources, HMG/N mentioned that if a formal request is made by GOI to HMG/N India’s interest would betaken into account while making the feasibility study. He informed that the height of the dam at Noonthar would be 117 metres but storage and other details of reservoir, maps, etc had not been prepared. Secretary, Irrigation, GOI again enquired if a barrage was being constructed over river Bagmati and if so, the scope of the project, and the extent to which the fair weather flows would be affected. Secretary, Water Resources, HMG/N replied that the diversion was taken up and the diversion would be quite upstream of the Indo-Nepal border. This diversion would not affect the uses in India as there would be regeneration of water. Nepal started construction of the Bagmati Barrage with her own meager resources. Only in June 1987 the Saudi Development Fund17 of Riyal 30 million financed the western main and sub-main canals for Rautahat district. India does admit to ‘initial objection’18 to Saudi funding for Nepal. It is likely that the Saudis turned a deaf ear to India’s objection as the Nepalese Muslim population in Rautahat is considerable19. Another package of Saudi Riyal 74 million was provided in 1995 mainly to reconstruct the barrage and canals devastated by the 1993 flash flood that had also washed out the penstock pipes of Kulekhani powerhouse. Further assistance of Riyal 40.6 million in 1997 and 56.25 million in 2007, thus totaling 200.85 million Riyal, was provided to increase the irrigation coverage and the associated infrastructures.
iv) Sunkosi – Kamala Diversion at Kurule from Sunkosi River
a) 1985 – Master Plan Study of the Kosi River Water Resources Development: This 1985 Master Plan Study of the Kosi River, funded by Japan International Cooperation Agency (JICA), recommended two top priority schemes to uplift the socio-economic status of the Nepalese living in that region: the Sunkosi Multipurpose Irrigation and Arun 3 Hydropower Projects for immediate implementation of feasibility study. The Study categorically pointed out that ‘diversion of water from the Sunkosi to Kamala is allowed according to the Agreement between HMGN and India.’ The Study also pointed out that as the 536 MW of Sunkosi No. 3 is too large for Nepalese domestic needs at that time, implementation of the irrigation scheme in the Terai area is urgently required.
b) Sunkosi – Kamala Diversion: There are three components to this trans-basin diversion: a 48.9 meter high diversion concrete gravity dam on Sunkosi at Kurule, a 16.6 km diversion tunnel with 72 cumecs design discharge capacity and a 61.4 MW powerhouse capable of producing annually 511 GWh. The Sun Kosi-Kamala diversion feeds into a tributary of the Kamala river on which a 51 meter high dam is envisaged about 20 km upstream of the Chisapani village. A 32 MW powerhouse at the dam generates 121 GWh annually. A 3 meter high re-regulating barrage at Chisapani will provide irrigation to a net command area of 175,000 ha – 108,000 ha on right bank in Dhanusha and 67,000 ha on left bank in Siraha.
c) Sunkosi- Kamala Diversion Subsumed by Saptakosi High Dam: Instead of requesting the multilateral and bilateral donors for implementing the top priority Sunkosi-Kamala Diversion, Prime Minister GP Koirala in December 199120 gave his nod to the Indian proposal for preparation of the Detailed Project Report of Saptakosi High Dam, India’s top priority project whose report21 she had already completed in 1983. In 1996 during Prime Minister Sher Bahadur Deuba’s visit to New Delhi, Nepal agreed to include the Sunkosi-Kamala Diversion in the Joint Team of Experts’ (JTE) meeting on Sapta Kosi High Dam.At the October 2004 JCWR meeting at New Delhi, India raised the multipurpose projects on Kamala and Bagmati. Though Nepal pointed out the social and environmental problems due to presence of large settlements in the proposed reservoir areas, it was agreed that ‘the feasibility study of the Kamala and preliminary study of Bagmati Multipurpose Projects would also be carried out by the Joint Project Office of Saptakosi–Sunkosi Projects to ascertain the likely constraints in implementation of these projects so that these could be appropriately addressed.’ Nepal’s top priority project, the Sunkosi-Kamala Diversion, was thus subsumed by the Saptakosi High Dam and tagged as the Saptakosi High Dam Multipurpose Project and Sunkosi Storage-cum-Diversion Scheme.
