Friday, April 12, 2024
Colonization of Nepal’s Hydropower
Signing of the “long term power trade agreement” between Nepal and India in January 2024 was hailed by Nepal's most politicos, bureaucrats and intellectuals claiming that Nepal would earn a huge amount of foreign currency - "hydro-dollar" - and become prosperous by reducing the trade and payment deficit. Some described it as another anti-national activity.
Hence, it is necessary to examine whether Nepal's treasury will actually receive foreign currency by exporting hydropower. It should also be examined whether Nepal’s economy would prosper if hydropower is used domestically. Basically, there are two schools of thought: export to earn hydro-dollars and use domestically to add value in the economy. Value addition takes place as a result of industrialization due to increased production which can be used for import substitution or to export, that in turn reduces trade and payment deficit while generating employment. A comparison is being made in the following lines between the benefits of exporting hydropower and using it domestically.
During the Panchayat era, while planning to implement 402 MW Arun 3, there was debate as to whether to use hydropower generated by it to produce artificial fertilizer in Nepal or to export. Later, when the then Indian Ambassador Arvind Ramchandra Dev was approached by Nepali leaders to export electricity from Arun 3, he instead suggested establishing energy intensive industries in Nepal; which Nepali side didn’t wish for.
Export by NEA
As Clause 5 of the agreement specifies that 10,000 MW will be exported in 10 years, it is necessary to examine if the Nepal Electricity Authority (NEA) can meet the target. NEA had signed an agreement with India to export up to 655 MW last year: up to 321 MW from hydropower plants owned by NEA and up to 344 MW owned by IPPs. And, till last fiscal year, there was 2,538 MW hydropower generation capacity under NEA including IPPs. If this proportion is to prevail, in order for NEA to export 10,000 MW it should have 40,000 MW under it including IPPs. Meaning, in the next 10 years, 37,500 MW should be added by NEA and IPPs. Which doesn't seem possible because after the establishment of the 500 kW Pharping hydropower plant in 1911, hydropower generation capacity under NEA reached 2,538 MW in 112 years. It is beyond imagination to add 37,500 megawatts under NEA in the next 10 years.
Export oriented projects
Besides, India would not wish to import just the spill/surplus hydropower (that otherwise would have gone waste), which NEA exports. Economically, the quality of such electricity is low and accordingly the tariff too is low.
After reinstatement of parliament in April 2006, the then prime minister Girija Prasad Koirala's government started the process of handing over hydropower project sites to the Indian private sector by making them export-oriented, deemed anti-national by many. It circumvented the need of signing treaties with the Indian government, which would require parliamentary ratification and have to repeat the struggle of getting the Mahakali Treaty ratified by the Parliament. In this manner, following hydropower sites with a total capacity of 4,649 MW have been handed over to Indian private companies as export-oriented projects:
These projects will not only export surplus hydropower that could not be used in Nepal, but also high-quality electricity during dry season and peak power. Nepal itself will not be exporting hydropower from these projects. The project sites located on the rivers of Nepal have been handed over to Indian companies. Further, in the same manner additional 5,351 MW capacity hydropower project sites could soon be handed over to Indian companies and the target of 10,000 MW would easily be achieved. Therefore, the ulterior motive of this agreement is to hand over hydropower sites on Nepal’s rivers to Indian companies totaling 10,000 MW, which is absolutely anti-national.
As Indian companies own export oriented projects and since electricity would be sold in India, the export proceeds will not enter Nepal. Because if the export proceeds are channeled through Nepal's banking system, those companies will have to pay unnecessarily huge banking charges, and, further, if the money is stuck in Nepal for just one night, a large amount in overnight interest will be lost. Therefore, export proceeds from 10,000 MW export oriented projects, which would amount to $1.7 billion/year if exported at 5 US cents, would not mitigate Nepal’s payment deficit. However, the export statistics would increase on paper, but since the proceeds will not enter Nepal, the trade deficit would not be mitigated in reality.
