Revamping Hydropower Policy Learning From Lesotho

The detailed feasibility study of the Kankai storage dam project carried out for the generation of electricity to meet the domestic demand and also for irrigation of lands exclusively within Nepalese territory clearly proves that the downstream benefits can be many times greater than the power benefit. Background information on the Kankai storage dam project is presented hereinafter.

Oct. 13, 2018, 9:06 a.m. Published in Magazine Issue: VOL 12 No.06, October 12, 2018 (Ashoj. 26, 2075) Online Register Number: DOI 584/074-75

Our government must urgently revamp the present misguided hydropower development policy to promote the implementation of our large storage dam projects exclusively for power generation turning a blind eye to already established facts based on detailed feasibility studies carried out with the assistance of the World Bank and donor governments that the downstream benefits ( from irrigation, flood control and wherever possible and practical inland navigation) accruing to lower riparian country could be far exceeding the power benefit accruing to our country.

Our intelligentsias as well as press must be ashamed if we continued to remain indifferent to our present horribly wrong hydropower development policy, which deprives our country right to a legitimate share in downstream benefits. Even the government of Lesotho, the most backward landlocked country of the Africa surrounded from all sides by the South Africa, is fully knowledgeable about the enormity of the downstream benefits and its right to a fair share in such benefits. Lesotho is now receiving a huge amount annually in royalty as its rightful share in downstream benefits accruing to its neighbouring country.

Irrigation Benefit Far Greater

The detailed feasibility study of the Kankai storage dam project carried out for the generation of electricity to meet the domestic demand and also for irrigation of lands exclusively within Nepalese territory clearly proves that the downstream benefits can be many times greater than the power benefit. Background information on the Kankai storage dam project is presented hereinafter.

In 1970s our government had requested then West German Government to provide technical as well as financial assistance in implementation of the Kankai storage dam project exclusively for power generation. Based on a preliminary study of that project the West German Government recommended that it would not be worthwhile to implement the proposed storage dam project exclusively for power generation because the irrigation benefit to accrue from such project would be far exceeding the power benefit.

Based on the recommendation of the West German Government the irrigation was included as an important component of the proposed storage dam project study. Detailed feasibility study report entitled KANKAI MULTI-PURPOSE PROJECT FEASIBILITY STUDY was submitted on July, 1978. According to that report the annual irrigation benefit was found to be US $ 31.46 million whereas the power benefit US $ 7.244 million only.

We Should Be Ashamed

Feasibility studies of multipurpose storage dam projects carried out by the World Bank and other international agencies show that the irrigation benefit could be too great. Unfortunately our country perhaps through ignorance is intending to implement the large West Seti Storage Dam project, Buri-Gandaki Storage Dam project etc exclusively for power generation completely ignoring our right to a substantial share in the vast downstream benefits accruing to lower riparian country. We should be ashamed that even the Government of Lesotho, the most backward landlocked country of the Africa surrounded from all sides by the South Africa, is fully knowledgeable about the enormity of the downstream benefit and thus it has skillfully entered into an agreement with the South Africa to receive a huge amount annually in royalty as its rightful share in downstream benefits accruing to its neighb ouring country.

Learning From Lesotho

Lesotho Water Project Treaty was signed in 1986 between Kingdom of Lesotho and the South Africa. The entire first phase works (Phase I & Phase Ia) of the project have already been completed. According to the treaty, high dams, tunnels, 72 MW hydropower, roadways and bridges have already been built. Regulated water after power generation in Lesotho would be supplied to the South Africa. After the completion of the entire first phase works of the project 29.8 cumecs water would be supplied. Lesotho is receiving 56% of the net benefit accruing to the South Africa from the use of 29.8 cumecs regulated water.

According to the World Bank report 200 the Lesotho's share in downstream benefits is being provided in two parts. First part of the annual benefit is used to recover with interest within a period of 50 years the entire amount US $ 3.0243 billion at 2004 price spent by the South Africa on the construction of the entire first phase works ( excluding the investment on the construction of hydroelectric station) of the project. Second part is used to provide annually US $ 36-38 million in royalty subject to periodic adjustment to cover inflation. After 50 years when the entire borrowed amount would be recovered, there would be further negotiation to fix new royalty rate.

Posterity Would Condemn Us

Mishandling of our large storage dam projects, which could be yielding in perpetuity a substantial proportion of the enormously large downstream benefits to our country, would indeed be a great national loss. Paul D. Terrell, Chief Advisor Consult of Karnali Multipurpose Project has written in an article published in the magazine HIMAL in May/June 1991 “Nepal should beware of unintentional give away in hydro development, and not rush to compromise the optimum development for the sake of quick deal. The present institution should be wary of giving away Nepali children's rightful inheritance."

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