v) Birth of Sunkosi – Marin/Bagmati Diversion: In such an environment, Madhav Belbase, an engineer at the Irrigation Department in BS 2066/067, remembers his senior at the Department, Durga Shankar Sharma, telling him about a JICA official who told him that Nepal should explore the possibility of the Sunkosi-Bagmati Diversion. It should be noted that though JICA’s 1985 Master Plan Study of the Kosi River identified the Sunkosi-Kamala Diversion as Nepal’s top priority irrigation project, there was no mention at all of the Sunkosi-Bagmati Diversion. This Sunkosi-Bagmati Diversion aroused keen interest in Madhav Belbase who, after referring to Google maps, found out that only 12 km of tunneling was required to divert the Sunkosi waters into Marin, a tributary of Bagmati. Madhav Belbase along with Shiva Kumar Sharma must be given the full credit for pushing this Sunkosi-Marin Diversion concept into the project implementation stage.
Though the Bagmati Irrigation Project has completed works to cover irrigation for 45,600 ha of farmlands, during the dry season it can provide irrigation to only 13,000 ha. Hence, the Sunkosi-Marin diversion will be a god-send blessing to provide round-the-year irrigation to 122,000 ha of farmlands in the five districts of Bara, Rautahat, Sarlahi, Mahottari and Danusha in Terai/Madesh.
D. Nepal’s Top Priority – a Decade of Hydropower Development (2016 – 2026) OR a Decade of Agriculture Investment (2024 – 2034):
i) Nepal’s Top Priority – Hydropower Development Decade (2016 – 2026): With the 10,000 MW in 10 years and 25,000 MW in 20 years reports published, Nepal, in order to make the great leap forward22, launched the ambitious 10,000 MW of hydropower in 10 years under the Electricity Development Decade 2016/026 flagship in February 2016. This Electricity Development Decade envisaged commissioning 133 hydropower projects23 totaling 9,935 MW: 2,587 MW of 117 run-of-river projects, 1,975 MW of 5 peaking run-of-river projects and 5,373 MW of 11 storage projects. Apparently Nepal’s great leap forward decade caused hiccups in New Delhi’s South Block. Citing electricity trade involved ‘issues of Strategic, National and Economic Importance’, India immediately on December 5, 2016 issued the ‘2016 Guidelines on Cross Border of Electricity’. Two years later, repealing the 2016 Guidelines, India on December 18, 2018 issued the ‘Guidelines for Import/Export (Cross Border) of Electricity-2018’. And three years later, India further polished the 2018 Guidelines by issuing on February 27, 2021 the ‘Procedure for Approval and Facilitating Import/Export’ wherein the controversial Clause 6.3 on Eligibility stated: ‘Indian entities may import electricity from the generation projects located in neighbouring country(ies) …………., provided that the generating company is not owned, directly or indirectly by any natural/legal personality(ies) whose effective control or source of funds or residence of beneficial owner, is situated in/citizen of a third country with whom India shares land border and that third country does not have a bilateral agreement on power sector cooperation with India.’
Such eligibility clauses in the Procedure for Approvalare clearly targeted at Nepal’s swarms of financially muscular Chinese companies working in various hydropower projects. These Chinese companies are far more competitive and technically sounder24 than the upcoming Indian companies. Hence, India’s Guidelines and Procedures are specifically targeted at Chinese investments in Nepal’s hydropower by hanging the large signboard: ‘Achtung! You are trespassing over private property!’ Then on April 2, 2022 Prime Minister Sher Bahadur Deuba signed the Indo-Nepal Joint 2022 Vision on Power Sector Cooperation with Prime Minister Narendra Modi in New Delhi. Ignoring the restrictive Guidelines and Procedures, in keeping with the 2022 Vision on Power Sector Cooperation, Nepal went ahead and on January 4, 2024 happily signed away the Long-Term Power Trade Agreement with India that stated ‘Both Parties shall strive to increase the quantum of export of power from Nepal to India to Ten Thousand Megawatt (10,000 MW) within a timeframe of ten years ……’ India ensured that her controversial Procedure is enshrined in the Agreement by inserting ‘In implementing this Agreement both parties shall abide by their applicable laws, regulations and Procedures related to cross border trade in power’.
