As the Kathmandu intelligentsia debates whether New Delhi has realised its mistake of blockading Nepal or not, there is a growing call for Nepal to correct its own past mistakes on past hydropower projects.
Indian PM Narendra Modi on Friday remotely laid the foundation stone of Arun III, a 900MW project being built by the Indian public sector firm Satluj Jal Vidyut Nigam in eastern Nepal. But experts say Nepal’s first export-oriented electricity scheme could be a losing proposition for the country.
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They say Nepal would benefit much more to meet its own suppressed demand for electricity instead of exporting it. Studies have shown that the consumption of 1 kilowatt of electricity makes the GDP grow by Rs 91.
Water resource analyst Ratna Sansar Shrestha calculates that Nepal could earn more than Rs 9,100 billion in 25 years from the multiplier effect of domestic consumption of Arun III electricity. But Nepal will be exporting 78% of Arun energy production to India, and be deprived of downstream benefits of the energy on its own economy.
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As Modi and Oli patch up after last year’s elections in which Oli capitalised on the perception that he had stood up to India during the Blockade, there are also concerns about how Nepal will safeguard its national interest on water resources from now on.
Back in 1996, it was Oli himself who persuaded his UML party to support the controversial Mahakali Treaty which was said to have cheated Nepal of water rights.
And in 1993 the UML government at the time vehemently opposed the Arun project which was pushed by the World Bank before it pulled out.
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Given what a political hot potato talking about building high dams on the Kosi or Karnali can be at a time when there is so much mistrust in Kathmandu, Modi and Oli are cleverly using the term ‘waterway’ as a code word for ‘dam’.
Reservoirs in Nepal would be useful for monsoon flood control and lean season augmented flow of Indian rivers for irrigation and inland waterways.
This could be why Oli is suddenly obsessed about making rivers navigable, and Modi talks about connecting Sagar (Mt Everest) to Saagar (Ocean) through inland waterways.
The argument is that inland waterways would bring the Bay of Bengal right to the Nepal border and allow Nepal access to the sea. Oli appears to be transfixed with the idea of flying the Nepali flag on its own merchant marine.
"Nepal will not benefit from making Indian rivers navigable," Shrestha explains. "Modi is trying to persuade Nepal by saying it will have access to the sea and will no longer be landlocked so that Nepal will not drive a hard bargain for compensation for inundation.”
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