Nepal dam deal opens door to
China By Dhruba Adhikary
KATHMANDU - The Nepalese government's
go-ahead early this month to construction of a
US$1.8 billion dam by China Three Gorges Corp
(CTGI), the country's first major hydropower
project, may pave the way to other resource
projects that will help create jobs and cut
poverty in a region dominated by China and India.
The snow-fed rivers cascading down the Himalayan
range are Nepal's main natural resource.
CTGI is expected to complete the US$1.8
billion West Seti River project in the west of
Nepal, with an installed capacity of 750 megawatt
(MW), by the end of 2019. The government confirmed
the project early this month after a parliamentary
inquiry followed the signing of a memorandum of
understanding (MoU) with the Ministry of Energy on
February 29.
Nepal has extended a warm
welcome to more Chinese
hydropower companies to
invest in projects worth US$400 billion following
the approval of the CTGI contract, China Post
reported this week. Heavy involvement by Chinese
companies in Nepal will raise geopolitical
concerns in New Delhi, as well as questions over
India's ability to exploit its small northern
neighbor's water resources.
"In terms of
capital, nobody can compete with China," Nepalese
legislator Binod K Chaudhary told reporters on the
sidelines of the Boao Forum for Asia in China's
Hainan province, said the China Post report, which
could not be confirmed.
The West Seti
project will help bring relief to some of the
estimated 40% of Nepal's 28 million people who do
not yet have access to electricity, while others
have to endure bitterly cold winters with up to 14
hours of blackouts on an almost daily basis.
Nepal's total power generation does not exceed 700
MW, in a country that has potential to generate up
to 42,000 MW of electricity through hydropower
projects.
"This is precisely the type of
project Nepal has needed for a long time," said
Ratna Sansar Shrestha, one of the country's
leading energy experts. In his view, West Seti
should serve as an ideal project to help realize
Nepal's long-term goal of raising farm
productivity through irrigation, and through
efficient and pollution-free energy to industries
and surface transport systems.
Nepal's
first hydropower plant, which generated 500 KW,
became operational in 1911. It is now a museum
piece at the southern edge of the Kathmandu
Valley.
CTGI is to secure necessary loans
from Exim Bank of China. The presence of China's
ambassador to Nepal at the MoU signing ceremony
indicated official endorsement of the plan. CTGI
will invest 75% of the project, with the remaining
25% the responsibility of the government's Nepal
Electricity Authority (NEA).
"The project
will be developed for domestic consumption of
electricity," the MoU states.
The project
had previously been given to Australia's Snowy
Mountain Engineering Corp (SMEC), which aimed to
sell the bulk of electricity to Nepal's southern
neighbor, India. SMEC could not mobilize adequate
money even after 16 years of effort, and the
Nepalese government scrapped the agreement last
July and began negotiations with other interested
parties.
"It was ridiculous to make West
Seti an export-based project while keeping the
country's domestic needs unmet and suppressed,"
said Dipak Gyawali, who as minister responsible
for water resources started the process of
canceling the deal with Australian company.
Gyawali, also an energy expert, told Asia
Times Online that the newly approved project could
be safely converted into a multi-purpose scheme
for using "regulated water" for running fisheries
as well as navigation in addition to irrigating
farmlands in adjacent districts.
The
Nepali side, not the Chinese side, should take
initiatives to make multiple use of regulated
water, he said.
The West Seti project
involves construction of a 187 meter high and 445
meter long concrete dam to store regular river
water and additional water received during the
rainy season. About 16,000 villagers in the area
need to be resettled.
CTGI's interest
became evident shortly after a visit to Nepal by
Chinese Premier Wen Jiabao in January when he
separately offered economic and technical
assistance equivalent to $119 million.
The
decision to go ahead with the dam comes while the
country's politics remain unsettled following the
May 2009 toppling of the Maoist-led government
that had won elections the year before. The most
recent government, formed last August, is led by
Prime Minister Baburam Bhattarai with the backing
of the Unified Communist Party of Nepal (Maoist),
the largest body in parliament.
A popular
perception of Nepali Maoists is that their
frontline leaders are opportunists, with a
disgruntled faction openly denouncing Bhattarai as
an Indian puppet, while supreme leader Pushpa
Kamal Dahal, also known as Prachanda, is projected
as the protector of Bhattarai.
Instead of
waiting for more signs of political stability,
China apparently believes it is appropriate to
resume assistance to its small, mountainous
neighbor for the ongoing drive to expand its
infrastructure base.