At the recent Third Nepal Investment Summit in Kathmandu inaugurated by Prime Minister Pushpa Kamal Dahal on April 28, 2024, Nepal called on the foreign investors25 to invest in her energy development roadmap of generating 28,500 MW in 12 years: consuming 13,500 MW by herself and exporting 10,000 MW to India and 5,000 MW to Bangladesh. At the Investment Summit, Nepal revealed26: a) its installed hydropower capacity as 2,910 MW of which 2,214 MW in the private sector b) 131 hydropower projects of 3,397 MW capacity under construction c) 138 hydropower projects of 3,615 MW capacity under financial closure negotiations and d) another 258 projects with 19,623 MW capacity licensed and at various stages. This means Nepal will shortly have 6,307 MW of hydropower projects in operation with another 3,615 MW achieving financial closures and thousands more Megawatts of the licensed 19,623 MW projects heading towards financial closures. With both parties abiding by their ‘applicable laws, regulations and Procedures’ in Nepal’s strive to export 10,000 MW within 10 years, with the global commitments already made at Glasgow’s COP 26, India is extremely pleased27 that Nepal is making Herculean efforts to push renewable hydropower into her networks-sans any quid pro quo from India!
ii) Finally Nepal’s Agriculture Investment Decade (2024 – 2034) Hesitantly Raises its Head: As early as 1985, JICA’s Kosi Master Plan Reporthad stated28 that due to high 76.5% production of the nation’s harvest by the Terai/Madesh areas, the 1981/82 crop production of Nepal exceeded 20.8% of the total demand. The report continued ‘Future food supply appears to be decreasing with an estimated food grain deficit of 41.7% of the total demand by the end of the century.’ With the 1990 regime change from the monarch’s Panchyat to so called peoples’ Democracy, our omniscient and omnipotent political leaders, instead of tackling the country’s food grain deficit, were far busy dancing29 to the musical chairs’ tune on who gets the Singha Durbar chair. They bothered neither with putting food on the empty ‘thalis’ of the hungry Nepalese families nor with the burning problems of ever increasing unemployed30 youths. By 2023 Nepal, a country that once proudly exported her grains, was forced to request31 India for ‘1 million tons of Paddy, 100,000 tons of rice and 50,000 tons of sugar’ when the Indian government banned export in preparation for its upcoming 2024 general elections. This begging bowl to India extended even to the humble onions32 in December 2023.
Agriculture is the backbone of the Nepalese economy contributing33 ‘around one-third of the nation’s GDP and provides employment to two third of the population. But, the contribution to overall GDP has declined over time. Agriculture contributed to 36.64% of the GDP which then decreased to 23% by 2022. Similarly, the employment in agriculture has decreased from 73% in 2005 to 62% in 2021. Although the sector still contributes to a significant proportion of the overall GDP and a lot of population is engaged in agriculture, the government has allocated only NPR 58.98 billion (USD 445.21 million) for the agriculture sector in the fiscal year 2023/24 AD, out of a total size of NPR 1.751 trillion (USD 13.20 billion) which amounts to only 3.36% of total budget. …………. Government investment is crucial in elevating rural livelihood and increasing agricultural productivity through agricultural support services, improved irrigation services for efficient water management, access to high-quality seeds, farm equipment, trainings in improved farming techniques, and value chain infrastructure.’
