Deuba's India visit and future of Rs 500b Pancheshwore Project

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Setopati Briefing

Prime Minister (PM) Sher Bahadur Deuba is going to India in the third week of August. Many believe that the Pancheswhore Project, that he signed as a PM when he visited India 22 years ago, will move forward.

PM Deuba has also prioritized the project. He confided that he will raise the issue of Pancheshwore and other projects on his India visit during his interaction with editors at Baluwatar a few days ago.

Deuba, who had reached India as the PM for the first time, had signed the Mahakali Treaty on February 12, 1996 to move the Pancheshwore Project forward.

The treaty stirred Nepali politics for a long time. CPN-UML suffered a split over differences on the treaty. Many believe that KP Oli, who emerged as a strong supporter of the treaty inside UML, built his deep relation with India then. The latest Indian blockade, however, has taken a toll on that relationship.

CPN-UML, that split over the treaty, has reunited long time ago and is unanimous on moving the project forward. The Maoists, who had opposed the treaty then, do not just support the project but are in the Deuba government now.  

There will not be much progress on the project during the impending India visit of Deuba despite the favorable domestic politics as bureaucrats of the two countries are discussing the technical aspects of the project. Politicians will not have anything to decide untill the discussions lead to any agreement or disagreement. 

The Pancheshwore Project that trudged along for 22 years is now in the stage of preparing a Detailed Project Report (DPR). This will be the third DPR for Pancheshwore. Nepal had first prepared the DPR for Pancheshwore in 1995 while India had prepared one of its own eight years later. The DPRs the two countries made on their own are not of much use now.

The two countries during the India visit of PM Pushpa Kamal Dahal in 2008 had agreed to form an authority to move the Pancheshwore Project forward. But even that did not move forward in lack of terms of reference (TOR). The project has seen some injection of pace after the Nepal visit of Indian PM Narendra Modi in 2014. The TOR for Pancheshwore Development Authority was signed during that visit.

The authority with four officials each from the two countries was formed after passing of the TOR. Chief Executive Officer (CEO) for the authority, with the office in Bhimdatta Municipality of Kanchanpur district, is selected alternatively from the two countries for a three-year term. Mahendra Bahadur Gurung of Nepal is the current CEO. A secretary-level governing body evaluates the performance of the authority.

The authority currently is discussing on the new DPR of the Pancheshwore Multi-purpose Project prepared by WAPCOS Limited, an Indian government-owned company. The project will cost around Rs 500 billion and take 10 years for completion, according to the DPR. A 311-meter high dam with capacity of 12 billion cubic meters of water will have to be built in the erstwhile Pancheshwore VDC of Baitadi.

The daily-peaking run-of-the river project will generate 4800 MW of electricity. A regulating dam will be built downstream at Rupaligad of Dadeldhura for irrigation. Another 240 MW can be generated from the regulating dam, according to the DPR.

The two sides are currently discussing sharing of water, energy and investment. The process will not be that easy. "India wants a larger share of both water and electricity while Nepal wants equitable distribution," CEO Gurung says. He, however, refuses to divulge the share India wants stating it is still being negotiated. Another high-level meeting of experts and officials from the two countries is scheduled to be held in Kathmandu on August 21 and 22 to try to seek agreement on the DPR.

WAPCOS will submit the final DPR to the authority once the two sides agree on sharing of resources and investment. The authority will send the DPR to the governing body for approval after studying it. The two governments will then approve the DPR endorsed by the governing body.

Gurung says there will not be need for any policy decision once the two countries approve the DPR. The authority plans to get the DPR approved by the two countries by October. The PMs need not take decision on the project when the officials of the two countries are discussing the DPR. The Energy Ministry has briefed PM Deuba accordingly.

But PM Deuba can still seek agreement in principle during the visit. The two countries currently have a secretary-level steering committee for projects related to water resources. The committee, formed as per the decision taken during the India visit of PM Krishna Prasad Bhattarai in 2000, monitors progress of the water-related projects with Indian investment in Nepal, and provides policy guidelines.   

"PM Deuba can propose to the Indian side for a separate committee that will submit monthly progress reports to both the PMs during this visit as the project will be developed with joint investment of the two countries," CEO Gurung says.

The environment for the project is favorable even in India. Modi, who seemed committed to moving the project forward during his Nepal visit in 2014, is still PM in India. Modi's party is in power not just at the center but even in Uttarakhand state across the Mahakali river.

India has been criticized for unnecessary dallying on development projects in Nepal even there. India is also paranoid about Chinese investment in Nepal. The proportion of those who believe that India has created space for China in Nepal by dallying and investing a lower amount is rising in India.

PM Deuba, who is visiting India in such situation, can convince the Indian political leadership to expedite the negotiation on Pancheshwore, and also respect Nepali interest regarding the project. By expressing his commitment to take the project, that he signed on 22 years ago, into implementation stage during his term, he can also seek Indian commitment toward that.

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