Deprived of value addition in economy
According to a USAID study report, if one kWh (unit) electricity is utilized in Nepal, it will add value in the economy by 86 US cents (equivalent to Rs 113 at current exchange rate). Of 4,018.87 GWh average annual generation by 900 MW Arun 3, deducting 21.9% that Nepal gets for free, export of 3,138.74 GWh would deprive Nepal’s economy by $2.69 billion/year in value addition; which would be equivalent to Nepal providing a grant of that amount to India. The export proceeds of Arun 3 of $156.93 million/year, if exported at 5 cents/kWh, will not even enter Nepal.
In case 10,000 MW is to be handed over to the Indian companies in Arun 3 format (Nepal receiving 21.9% free electricity) Nepal's economy will be deprived of value addition by $29.99 billion/year, while value will be added to Indian economy by that amount – a case of Nepal giving grant to India. But the annual export proceeds that do not enter Nepal will be $1.74 billion, if exported at 5 cents/kWh. While India has proposed to provide a grant of ₹6.5 billion to Nepal next year, equivalent to $79.2 million only, at the current exchange rate. India budgets to provide less than a one-tenth of billion dollars as grant and makes a huge fanfare, while Nepal will help add value in the Indian economy by close to $30 billion/year without even calling it a grant.
Reservoir Projects
Both the 750 MW West Seti Reservoir Project and 450 MW Seti River 6 cascade project have also been made export-oriented and handed over to Indian company NHPC Ltd. These two can generate 4.54 GWh/year hydropower during peak time and dry season, which is more valuable than from the run of the river projects. Such electricity is much required for Nepal and will end up importing to meet demand for electricity in the peak time and dry season, while these two projects will be exporting.
West Seti is a reservoir project and it would also generate 90 cumecs of lean season augmented flow. Nepal will be deprived from multidimensional use of such lean season augmented flow. As GoN has not made any plan to make this project multipurpose, India will stand to receive that lean season augmented flow free of cost. Lesotho was paid at the rate of $2.789 million/cumecs water by South Africa in 2020. Based on this rate, West Seti’s lean season augmented flow is worth $250 million/year. A case of double whammy: Nepal to be deprived of not only peak and dry season power but also of lean season augmented flow.
When West Seti was awarded to China Three Gorges Corporation (CTGC), the parliamentary committee on Natural Resources had queried GoN in March 2012 as to the plan to use the lean season augmented flow in Nepal. After CTGC was forced to withdraw from it in August 2018 and hand it over to NHPC Ltd., Indian company, in August 2022, neither the parliamentary committee would receive an answer nor would GoN be able to put lean season augmented flow to use in Nepal. Further, GoN would not be able to recover the amount due for it according to Lesotho precedent as no mention of it has been made in the memorandum of understanding concluded with NHPC.
Domestic use
Nepal’s economy is not self-reliant because the contribution of the industrial sector to Nepal’s GDP is 13.45% only, due to which unemployed youth are forced to seek employment abroad where they face exploitation. Although the contribution of the industrial sector in India is already 28%, it has signed an agreement to import hydropower from Nepal to further industrialize and generate more employment there. Unfortunately, Nepal's most leaders, bureaucracy and intellectuals mistakenly believe that hydropower produced in Nepal cannot be used domestically.
Most Nepalis are under the illusion that Bhutan became rich by exporting hydropower. They are unaware that her industrial sector's contribution to the GDP is 34%. Last year Nepal’s electricity consumption per capita was only 380 kWh while it was 1,297 kWh in India and 5,515 kWh were in Bhutan. The leaders that promise to metamorphose Nepal into Singapore ignore the fact that per capita electricity consumption there is 9,002 kWh. In order for Nepal to reach the level of India, Nepal would need to consume 9,161 MW and 38,953 MW to reach Bhutanese level. Nepal will need to consume 63,583 MW to reach Singaporean level. But economically potential electricity generation capacity of Nepal is merely 43,000 MW. Therefore, unless Nepal uses maximum electricity and increases the contribution of the industrial sector in GDP thereby adding value in the economy, neither the problem of unemployment will be solved, nor will deficit in trade and payment be mitigated.
Also, Nepal imports petroleum products worth more than Rs 300 billion a year, which results in emission of pollutants that makes locals diseased and increases global warming. If entire transportation sector, excluding air transport, is electrified neither Nepal would need to export hydropower, nor import petroleum products. This will also help Nepal achieve the net zero emissions goal too. But Nepal imports petroleum products and exports hydropower.