After relentlessly pursuing hydropower development from the Panchyat days, finally Nepal half-heartedly launched the Decade (2024–2034) of Agriculture Investment34 in its 2024/2025 Budget. The Budget states that contract farming in collaboration with farmers and businesspeople will be promoted and those engaged in commercial farming and animal husbandry ‘tax exemptions on purchase of machinery and spare parts as well as interest subsidies on loans’ will be provided. Though the 2024/2025 Budget introduced ‘A Decade (2024–2034) of Agriculture Investment’, Nepal’s ‘Decade (2016–2026) of Hydropower Development’ with ‘1,200 MW Budhigandaki, 625 MW Dudhkoshi, 417 MW Nalgadh, 280 MW Naumure Projects on the cards plus conducting the Feasibility Study of 10,800 MW Karnali Chisapani Hydropower Project’ farovershadows the miniscule investment in Agriculture development. Many, thus, believe that the Nepal government is barking up the wrong Hydropower tree!
E. Final Words: More Hydropower Projects for More Export to India Bhutan-style OR More Inter-basin Diversions for More Irrigation in Terai/Madesh India-style?
There was a time when a strong lobby in Nepal advocated duplicating the Bhutan Model of hydropower development with India. Under that Model, Bhutan has so far developed around 2,326 MW of hydropower35, exporting over 75 percent of that to India and earning 40% of its GDP. Thus, Bhutan’s tiny 0.78 million people36enjoys a per capita income of US$ 3,266/ (2021 World Bank figure) making it the richest country in South Asia. But Nepal’s 30.9 million people, with a paltry per capita income of US$ 1,337/ (2022 World Bank figure), is the poorest in South Asia. Despite being the richest South Asian country by exporting hydropower to India, ‘Of late, Bhutan is witnessing a new challenge-a massive exodus. In the last two years, more than 11,000 Bhutanese youths got their education visas from Australia alone. Several experienced and mid-level civil servants, teachers, medical specialists, and employees of private and state-owned enterprises have also left the country in search of better opportunities. For a country with a population of less than 800,000, a shortage of manpower is being felt in every sector.’37 The World Bank’s Report38 says that ‘Bhutan’s labor market is at a critical juncture, facing challenges in creating jobs in the private sector’. Despite the huge electricity export to India, foremost for the Bhutanese is more jobs for young educated people – a situation not dissimilar to Nepal. This message of more jobs was stridently given by the people of India during their 2024 general election when the Bharatiya Janata Party was humbled from the domineering 303 to 240 MPs in the 543 House Lok Sabha. Nepal’s major political parties, however, remain both deaf and dumb to discuss/debate why over 2.2 million Nepalese are forced to work abroad on ‘cheap, dirty and dangerous’ jobs to feed their families back home in Nepal. Some, to keep their kitchen fires burning at home, have recently been forced to become ‘Lahures’ in the Russian army only to be pummeled by Ukraine with the arms supplied by the pleased Western arms suppliers. The remittances, 30% of Nepal’s GDP, sent by these Nepalese working abroad keeps the Nepalese economy afloat for the political parties to relentlessly vie for the Singha Durbar chair!
