26 August 2020, NIICE Commentary 5893
Sandhya Rani
Nepal is gifted with perennial rivers and mountainous topography creating an enormous opportunity for the country to emerge as a hydro-power center in its region. It is not a hidden fact that the hydroelectric potential of Nepal has not been utilized to its full potential which is partially because it’s dependent on foreign investment for hydropower development. Its two giant neighbors, China and India, requires more energy than either country can produce domestically creating an extensive scope for close relationship between these three neighbours through water diplomacy, but unfortunately nothing as such has happened. There is no denying that investment from China and India has positive ramifications for the Nepalese economy but at the same time it’s also true that the investment interests of the Asian giants has wider geopolitical implications for the region.
In the recent years, there has been number of positive moves from India and Nepal where both countries have agreed on number of hydro-power projects such as Arun-III Hydro Electric Project and Upper Karnali Hydropower Project. There also exists several others, such as West Seti Hydropower Project, Mahakali and Gandaki river basin which also requires equal deliberation. However, in October 2018, Nepal has reinstated a deal with China to build a USD 2.5 billion hydroelectric plant. The 1200 megawatt Budhi-Gandaki plant would have nearly double Nepal’s hydropower production, but was cancelled. In this milieu, the article, intends to discuss the hydropower policies of Nepal vis-à-vis India and China, which in return would fetch public support and opinion of India and can prevent pro-China shifts in Nepal’s foreign policy.
The two Asian giants are vast in area as well as in population which creates a space for huge demand of electricity. According to the reports, India is endowed with rich hydropower potential of almost 148 GW which means it is capable of delivering an electricity demand of 84 GW at 60 percent load factor.
For this reason, there has been a Power Exchange Agreement since 1971 in order to meet the power requirements in the border areas of both the countries i.e. Nepal and India. Though Nepal’s hydropower potential is huge, India currently is supplying a total of about 450 MW of power to Nepal. Also, for further accelerating and facilitating cross border electricity transmission, grid connectivity and power trade, an agreement on ‘Electric Power Trade, Cross-border Transmission Interconnection and Grid Connectivity, between India and Nepal was signed on 21 October 2014.
China, India and Nepal’s Hydropower Cooperation Projects
Nepal holds a huge potential for hydropower development which is estimated to be more than 80,000 MW, however only 60 percent of the 30 million people have access to electricity. Presently, the annual consumption of electricity in all these three countries differs a lot which shows the requirement of electricity demand as well as indicates the country’s level of development. In Nepal this is about 100 KW per person, in India it is 500 KW and in China it is 3,900 KW per person. Also, not to forget that Nepal leans on neighbour India to meet its annual power demand of 1400 MW to balance the rest of the required shortage.
For India, hydropower projects can play a very important role for economic operation and balancing the power system. The value of hydro energy and power is much higher than thermal energy, hence, India needs to import electricity from Nepal. Hydropower development in Nepal is quite an old and well-known idea and attracts prospect for all the other interested countries.
The projects such as Chisapani (Karnali Multipurpose Project) have an installed capacity of 10800 MW. Presently, 694 MW power has been able to be generated out of which only 92 MW (i.e. from Kulekhani I and II) is storage type and the rest is based on Run of the River (ROR). Likewise, the Pancheshwar Multipurpose Project including Tanakpur Project is one of the unprecedented projects based on river Mahakali ( also known as Sarada) at the India-Nepal border.
Similarly, when it comes to collaborative projects with China, projects like the Budhi Ganadaki, a proposed hydroelectric power plant that was handed over to China’s Gezhouba group in August 2016 can be referred to. The project was handed with an agreement that the overall investment first would be made by China itself and later on, the money would be paid back by Nepal once construction was over. However, by November 2017 this same license awarded to Gezhouba was scrapped by then Energy Minister Kamal Thapa with the announcement of building this project using its own resources. The positive side is that recently once again the Budhi Gandaki project is allotted back to Gezhouba Group.
In mitigating such obstacles, some of the suggested recommendations would be to make projects plans keeping in mind the economical, technical and proximity to the load center from the river basins. Projects like Pancheshwar should be given an important attention as it is located in an area that is known for high seismic activity. The other major problem of Nepal is that most of the power plants in Nepal are run-of-river type with energy available in excess during the monsoon season and deficit during the dry season. This gives rise for the establishment of the storage projects. Finally the feeling of exploitation by Nepal or the nature of exploitation by India or China of Nepal’s water resources must be considered as one of the major factors for the delay in the promotion of these all above discussed hydropower projects.
Conclusion
India and China as a big country should work in such a way that it strengthens their relationship with Nepal and is mutually beneficial. India must change its way of dealing with Nepal as times have changed and the same goes for China, it needs to have more improved approach towards promoting the Nepal’s hydropower projects instead of delaying it. It is very evident that Nepal’s overall development depends on the optimum utilization of its water resources and at the same time India and China can also be benefitted by it. The mutual cooperation is the need of all the three countries as India and China can help Nepal to develop the projects in terms of technology and finance while Nepal can help India by supplying excess energy produced.