Colonization
The reason ascribed by GoN functionaries for handing over above-mentioned project sites to the Indian companies as export oriented is that Nepal lacks funds for investment, which is not true. The very fact that IPOs of hydropower companies, banks, etc. are oversubscribed by more than 10 times disproves such contention. Moreover, Nepal receives over Rs 100 billion/month as remittances. Just 10% of it suffices to finance 2,400 MW hydropower at an average cost of Rs 200 million/MW. In this manner 24,000 MW can be financed from 10% of remittance in 10 years.
Further, it is not to say that foreign investment should be disallowed in Nepal. Khimti and Bhote Koshi hydropower plants, although built with Norwegian and American investment respectively, the electricity generated by these were not exported but used in Nepal. Normal practice for a foreign investor is to repatriate return on their investment. Merely because a project is financed by an Indian investor, it does not mean that electricity has to be exported. The very concept is like a lender receiving a borrower’s daughter as mortgage till the loan is fully repaid, although the borrower pays interest to the lender regularly; a practice prevalent in Nepal till few years ago until it was banned.
The colonial powers resort to extraction of natural/human resources of their colonies in order to add value to their own country's economy and achieve prosperity. Britain did so to India when it was a British colony. Nepal was never a colony. But handing over hydropower project sites to India in this manner means that Nepal itself is allowing India to colonize Nepal's water resources. However, it does not amount to colonization when Nepal exports surplus electricity, which would have gone waste.
Also, gifting lean season augmented flow to India is another form of colonization. But the Indians are not at fault. As they are patriotic and nationalist towards their motherland and they ensure India’s benefit. But people in Nepal do not ensure that agreements are based on international laws, nor do they take international precedents into consideration while signing such agreements. Hence, the fault lies with the leaders, bureaucrats and intellectuals of Nepal who adhere to capitulationism.
It’s water, not hydropower
When the then prime minister Manmohan Adhikari presented the draft of the Mahakali package treaty during his Delhi visit in April 1995, it stipulated that Mahakali is mostly a border river. The slogan was: half water, half electricity. Whereas according to the Sugauli Treaty, the Mahakali River solely belongs to Nepal; its neither a border river nor common. In this way, 50 percent of Nepal's rights over Mahakali River water was ceded to India.
Later, Nepal’s side agreeing to add the phrase "without prejudice to prior existing consumptive use" in the treaty was a further coup d'état. This resulted in Nepal admitting that 723 cumecs currently used by India out of the average annual flow of 730 cumecs of Mahakali river constitutes India’s prior existing consumption. In this manner it was established that 99% of the annual average flow belongs to India and Nepal will be entitled to only one-half of the remaining 1%.
To add insult to injury, it was also agreed by exchanging letters along with the treaty that India can use the remaining quantum of Nepal’s share of lean season augmented flow from the Pancheswar reservoir that Nepal is unable to use, free of cost. Those involved in executing the treaty on Nepal’s side did not think of demanding payment based on Lesotho precedent; the value of such water amounts to $998 million/year. While the focus of Nepal’s side was centered on hydropower export, it ended up giving precious lean season augmented flow for free to India.
Conclusion
It is logical to export surplus electricity as it cannot be stored, which NEA is doing (and also incurring loss as it imports more than exports). However, it is anti-national to give up lean season augmented flow worth $250 million/year by making the West Seti reservoir project export oriented.
On the other hand, hydropower used domestically would add value to the economy. If Nepal actually exports 10,000 MW, Nepal's economy will be deprived of value addition by $28.66 billion/year. India has budgeted a grant of $79.2 million to Nepal for next fiscal year, while Nepal will be providing a grant more than 360 times in terms of value addition in the Indian economy without even taking credit.