Bhutan has very well demonstrated that hydropower export does not create jobs for the exporting country. That is, Nepal’s great leap forward with the Decade of Hydropower Development to export 10,000 MW in 10 years to India would not create jobs in Nepal. Jobs would, definitely, be created for the country importing cheap renewable Nepalese and Bhutanese hydropower. Yet, Nepal’s key policy and decision makers continue to harp the same by gone Panchyati slogan of Nepal getting rich through hydropower export to India. They insist39 ‘The first benefit is the energy royalty that Nepal gets. For example, in the case of Arun-3, the developer pays two percent of what it gets from the energy sold in the Indian market in the first 15 years. In the next 15 to 30 years, it pays 10 percent energy royalty. Two, it pays capacity royalty at the rate of Rs 100 per kW for the first 15 years and Rs 1,000 per kW after 15 years. Third, it pays income tax. Fourth, we get 21.9 percent of the total energy produced by Arun 3 for free. Fifth, the entire project is handed over to the government after 30 years.’ Bhutan has proved that this reliance on hydropower as Nepal’s growth engine is totally untenable. Former Minister Dipak Gyawali has aptly termed it ‘ rent-seeking’ mentality. There is not a word on the employment the 900 MW Arun-3 project creates for the youths in Nepal. In 2021, Nepal’s agriculture sector provided employment to 63% of the Nepalese population. If round-the-year irrigation is provided in the Terai/Madesh, not only these 63% of the Nepalese will continue to work in agriculture and not be forced to migrate abroad for enlistment in the Russian army but they would also help to make the country self-sufficient in food.That is why CK Lal, a veteran political commentator, finds40 the Nepal Government’s pursuit of Hydropower ‘the perilous path to quick-fire prosperity’! On Power Sector Development, Lal believes ‘Beyond ensuring energy security for the country, further investment in hydroelectricity is best avoided ……. develop its institutional capacity to handle geo-economic rivalry that invariably comes into play ….. Exporting electricity to Bangladesh is a goal worth pursuing.’ On Agriculture, Lal further added ‘…. a country that cannot feed itself has to perforce hawk its independence to keep itself afloat.’
In the 1950s and 1960s India was forced to ‘hawk her independence’ by importing cheap American grains under the Rupee-paid American PL-480 (Public Law) Program. But in two decades by 1971, India stopped that import when her Kosi (8.5 lakhs ha), Gandak (16.5 lakhs ha), Bhakra Nangal (40.0 lakhs ha) and Beas (21.0 lakh ha) irrigation Projects ushered in not only the famed Green but White (AMUL41) revolutions as well. Should Nepal, shamelessly, ‘hawk her independence’ for even the humble onions? Should Nepal for ‘quick-fire prosperity’ take the ‘perilous hydropower path’? Or should Nepal priotize her ‘Decade of Agriculture Investment’ instead of pursuing the ‘1,200 MW Budhigandaki, 625 MW Dudhkoshi, 417 MW Nalgadh, 280 MW Naumure Projects on the cards plus conducting the Feasibility Study of 10,800 MW Karnali Chisapani Hydropower Project’? During this Decade of Agriculture Investment (2024-2034) shouldn’t Nepal implement more inter-basin diversions like the Kali Gandaki-Tinau for Rupandehi/Kapilavastu, Sunkosi-Trijuja to expand Chandra Nahar’s additional irrigation networks, Tamor-Chisang for Morang/Jhapa to provide irrigation for more Terai/Madesh farmlands? This is NOT the million dollar denominated question but a SIMPLE one Nepalese Rupee tagged question for our omniscient and omnipotent political leaders.
References
1. The writer wishes to acknowledge with thanks the inputs provided by the following: Madhav Belbase (former DG/Irrigation Department, former Secretary Ministry of Water Supply and presently Member Public Service Commission), Shiva Kumar Sharma (former DG/Irrigation Department) and Dr. Hari Prasad Pandit (Professor, Institute of Engineering, Pulchowk, Water Resources Specialist).
2. This design capacity of 2,408 cusecs is three times the capacity allocated for Parsa/Bara/Rautahat under the Gandak Agreement: Nepal Eastern Canal (Parsa/Bara/Rautahat) gets 850 cusecs and Nepal Western Canal (Nawalparasi) 366 cusecs – amounts Nepal has never received since the handover of canals in June 1976.
