Next Door Nepal: Whose dam is it, anyway?

Next Door Nepal: Whose dam is it, anyway?

Context:

The Nepal government recently decided to annul the 1200-MW Budhi Gandaki Hydro project contract awarded to the Chinese firm Gejuwa, citing lack of transparency.

Introduction:

• The annulment of the contract three weeks prior to the formation of the new government, expectedly, has triggered a debate.
• In June a Maoist-dominated coalition government awarded a contract to China Gezhouba Group Corp. to build a 1,200MW plant on the Budhi Gandaki river, about 50km west of Kathmandu, to address acute power shortages.
• The government was following the instruction of a parliamentary committee that had disapproved the deal on the ground of lack of “transparency”.
• Cancelled project may now go to an Indian company.

India’s past failures:

• India’s past failures in completing hydropower projects on time has discredited its image as a reliable partner in Kathmandu.
• China entered Nepal’s hydropower sector, challenging India’s monopoly, only about a decade ago. This was after political changes in Nepal became unmanageable and Beijing began to get suspicious about the role of New Delhi and western powers in the country’s internal politics.
• On the scrapped of the Gejuwa deal , the investment board of the government extended the deadline for  “financial closure” of two other major hydroprojects undertaken by Indian companies- the 900 MW Upper Karnali undertaken by GMR and Arun three  undertaken by Sutlej Jal Vidhyut Ltd.
• The much-talked about Mahakali project that was signed between Nepal and India way back in 1996 has not moved an inch as the two sides are still to finalise the detailed project report. The Mahakali project was signed between Nepal and India way back in 1996 has not moved an inch as the two sides are still to finalise the detailed project report.
• As most projects remain in limbo, power brokers and commission agents lobby on behalf of competing firms for the termination or transfer of contracts.

China’s response:

• Less than a week after the government decision, China’s Three Gorges International Corporation signed a deal with the Nepal Electricity Authority to form a joint venture company to develop the 750 MW West Seti Project in a time-bound manner.

Reasons for delay in projects:

• The projects are delayed because of corruption.
• The delays in the execution of projects and the external interferences.
• Lack of transparency and accountability in government decisions in their manifestos, including a convergence of interest and method.

About Budhi Gandaki hydropower project:

• Budhi Gandaki Hydropower Project is a storage type project located in Central/ Western Development region on the Budhi Gandaki River of Nepal.
• The 1,200 megawatt project was recently listed as a component of the Belt and Road Initiative (BRI), the China-led plan that envisages greater trade and connectivity and supports varied infrastructure projects.
• The Nepal government had awarded the contract under the engineering, procurement, construction and finance (EPCF) model of project development.
• Budhi Gandaki has been highlighted as a key project to resolve the country’s perennial power crisis.