Although all 6,000 rivers and rivulets flow down from Nepal to India (to West Bengal via Uttar Pradesh and Bihar), India is striving to import hydropower from Nepal. One should wonder why doesn’t India generate hydropower in those states after the rivers enter India. The answer is simple. Hydropower cannot be generated by water flowing in the rivers in flat land, it requires geographical and geological conditions. Hydropower is generated from the water falling from a height. Moreover, reservoir projects need gorges, valleys, etc. to store water. Both of these are not available in the Indian states of Uttar Pradesh, Bihar and West Bengal. That is why India depends on Nepal for hydropower. But they import from Nepal as if doing a favor.
Nature gave the ability to generate hydropower from Nepal's rivers only to Nepal; which although eventually flow into India cannot be used to generate hydropower there. It can be compared with a lactating woman. She can breastfeed only as long as she is nursing her baby. At other times no woman can breastfeed. This is nature’s gift to women. Nature gives breastfeeding ability to women with infants, which should not be commercialized at all.
Similarly, hydropower generation capacity is the gift of mother nature to Nepal for the prosperity of her people, the economy and country. While nature has not gifted other natural resources like precious and semiprecious metals, fossil fuel, etc. to Nepal.
If a lactating woman has too much milk, it can be shared with other babies. Similarly, Nepal's surplus hydropower can be given to others rather than letting it go to waste. However, as a mother should not give milk to others thereby exposing her baby to the risk of malnourishment, exporting hydropower generated in Nepal, leaving the country and people impoverished and economy downtrodden amounts to colonization of hydropower.
Ratna Sansar Shrestha
Published in People’s Review on April 11, 2024.
https://www.peoplesreview.com.np/2024/04/09/colonization-of-nepals-hydropower/
Thursday, March 28, 2024
संसदीय अनुमोदनको प्रावधान उल्लंघन
राज्य वा सरकारले गर्ने द्वीराष्ट्रिय वा बहुराष्ट्रिय सन्धि सम्झौताको संसदीय अनुमोदन सम्बन्धमा प्रत्येक देशमा छुट्टाछुट्टै व्यवस्था छ । नेदरल्यांड, जापान, संयुक्त राज्य अमेरिका, भुटान आदि देशहरुमा द्वीराष्ट्रिय वा बहुराष्ट्रिय सन्धिहरुको संसदीय अनुमोदन अनिवार्य छ भने संयुक्त अधिराज्य, अस्ट्रेलिया, भारत जस्ता देशहरुमा संसदीय अनुमोदनको व्यवस्था छैन ।
