India Nepal Hydel Cooperation

Despite of a huge hydropower potential, Nepal is power starved. This is evident from the fact that Nepal is rich in water resources with the potential to generate 83,000 MW of hydro-power, but it currently generates 674 MW of hydro-power from the total installed capacity of 705 MW.

Various Hydel Cooperation Projects between India and Nepal are as follows:

1. Multipurpose project in border area such as Koshi Project and Gandak Project
2. Development of hydroelectric project in Nepal under grant – aid program for internal use in Nepal such as Katariya, Trishuli, Devighat, Fewatal projects.
3. Border power exchange and power transmission line link
4. Joint technical study for mega projects such as Chisapani (Karnali) Multipurpose Project, Pancheshwar Multipurpose Project, Koshi High Dam Multipurpose Project.
5. Electric Power Trade Agreement
6. PPP projects such as West Seti Hydroelectric Project and Upper Karnali Hydroelectric Project.

Why Little Progress on Ground?

• First issue is lack of confidence on both sides. Power sharing and cooperation has always been shadowed by the water issues. This is because often hydropower generation is intermingled with other aspects of water use or benefit which has been hindering to make cooperation on hydropower to large extent. For example, the Koshi and Gandak projects (they are primarily for flood mitigation and irrigation purpose) were located at the border area in Nepal included small hydropower component. Since the projects were located at far downstream of Nepal, it was alleged that major benefits of flood mitigation and irrigation were for India.
• Second issue is political, i.e. protests from Maoists against foreign investments and developments.
• Third issue is lack of effective institutional arrangements and statutory provisions. There are overlapping roles and responsibilities of existing institutions in Nepal which in turn affects the power trade negotiations.
• Fourth Issue is technical problem. Some power projects such as Koshi have been marred by technical problems ever since they started. From the beginning the Katatiya power plant (In India relates to Koshi Project) faced technical problem due to low head and heavy silt in the river water. We note here that high sediment load in rivers in Nepal is a natural phenomenon, aggravated by man-made interventions.
• Fifth Issue is of cost. Due to remoteness, cost of hydropower development is likely to be higher in certain sites in Nepal. It makes less attractive for India to invest in those projects.
• Sixth issue is of increasing Chinese influence in Nepal. For example, in 2012, Nepal approved a $1.8 billion contract to China for the West Seti Hydropower Project. After 16 years of struggle to implement the 750 MW hydropower project, which was initially designed to supply electricity to India, Nepal scrapped the license and signed a fresh MOU with a Chinese Company.

The result of various problems is that

Accumulated resentment over the 1954 Kosi Agreement and the 1959 Gandak Agreement, cited by successive Nepali regimes as unfair, has rendered progress on Hydel-cooperation impossible. Three mega-projects — Saptakosi with 5,000MW, Karnali-Chisapani with 11,000MW, and Pancheshwar with 6,500MW — have been languishing for 30 years. When the Hydel sector in Nepal was opened up to the private sector, Indian companies won 27 survey licenses for projects ranging from 100 to 1,000 MW each, but not a single one is even close to beginning construction.

What needs to be done?

This is an opportunity for India to reach out, demonstrating goodwill, generosity and time bound delivery on infrastructure that could change mindsets and help unlock Nepal’s Hydel potential, making it one of the richest countries of the region and add to India’s energy security as well. So far both the countries have failed in assessment of the reasons for failure in the regional cooperation between India and Nepal. With China increasing its presence in Nepal, it is ever more essential for India to bridge these gaps and eliminate the trust deficit with Nepal.