"A friend in need is
a friend indeed is a familiar maxim," said Upendra
Gautam, who has spent over 20 years in the study
of water economics of South Asian countries. In
his opinion, it would be unfair to conclude that
China was advancing its helping hand to Nepal just
at a time when this country was being governed by
a coalition led by a political party that prefers
to identify itself as Maoist.
In any case,
official Chinese policy has been to deal with the
leadership that runs the contemporary government,
and, unlike Delhi, Beijing is not seen taking
sides or picking victorious candidates. That
probably was one reason it previously dealt with
Nepal's monarchy so long as it provided stability
to Nepal.
Chinese diplomats in Kathmandu
have also consistently maintained that their
country would not compete with India in Nepal.
The Chinese approach towards India in the
context of relations with Nepal is mentioned in
the autobiography of the late B P Koirala, Nepal's
first democratically elected prime minister. In a
reference to his last meeting with former Chinese
premier, the late Zhou Enlai, at the end of his
China visit in 1960, Koirala quoted Zhou's
comments on economic assistance that China wanted
to develop friendship with Nepal, but the
international community wanted to see it competing
with India.
It appears that a now far
stronger China has not changed this basic
position.
India ostensibly takes the
opposite view. Indian security and intelligence
agencies often construct alarming scenarios to
justify their activities, and expenses, to carry
them out. Late last month, India co-hosted in
Kathmandu the "Hydropower Summit 2012" with
potential developers from India as main
participants.
India also unofficially
organized a tour for "energy" reporters of Nepal's
print and electronic media outlets. It was
presumably meant to create an atmosphere whereby
GMR Group, an Indian infrastructure developer,
could reopen its office in the vicinity of Karnali
River in the northwest hills of Nepal. The office
was set on fire last year by people opposed to
Indian efforts to construct hydropower stations
and take the lion's share of electricity and
regulated water across the border.
Delhi
took the action as an angry onslaught by Maoist
cadres, but senior dissident Maoists insist it was
a spontaneous move by patriotic Nepalis who had
learned from bitter 50-year experience how India
can deliberately short-change Nepal through water
resource agreements.
Tulanarayan Sah, who
two years ago contributed to a report on how the
state could share its resources among citizens,
said in an article in the NEPAL weekly magazine
that India's eyes were on regulated water from
West Seti.
Delhi would also consider the
presence of a prominent Chinese company in Nepal
as a strategic challenge.
Some analysts
think that Delhi's attitude towards Nepal is
bolstered by the United States, which approves
Indian measures to contain China, leading to Nepal
being deprived of possible economic gains even if
Washington usually remains sympathetic to Nepal.
The prospect of a large Chinese company
(CTGI is one of China's top six energy producers)
entering Nepal prompted a pro-India lobby in the
Nepalese parliament to halt implementation of the
MoU with CTGI. The committee on natural resources
instituted a probe with the intention of
disqualifying the Chinese company from taking up
the project.
However, since no substantive
issues to oppose the deal were found, the
committee gave the go-ahead, together with
suggestions to rectify procedural flaws in the
MoU. The approval came in the aftermath of media
reports that CTGI had sent a letter to the Nepal
government threatening to pull out of the project
if fresh hurdles were created.
Lawmakers
had raised concerns that Nepal's government had
awarded the contract without opening it up to
international bidding, prompting the Chinese
company to threaten in March that it would scrap
the project unless things moved forward, the Wall
Street Journal reported on April 2.
Those
who favorably viewed China's interest and
investment in West Seti took exception to the
parliamentary committee's intervention as
encroachment on the powers of the executive wing
of the state.
"I was shocked to find the
committee issuing a stay order and behaving like
the Supreme Court," Bipin Adhikari, a
constitutional lawyer, told Asia Times Online. His
stinging comment also appeared in a leading
Kathmandu newspaper.
Resentment over
growing Indian interference is not likely to be
confined to media debate and court cases. Over
time, incidents such as the one associated with
the GMR office might happen in too many places and
too frequently to be prevented. Since the end of
monarchical power in 2006, public anger that used
to be directed at the monarchy is now often
directed at New Delhi.
Gopal Siwakoti
"Chintan", an international water law expert,
said, " If Delhi does not reconsider its current
attitude to prevent others from working in Nepal,
India-registered companies might also find it
difficult to carry out their project works in this
country."
Dhruba Adhikary is a
Kathmandu-based journalist.
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