[One reason that is believed to be at the centre of GMR's failure to line up financing is that the project cost is extravagantly inflated at 139 billion rupees - double of what experts believe should have been the reasonable cost - to which Rs. 25 billion have lately been added, thus bringing the cumulative cost to a whopping Rs. 164 billion.]
By Bihari Krishna Shrestha
Lately, the Upper Karnali Hydel Project is
once again in the news after a delegation composed of local people, senior
politicians, and hydropower experts (including this author) submitted a
memorandum to PM Sher Bahadur Deuba who is scheduled to go on al visit to India
in the near future. While the memo demands for the scrapping of the project
agreement with the Indian company, GMR, this is not the first time that such a
representation has been made to the power that be on the issue. The first time
the problems with the proposed project was aired was in the form of an
"Open Letter" addressed to the then PM Sushil Koirala and the India's
PM Modi on the eve of the latter's visit to Nepal in November 2014. The second
time such representation was made was to the then PM Mr. Prachanda in August
2016 on the eve of his visit to India.
The project agreement itself was signed a
full decade ago between the Government of Nepal and the Indian company, GMR, in
2008 that has since been dragging on, although not because of the sustained
local protests and representations to the powers that be, but mainly due to
GMR's continued inability to line up necessary finances even as Nepal's
Investment Board continued to extending the deadlines for financial closure in
favour of the company.
The case against the project in its present
form is simple and straightforward. Firstly, the project, when awarded to the
GMR, was designed only for 300 MW which was later augmented, under
controversial circumstance, to 900 MW that would require the impounding of the
water for 18 to 21 hours a day and release it during the next 3 to 6 hours to
generate power at the new capacity. However, its consequence would be deadly
for the people downstream. It would wipe out several major irrigation infrastructures
downstream such as Rani and Zamaria in Bardia and Kallali districts that have
been traditionally built, owned and managed by the people themselves and have
the combined capacity to irrigate 75,000 ha of agricultural land which would
rendered useless due to the daily flooding. Even more vital is the issue that
the construction of the 900 MW project would ruin the Upper Karnali site which,
as per a World Bank study, has the potential to generate 4,180 MW at one of the
lowest cost due to its highly advantageous topography. It would be a
multipurpose reservoir-based project that would contribute to flood control and
make available vast quantities of regulated water. Given these extraordinary
advantages, the site itself is known among the national and international hydro
experts as "the jewel in the crown" and the second most advantageous
worldwide. While vast proportion of
Nepal's population remains deprived of access to electricity that, according to
latest Economic Survey, accounts for only about 4 percent in the composition of
energy sources used by the people, lately, the GMR had also broached the
possibility that the power would after all be sold to third country,
Bangladesh. Clearly, GMR's interest in doing the project is to make a profit
even as India remains uninterested in the use of the power in India.
One reason that is believed to be at the
centre of GMR's failure to line up financing is that the project cost is
extravagantly inflated at 139 billion rupees - double of what experts believe
should have been the reasonable cost - to which Rs. 25 billion have lately been
added, thus bringing the cumulative cost to a whopping Rs. 164 billion.
The mystery and controversy surrounding the
project and the deal has remained heightened by the fact that its Project
Development Agreement (PDA) was kept secret from the public as well as
Parliament and the Supreme Court by the Investment Board under the alibi that
it was a "commercial agreement" until its hand was forced to make it
public by the National Information Commission in response to a plea by an
activist. Once out in the open, the PDA only confirmed the worst fears
regarding the project which was conveyed through Open Letter 2 to the then PM
Dahal and India's PM Narendra Modi on the eve of the former's visit to India.
The Letter maintained that the PDA did not "serve the interests of either
the government or of the peoples of both Nepal and India, but only that of an
(unduly) profit making body."
By any stretch of imagination, the UKP in its
present form should never have been taken up in the first place. But the fact
remains that GMR was able to bag the project with considerable ease and Nepal's
Investment Board has continued to grant extensions on the deadlines for
financial foreclosure even as the Indian company's capacity and intent seemed
increasingly questionable.
While the issue has been brought to the
notice of Nepal's and India's PMs on more than one occasion, GMR and the PDA
clearly do not seem to have come under any threat, suggesting that the company has cultivated constituencies of
trust and confidence at important quarters in the power structures of both
Nepal and India. At one point, a Nepal PM, scheduled to meet his Indian
counterpart shortly, upon being briefed about the possible negative
repercussions of Indian involvement in some major projects in Nepal was known
to have cried out in exasperation that he clearly did not have anything to
offer to India.
As persistent as the stakeholders have been
for saving one of the most precious gifts of Nature, the UKP hydropower site,
PM Sher Bahadur Deuba's rather tentative assurance that the PDA could be
reviewed has been the best ever yet. This experience once again brings to light
the ironies of Nepal's more than half a century long democracy: it is very
difficult to speak and sell truth to power.
