How Investment Board treats Chinese and Indian projects will be a window to Baluwatar’s relation with Beijing and Delhi
OCT 04 – These are interesting times in Nepal’s infrastructure-building sector.
A brief chronology of recent developments, to start with:
First came the memorandum of understanding with the China Three Gorges International Corporation (CTGIC) last February to build the West Seti hydroelectric project.
Then the energy ministry had to brave enraged Indian companies that had been semi-successfully lobbying for Arun III and Upper Karnali hydropower projects for quite some time then.
And what they saw instead was a Chinese company, the CTGIC being awarded a lucrative hydro scheme while their proposals were moving nowhere.
The government, one fine day last month, decided to terminate the contract with a Chinese company that had been dragging its feet on the tunnelling component of the Melamchi water supply project.
A few days later, the Investment Board formed by the government decided to give green signal to the Indian companies GMR and Sutluj Jal Vidyut Nigam (SJVL) to go ahead with the preparatory works for Arun III and Upper Karnali projects.
When all these were happening in the last eight months, Prime Minister Baburam Bhattarai in recent time has had one after another “successful” meetings with his Indian counterpart Manmohan Singh while he has not been able to do so with the Chinese side.
Nor has Beijing confirmed a date for his planned state visit to the northern neighbour.
Top sources said the Chinese contractor for Melamchi tunnel construction was in touch with the Prime Minister’ office and had also tried to pull China’s diplomatic strings in Kathmandu.
All that the Chinese company heard from the PMO was “we know your problem,” and it did not get “high enough Chinese diplomatic support” either.
The donor Asian Development Bank endorsing the sacking of the Chinese contractor has certainly helped the Bhattarai government in its Melamchi move.
Whether the sacking was a part of the bigger picture—Bhattarai’s relation with China and India—might never be known. Partly also because the Chinese contractor performance in digging the Melamchi tunnel had indeed been pathetically poor.
But there have been developments both before and after the Melamchi episode, as you have read in the chronology above.
Interestingly all of those projects—West Seti, Arun III and Upper Karnali—are now being handled by the Investment Board the government formed to supersede the energy ministry.
How the Board treats the West Seti project, which has the Chinese company as a wannabe developer, and Arun III and Upper Karnali with aspiring Indian investors, can be a window to examine how Baluwatar is doing with Beijing and New Delhi.
With the Chinese contractor in the Melamchi project just sacked, there may not be anything against the CTGIC immediately. Particularly also because Bhattarai has been trying to show that he has not left Beijing all angry—even if he may have.
Although the Chinese company that built the 20,000 MW Three Gorges Dam does not have a clean record in China itself. The Chinese National Audit Office had uncovered 31 financial issues related to accounting, financial management, investment, bidding and corporate management, according to the Chinese state-run Xinhua news agency.
So, worth watching for now will be how the Investment Board deals with the Indian companies GMR and SJVN.
With no manpower and technical expertise of its own—and with the energy ministry totally bypassed—will it be able to strike the right deal, unless the design is to give the Indian companies an upper hand?
A litmus test, for instance, can be whether Nepal can make sure that both companies are given in agreement papers specific project sites and not “vague description of areas that leaves room for manipulation in the future.”
A very knowledgeable source involved in past negotiations said the current language in the Memorandum of Understanding—particularly with GMR—is quite ambiguous as to where the Upper Karnali project site would be and how far it could be expanded.
The MoU the government signed with GMR states, “GON (Government of Nepal acknowledges that due consideration may be accorded to GMR-ITD Consortium for the allotment of upstream/downstream project, if any.”
Another provision in the agreement reads: “GON shall ensure that the development, implementation and operation of upstream/downstream projects by other developers shall not be detrimental in any way to the (Upper Karnali) project.”
The source involved in past negotiations said, “The language in the MoU will have to be made more specific so that the project will be built where it is agreed by both the sides and the Indian company does not get a single inch of area more.”
Also worth watching will be whether a planned proposal by the Nepali side to maximise power supply to Nepal during dry season can make its way in the final agreement.
The MoU signed with GMR requires it to provide 12 percent of monthly generated power from the Upper Karnali project free to Nepal.
For SJVN the figure is 22 percent.
Both Arun III and Upper Karnali have been widely criticised because most of their power will be exported to India while Nepal is left with crippling power cuts.
The moves to award them to the Indian companies have also been challenged in the court.
Amid all these, all eyes will now be on the Investment Board.
Hydropower pundits say it has no choice but to rope in the technical expertise of the energy ministry.
Expertise it may have, but don’t forget it was the same ministry and the department of electricity development under it that did nothing—or were not allowed to—all these years and let the load-shedding hours shoot up.
With such background of the ministry, if the Board too caters to the need of power-centres only, power-starved Nepali people will be caught between the devil and the deep blue sea.
Source : The Kanthmandu Post by
Navin Singh Khadka is a BBC journalist based in London