3. Kathmandu Post, May 9, 2024 – Sangam Prasai & Raj Kumar Karki
4. The 1959 Gandak Agreement was supposed to supply Gandak waters for 1,03,500 acres for Parsa, Bara and Rautahat through the Nepal Eastern Canal and for Nawalparasi through the Nepal Western Canal. But the 1959 Agreement was shrewdly noncommittal on the quantity of Gandak waters Nepal was to get. But for her own requirement, India incorporated the controversial month-wise Schedule of Water Requirements in the treaty. Only when the World Bank came on board for the Birganj Irrigation Project and questioned Nepal’s allotment, did Nepal and India agree in October 1971 to 850 cusecs (23.65 cumecs) for Nepal Eastern Canal and 366 cusecs (10.18 cumecs) for Nepal Western Canal. Since the handover of the Gandak canals to Nepal in June 1976, Nepal has never availed the 850 cusecs of Gandak waters. On the other hand, India’s Western Canal (Bihar and UP) capacity is 18,000 cusecs (500.83 cumecs) and Eastern Canal (Bihar) capacity 15,645 cusecs (435.31 cumecs). Thus forcing Nepalese engineers in the Gandak Project to quip ‘Nepal ko lagi Kulo, Bharatle afno lagi Nadi’!
5. The UCPN-Maoist led coalition government with CPN-UML on Mangsir 18, 2065 (December 3, 2008) constituted a 15 Member Task Force with Somnath Poudel (ex-WECS Secretary) as Coordinator and Lilanath Bhattarai as Member-Secretary to formulate the 10,000 MW in 10 Years Report. Only nine months later, not to be outdone the next CPN-UML led coalition government with Nepali Congress first truncated (to share the poor nation’s loaves and fishes) the Water Resources Ministry into that of Energy and Irrigation and then on Bhadra 10, 2066 (August 26, 2009) constituted another 12 Member Task Force with by Kishore Thapa (sitting WECS Secretary) as Coordinator and Bhojraj Regmi as Member-Secretary to formulate the 25,000 MW in 20 years Report.
6. Krishana Prasai in Kathmandu Post August 11, 2023 and December 19, 2023
7. As identified to the writer by Madhav Belbaseji
8. World Bank’s Nepal and International Inland Waterways Issues, September 1987.
9. Shyam Saran, India’s ambassador to Nepal just before completing his Nepal tenure to become Secretary of External Affairs Ministry used the same argument on Nepal’s Sikta Irrigation Project to the media on July 9, 2004 ‘…. Sikta Irrigation Project in isolation by HMGN would adversely affect the Utraula and Dumeriagunj Canal Project as also the Saryu Canal Projects downstream in India. …… Sikta Irrigation Project could be considered if the storage at Bhalubang is constructed…. which would ensure availability of water during non-monsoon period for the Indian operation. Embassy of India has requested HMGN not to proceed with the execution of the Sikta Irrigation Project till both Governments have reached an agreement on the subject.’ – Spotlight July 16, 2004. Such public statements by the would-be Foreign Secretary of India drove away the European Union from Sikta Irrigation Project. Though Nepal funded the Sikta project with her own resources, unfortunately the canal is still inoperative due to Nepal’s poor supervision and contractual implementation. However, instead of implementing the Bhalubang Multipurpose Project for providing irrigation to Kapilavastu, Nepal has incorporated, in her latest 2024/025 Budget, the 280 MW Naumure Storage Project just upstream of the Bhalubang Project on West Rapti river. It should be noted that Prime Minister PK Dahal, during his first Premiership in 2009, had also given his green signal to the 240 MW Naumure Project during his India visit.
10. Instead of using this ‘perpetual nightmares’ of India as the Strategic Tool by Nepal, Prime Minister Sher Bahadur Deuba generously made that Tool dysfunctional by signing away the ‘India-Nepal Joint 2022 Vision Statement on Power Sector Cooperation’ on April 2, 2022 with Prime Minister Narendra Modi. This Joint Vision on Power Sector Cooperation is another form of Bhutan Model. The 2022 Joint Vision prioritizes Nepal’s Water for Hydropower and Not for Drinking and Producing Food!