नेपालमा नेपालमा २०४७ सालको नेपाल अधिराज्यको संविधानको धारा १२६ मा संसदीय अनुमोदनको व्यवस्था गरिएको थियो भने २०६३ सालमा जारी गरिएको नेपालको अन्तरिम संविधानको धारा १५६ मा र २०७२ साल जारी गरिएको नेपालको संविधानको धारा २७९ मा सोहि प्रावधानले अक्षरसः निरन्तरता पायो । साथै २०५२ सालमा सम्पन्न महाकाली सन्धिको संसदीय अनुमोदन २०५३ सालमा गरिएको थियो ।
माथिल्लो कर्णाली जलविद्युत आयोजना
२०६४ माघमा ३०० मेगावाट क्षमताको माथिल्लो कर्णाली जलविद्युत आयोजनाको लागि जलस्रोत मन्त्रालय र विदेशी निजी कम्पनीहरुको जीएमआर–आइटीडी कन्सोर्टियम नामक संयुक्त उद्यम (ज्वाइन्ट भेन्चर) बिच समझदारीपत्रमा दस्तखत गरिएको थियो । तत्काल कायम रहेको अन्तरिम संविधान २०६३ को धारा १५६ अनुसार उक्त समझदारीपत्र संसदबाट अनुमोदन गरिनु पथ्र्यो भन्दै सार्वजनिक सरोकारको विषयमा २०६४ फागुनमा सर्वोच्च अदालतमा रिट निवेदन दायर गरिएकोमा २०६९ सालमा संसदीय अनुमोदन आवश्यक नहुने फैसला भयो ।
यसरी नेपाल र भारत सरकारहरुबिच द्विराष्ट्रिय सन्धि, सम्झौता आदि नगरिकन भारतमा जलविद्युत आपूर्ति गर्ने गरेर बिभिन्न जलविद्युत आयोजनाहरुलाई निर्यातमूलक बनाएर सुम्पिँदै जाने क्रम शुरु गरियो । हुन त प्रतिश्पर्धाबाट कुनै पनि देशको लगानीकर्ताले कुनै पनि आयोजना कार्यान्वयन गर्ने अवसर पाउन सक्थ्यो, तर जलविद्युत भने भौगोलिक कारणवश मुख्यतया भारतमा नै निर्यात गर्नु पर्ने बाध्यात्मक अवस्था छ । अहिले सम्ममा जम्मा ४ हजार ६ सय ४९ मेगावाट क्षमताका ७ जलविद्युत आयोजनाहरुलाई निर्यातमूलक बनाएर सुम्पिने काम भइ सक्यो ।
यसै बिच माथिल्लो कर्णाली जलविद्युत आयोजना सम्बन्धमा माथि उल्लिखित समझदारीपत्रकै आधारमा जलस्रोत मन्त्रालयले उक्त आयोजनाको क्षमता बढाएर ९०० मेगावाट बनाई २०६५ जेठमा अप्पर कर्णाली हाइड्रोपावर लिमिटेड (प्रवर्धक) लाई सर्वेक्षण अनुमतिपत्र जारी ग¥यो । पछि २०७१ असोजमा नेपाल लगानी बोर्ड र प्रवर्धकबिच आयोजना विकास सम्झौता सम्पन्न भयो ।
संवैधानिक इजलासको फैसला
उक्त सम्झौताविरुद्ध केही रिट निवेदनहरु परेकोमा सर्वोच्च अदालतको संवैधानिक इजलासबाट २०८० बैशाखमा फैसला भएको हो । उक्त फैसलामा नेपाल सरकार र जीएमआर अप्पर कर्णाली हाइड्रोपावर लिमिटेड (प्रवर्धक) बिच माथिल्लो कर्णाली जलविद्युत आयोजाना सम्बन्धमा गरिएको सम्झौता वर्तमान “संविधानको धारा २७९ मा वर्णित सन्धिको वर्गमा पर्छ भन्ने देखिएन” भनियो । यी पंक्तिहरुमा यहि फैसलाको आलोकमा संविधानको धारा २७९ को उपधारा (२) को खण्ड (घ) मा उल्लिखित प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँडमा सम्बन्धमा भएका सन्धि वा सम्झौताको संसदीय अनुमोदन सम्बन्धमा विवेचना गरिएको छ ।
सन्धि वा सम्झौता
उपरोक्त फैसलामा नेपाल सन्धि ऐन, २०४७ को दफा २(क) मा “सन्धि भन्नाले दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी सङ्गठन बीच लिखित रुपमा सम्पन्न भएको सम्झौता सम्झनु पर्छ” भनेकोलाई आधार बनाएर संवैधानिक इजलासबाट अर्को पक्ष अन्य कुनै राज्य वा अन्तरसरकारी संगठन नभएको हुनाले उक्त सम्झौता “सन्धि” होइन भन्दै संसदीय अनुमोदन अनावश्यक ठह¥याइयो । यसबाट त्यही सम्झौताको अर्को पक्ष कम्पनीको सट्टा अर्को कुनै राज्य भएको भए संसदीय अनुमोदन आवश्यक हुन्थ्यो भन्ने अर्थ लाग्दछ । तर अवश्य पनि संविधान निर्माताको मनसाय त्यस्तो होइन ।
