Oh! Pancheshwar

Oh! Pancheshwar
myrepublica.com, 19-Aug-09
ADITYA MAN SHRESTHA (adityaman@hotmail.com)

Prime Minister Madhav Kumar Nepal is looking forward to push the Pancheshwar project during his visit to India but no matter how hard he tries, it is going to be a futile exercise. The project was never meant to be implemented and I am not saying this now; I said this almost a decade ago. The project still stands today where it was when it was agreed upon between India and Nepal about 13 years back.

“Pancheshwar is actually a jinxed project. When India wanted it seriously in the sixties, seventies and eighties Nepal resisted it. When Nepal wanted it in the nineties and onward India became lukewarm about it. When both these countries will be equally serious and capable of taking up this project on the ground instead only in the paper is anybody’s guess. However the best bet is that it is shelved for many decades to come” (Himalayan Times, 6/12/2001).

The pessimism was not without reasons. The basis of Pancheshwar project is the Mahakali Treaty. “But the main objective of the treaty”, I said, “was not to develop the Pancheswar project but to legitimize the Tanakpur dam. The Tanakpur dam was unilaterally built by India toward the end of eighties using a part of the Nepalese territory without Nepalese consent. The Mahakali Treaty embodied the Sarada dam, Tanakpur dam and the Pancheshwar dam. Legally speaking there is no longer any hitch between Nepal and India as far as these three dams (existing and potential) over the Mahakali River are concerned.”

The more than 80-year old Sarada dam was aging and its days were numbered. It did not matter as its function was taken over by the newly-built Tanakpur dam to irrigate about half-a-million hectares of land in northern India.

When the Mahakali River Integrated Development Treaty was signed amid great fanfare in 1996 between Nepal and India, the signatories declared that the DPR (detailed project report) would be ready within an incredibly short period of six months. Since then, about 26 six months have elapsed but it is nowhere to be seen. That is why I had described the DPR as Diligently Procrastinated Report. In a routine ritual, numerous meetings between the officials of the two countries on DPR promise that the report would be ready in yet another six months. The most we can expect from our PM’s visit is yet another pledge to complete it in the coming six months.

Pancheshwar is too big a riddle. Nepal wants this project to have a 315-meter high dam to generate 6,480 MW of power by building a storage facility capable of holding 9.72 billion cubic meters of water in the mountains. But India wants a much smaller dam. She is thinking of a 262-meter high dam with a storage facility for 5.5 billion cubic meters of water. This facility can produce only 1,750 MW of power. Whether and how this difference will be ironed out is in itself a big question that may prolong the bilateral negotiations for a long time.

Even if the two countries succeed in reconciling the height of the dam and the volume of power production from the project, the funding aspect poses a big question mark. In 1996, the Pancheshwar dam was estimated to cost about US$3 billion, which would have escalated many times now. The Treaty of Mahakali prescribed equal sharing of cost and benefits in water and power. In that sense, Nepal would have to raise half the cost. Private investment might be ready to come in on behalf of Nepal. But will India be ready to let a third-party investor join the Pancheshwar project is yet another question. India is capable of bearing the total cost of the project. In that case, India will ask for too big a share from the benefits. Will Nepal be ready to remain contented with a crumb from a project that has sold big dreams to the people of Nepal? No government would dare to do that.

Pancheshwar is full of other hassles as well. Even if the investment question is resolved, many other difficulties are bound to occur. For example, according to the Mahakali Treaty, Nepal is obliged to sell excess power of its share only to India but it is not obligatory on India to buy it. In other words, India will buy power generated by this project from Nepal at an acceptable price. The treaty does not speak anything about how the price should be determined. So, naturally India would like to set the price as low as possible and vice versa. Will the two haggling parties be able to come to an acceptable pricing? It is not just a matter between two government officials. They have to explain and satisfy the people on the fairness of the pricing.

There are several other questions relating to downstream benefits, use of excess water of Nepali ownership, contracting, consulting etc that pose difficulties in carrying out the Pancheshwar project. Nepal and India are fully aware of these problems. So, we will be discussing about it for many decades to come as we have been hearing about it for many gone by.

At the time of negotiations on Mahakali Treaty, it was claimed that Nepal would accrue a benefit of Rs 120 billion a year (US$ 2 billion) on the completion of the project. The myth was promptly exploded as none could believe that a project, which was estimated to cost US$3 billion in total would yield US$2 billion revenue annually. People in Nepal listened in awe and utter disbelief about this hidden treasure of theirs.