11. Avtar Singh Bhasin. Nepal – India Relations. 2005. Geetika Publishers, New Delhi.
12. Poudyal, S. June 1992. Irrigation Profile in Nepal – Training and Research Branch, Irrigation Department.
13. 8th Committee on Karnali meeting of March 1991 between BK Pradhan Nepal’s Secretary/Water Resources and S Rajgopal India’s Secretary/Power. As Karnali Chisapani is an extremely important strategic project for India, India’s ambassador to Nepal, Ranjit Rae (2013 – 2017), in his 2021 book ‘Kathmandu Dilemma’ admits that India has ‘held in abeyance’ the 10,800 MW Karnali Chisapani Multipurpose Project. However, with Prime Minister PK Dahal now wanting to revive Karnali Chisapani (Kathmandu Post August 22, 2023), the go-ahead to NEA was given in November 2023 to conduct a fresh study ‘to ensure that the Project is feasible and ready so that we can get investment to develop it.’ – NEA MD Kulman Ghising
14. According to Shiva Kumar Sharma, former DG/Irrigation Department, Umakant Jha, DG/Irrigation Department, initiated the Bheri-Babai Diversion Project by sanctioning Rs 10 lakhs to conduct its studies. Shiva Kumar Sharma (first Manager of the Bheri-Babai DiversionProject), Madhav Belbase (who succeeded SK Sharma as Project Manager) and Shiv Kumar Basnet were instrumental in resurrecting and implementing the Bheri-Babai Diversion Project.
15. This Phase 1 Report was prepared and submitted in February 1981 by HMG’s Departments of Electricity/Irrigation/Agriculture (ED, ID, AD), German Agency for Technical Cooperation (GTZ), Federal Institute for Geosciences and Natural Resources (BGR), Snowy Mountains Engineering Corporation (SMEC) and Electricity Generating Authority of Thailand(EGAT).
16. Avtar Singh Bhasin. Nepal – India Relations. 2005. Geetika Publishers, New Delhi.
17. Sinchai Diary BS 2065, Department of Irrigation, Ministry of Water Resources, Government of Nepal.
18. Verghese, BG. Waters of Hope. 1990. Oxford & IBH New Delhi.
19. Thapa, Dorak Bahadur – formerly of Irrigation Department, during informal talks.
20. Bhasin, AS. Nepal’s Relations with India and China. 1994. Siba Exim Pvt. Ltd. Delhi. Nepal Gazette Vol. 41 No.36 Kathmandu, December 29,1991. Prime Minister GP Koirala, sans his Water Resources Minister and Secretary, flew to New Delhi with his jumbo 72 member team in December 1991. Besides signing the controversial Tanakpur MOU, Prime Minister Koirala made agreements on Nepal’s all major water resources projects: Karnali (Chisapani) Multipurpose Project, Pancheshwar Multipurpose Project, Sapta Koshi High Dam Multipurpose Project, Burhi Gandaki Project, Kamala and Bagmati Schemes.
21. Comprehensive Plan of Flood Control for the Kosi Sub-basin. December 1983. Ganga Flood Control Commission. Ministry of
Irrigation. Government of India.
22. The Leap that the veteran political commentator, CK Lal, calls ‘the perilous path to quick-fire prosperity’!
23. Ministry of Energy, Government of Nepal’s white paper of February 2016 on Electricity Development Decade 2016/’026
24. As demonstrated in the 456 MW Upper Tamakoshi Hydropower Project by the Lot 1 (penstock pipe) Indian Texamaco company whose contract, due to long delays, had to be terminated.
25. The Summit expected foreign companies and stakeholders from different countries, including China, India, Canada, Norway, South Korea, Germany, Austria, Italy, Sweden, United Kingdom and Brazil to participate. Many believe this was not unlike that of Som Sharma’s ‘sattu’ dream
26. Ganesh Karki, President/Independent Power Producers’ Association of Nepal (IPPAN), speaking about IPPAN’s Fourth Himalayan Hydro Expo in Kathmandu on 24th to 26th April 2024 – Rising Nepal February 8, 2024.
27. In fact, the Embassy of India, Kathmandu ‘in collaboration with the Investment Board of Nepal (IBN) and Nepal India Chamber of Commerce and Industry (NICCI) organized a Post Investment Summit India-Nepal B2B Meet in Kathmandu’ on April 30, 2024.