संविधानको धारा २७९ मा को उपधारा (१) मा संसदीय अनुमोदन आवश्यक हुने सम्झौताको सन्दर्भमा “नेपाल राज्य वा नेपाल सरकार पक्ष हुने सन्धि वा सम्झौता” भन्ने वाक्यांशमात्र उल्लेख छ र अर्को पक्ष विदेशी राज्य वा सरकार अथवा कुनै अन्तर सरकारी सङ्गठन नै हुनु पर्छ भनिएको छैन, न विदेशी प्राकृतिक÷अप्राकृतिक व्यक्ति नै हुनु पर्छ भनिएको छ । तसर्थ नेपालको प्राकृतिक स्रोत दोहन गरेर विदेशीलाई लाभान्वित गराउने गरेर कुनै अर्को राज्य वा सरकारको अतिरिक्त स्वदेशी वा विदेशी, प्राकृतिक÷अप्राकृतिक व्यक्तिसंग नेपाल सरकारले सम्झौता गरेमा धारा २७९ आकृष्ट हुन्छ ।
अर्थात नेपाल सन्धि ऐनको दफा २(क) को व्यवस्था दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी संगठन बीच हुने सन्धिको सम्बन्धमा मात्र हो । तर दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी संगठनसंग गरिने सन्धि बाहेकका सम्झौताको सम्बन्धमा नेपाल सन्धि ऐनको दफा २(क) लागू हुँदैन । किनभने संविधानको धारा १ को उपधारा (१) अनुसार संविधान नेपालको मूल कानुन हो र योसंग बाझिने नेपाल सन्धि ऐनको उक्त व्यवस्था त्यस हद सम्म लागू हुन्न । र, धारा २७९ मा संविधान निर्माताहरुले सन्धि वा सम्झौता भन्ने शब्दहरु पर्यायवाचीरुपमा राखेको होइन ।
नेपालले दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी संगठन बाहेककासंग गरिने सम्झौता (अर्थात “सन्धि” बाहेकका सम्झौता) नेपाल सन्धि ऐन, २०४७ को दफा २(क) को परिधि बाहिर पर्दछ । तसर्थ दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी संगठनबिच भएका सन्धि बाहेकका सम्झौताहरु पनि धारा २७९ बमोजिम संसदबाट अनुमोदन गरिनु पर्छ भन्ने संवैधानिक प्रावधान हो, यदि धारा २७९ को उपधारा (२) को देहायमा उल्लिखित खण्ड (क) देखि (घ) सम्मका विषयहरु सम्बन्धमा गरिएका सम्झौता भए ।
संविधानले यसरी व्यापकता दिएका प्रावधानलाई सन्धि ऐनमा टेकेर संवैधानिक प्रावधानलाई संकुचित बनाउने अधिकार न्यायपालिकालाई छैन । उक्त उपधाराका (२) को प्रतिबन्धात्मक वाक्यांश अनुसार (१) शान्ति र मैत्री तथा (२) प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड सम्बन्धी विषयहरुमा गरिएका सम्झौताले राष्ट्रलाई व्यापक, गम्भीर वा दीर्घकालिन असर नपर्ने अवस्था भने सामान्य बहुमतले अनुमोदन गरिन सक्छ । अर्थात यी दुई विषयमा भएका सन्धि सम्झौताको संसदीय अनुमोदन अनिवार्य छ, तर दुवै सदनमा तत्काल कायम रहेका सम्पूर्ण सदस्य संख्याको दुई तिहाइ बहुमतले अनुमोदन गर्ने कि प्रतिनिधि सभाको साधारण बहुमतले गर्ने भन्ने प्रश्नमात्र खडा हुन्छ । राष्ट्रलाई व्यापक, गम्भीर वा दीर्घकालिन असर के कस्ता सन्धि सम्झौताले पार्छ भन्ने सम्बन्धमा उक्त धाराको उपधारा (१) मा उल्लिखत कानुनले व्यवस्था गर्ने हो, जुन जारी गर्नमा राज्यले उदासीनता प्रदर्शन गरेको छ ।