28. JICA’s Master Plan Study on the Kosi River Water Resources Development, March 1985, submitted to Ministry of Water Resources, HMGN
29. The urge to dance to the tune of musical chairs is very well illustrated by the 27 governments in 34 years from 1990 to 2024 that included the governments of King Gyanendra Bickram Shah and Khilendra Prasad Regmi, Chief Justice of Supreme Court!
30. This led to the ‘Khadi muluk and Malaysia’ exodus of over 2.2 million youths and has now become a major pain in the neck for Singha Durbar with the ‘bhadaka Sepoy’ being killed in the Russian-Ukraine war.
31. Kathmandu Post, August 11, 2023 – Krishana Prasai
32. Kathmandu Post, December 19, 2023; Nepal again hawked its independence by deciding to ask India for onions – Hagne laibhanda Dekhne lai Laj – a befitting Nepalese proverb! According to the Department of Customs, Nepal imported 180,190 tons of onions worth Rs 6.75 Billion from India in fiscal year 2021/022.
33. Mahotsav Pradhan, Economic Development, Nepal Economic Forum, December 14, 2023
34. To ensure access to food and address food safety, Right to Food and Food Sovereignty Act 2075 (2018) is enshrined in Nepal’s constitution – Khim Lal Devkota. Food Security and Climate Change. Kathmandu Post April 3, 2024
35. Bhutan’s in operation hydropower plants are: i) Chukha – 336 MW ii) Tala – 1,020 MW iii) Kurichhu – 64 MW iv) Basochhu – 64 Mw v) Mangdechhu – 720 MW and vi) Dagachhu – 126 MW; Total: 2,326 MW. Under construction are: i) Punatsangchhu I – 1,200 MW ii) Punatsangchhu II– 1,020 MW iii) Nikachhu – 118 MW and iv) Kholongchhu – 600 MW; Total: 2,938 MW. Under consideration for implementation with India are: i) 1,125 MW Dorjilung ii) 2,585 MW Sunkosh and iii) 404 MW Nyera Amari I and II – USAID’s Guidance Note for Bhuatn to Trade in Indian Power Exchange, August 2023.
36. With discreet nods of both India and USA, Bhutan expelled over 125,000 Lhotshampas of Nepalese origins into Nepal with the foolish affirmative nod of Prime Minister GP Koirala also.
37. India’s Observer Research Foundation (ORF) March 31, 2023, Assessing Bhutan’s Migration Trends and Policies – Aditya Gowdara Shivamurthy, Associate Fellow with ORFs Strategic Studies Programme..
38. World Bank, MARCH 12, 2024 : A Strong Labor Market is key to Bhutan’s Inclusive Growth
39. Kathmandu Post January 8, 2024. TR Bhusal and PM Shrestha’s interview with Dinesh Ghimire, retired Energy Secretary, who was intimately involved in negotiations with India on the Long-Term Power Trade, the 10,000 MW in 10 years Agreement, that was signed by his successor Gopal Prasad Sigdel on January 4, 2024
40. Kathmandu Post, January 18, 2023 (Magh 4, 2079);
41. AMUL, acronym for India’s Anand Milk Union Limited, the cooperative founded in Gujarat by Tribhuvandas Patel on 14th December 1946 and transformed by Verghese Kurien into a multinational selling milk and milk products globally. It is under the ownership of Gujarat Cooperative Milk Marketing Federation Limited, Government of Gujarat and is controlled by 3.6 million milk producers. AMUL spurred India’s White Revolution and in 2022 its revenue was Rs 52,000 crores (US$ 6.2 billion). On the other hand, Nepal’s Dairy Development Corporation (DDC) was established in 1969 with the support of the Swiss Government. Despite fifty years of operation, DDC’s recent sad plight, unable to pay Rs 6 billion to its milk producers, fails to enlighten our policy and decision makers. – Republica April 8, 2024.
The writer of this article is the former Managing Director of the Nepal Electricity Authority. This article is taken from the 6th issue of urja khabar, a bi-annual magazine. Which was published on 15 june, 2024.