तसर्थ सर्वोच्च अदालतका बिभिन्न इजलासहरुको अतिरिक्त संवैधानिक इजलासले संविधानको धारा २७९ को उपधारा (१) र (२) को पटक पटक अपव्याख्या गरेर जलस्रोत (प्राकृतिक स्रोत) सम्बन्धमा सन्धि ऐनको दफा २(क) को परिभाषाले समेट्ने सन्धि बाहेकका सम्झौताहरुको संसदीय अनुमोदन अनावश्यक ठह¥याइएका सबै फैसलाहरु असंवैधानिक हुन् ।
टनकपुर सम्बन्धी नजीर
संवैधानिक इजलासको फैसलामा नेपाल सन्धि ऐनको दफा २(क) उद्धृत गर्दै दुई वा दुई भन्दा बढी राज्यहरु वा कुनै राज्य र अन्तर सरकारी संगठन बीच “लिखित” रुपमा सम्पन्न भएको सम्झौताकोमात्र संसदीय अनुमोदन अनावश्यक ठह¥याइएको रहेछ । तर २०४९ सालमा सर्वोच्च अदालतको विशेष इजलासले तत्कालिन प्रधानमन्त्री गिरिजाप्रसाद कोइरालाले भारतसंग टनकपुर बाँध सम्बन्धमा गरेको समझदारीको संसदबाट अनुमोदन वा समर्थन गराउनेतर्फ कारवाही गर्नु भनी तत्कालिन परमादेश जारी गरिएकोमा टनकपुर बाँध सम्बन्धमा नेपाल र भारत सरकारहरुबिच “लिखित” रुपमा सन्धि वा सम्झौता भएकै थिएन । खालि २०४८ पौष ८ गतेको नेपाल राजपत्रको भाग ४ खण्ड ४१ संख्या ३६ मा जलस्रोत मन्त्रालयको सूचनाको रुपमा मात्र प्रकाशित थियो । तथापि उक्त सम्झौता अलिखित भए तापनि नेपालको संविधान २०४७ को धारा १२६ को देहाय (घ) मा उल्लिखित ‘प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड’सँग सम्बन्धित हुनाले संसदबाट अनिवार्य रुपमा अनुमोदन गर्नै पर्ने फैसला भएको थियो ।
यसबाट नेपाल सन्धि ऐनले किटानीसाथ “लिखित” सन्धि हुनु पर्छ भने तापनि लिखित सन्धि नभएको अवस्थामा पनि संसदीय अनुमोदन अपरिहार्य हुने नजीर स्थापना गरेर सर्वोच्च अदालतबाटै संवैधानिक सर्वोच्चता कायम गरिएको थियो । त्यसैले संसदीय अनुमोदन सम्बन्धमा विवेचना गर्दा संविधानको धारा २७९ को आधारमा गरिनु पथ्र्यो, नेपाल सन्धि ऐनको दफा २(क) मा सीमित रहेर होइन ।
विदेशी कम्पनी
संवैधानिक इजलासबाट नेपाल सरकार र कुनै विदेशी राज्य वा सरकारसंग उक्त सम्झौता गरिएको नभै नेपाल कानुन बमोजिम नेपालमा संस्थापित कम्पनीले नेपाल कानुन अन्तर्गत रही सम्झौता गरेको भनिएको छ । प्रवर्धक पक्कै पनि नेपालमा संस्थापित कम्पनी हो । तर प्रवर्धक कम्पनीमा हिन्द महासागर अवस्थित पूर्वी अफ्रिकी देश मरिससमा दर्ता भएको जीएमआर लायन इनर्जी लिमिटेड नामक कम्पनीको ७३ प्रतिशत शेयर पूँजी छ । अर्थात प्रवर्धक कम्पनी मरिसस स्थित मुख्य कम्पनीको सहायक कम्पनी हो र मुख्य कम्पनी विदेशी हुनाले लगानी पनि विदेशबाट नै आउने हो । साथै त्यस कम्पनीले आर्जन गरेको अधिकांश मुनाफापनि विदेशमै प्रत्यावर्तन गरिन्छ । त्यसकारण उक्त कम्पनी नेपालमा दर्ता भए पनि त्यसको आत्मा पूर्णतः विदेशी हो ।
साथै कम्पनी नेपालमा दर्ता भए पनि लगानी बोर्डले प्रवर्धक मार्फत नेपालमा वैदेशिक लगानी भित्र्याएको हुनाले पनि सारमा प्रवर्धक विदेशी नै हो । यस अतिरिक्त उद्योग विभागबाट नेपालमा प्रत्यक्ष विदेशी लगानी गर्ने स्वीकृति प्रदान गरिएर उक्त कम्पनी नेपालमा संस्थापन गरिएको हुनाले पनि उक्त कम्पनीको आत्मा विदेशी नै हो ।
यस अतिरिक्त २०७१ असोजमा सम्पन्न आयोजना विकास सम्झौता पनि २०६४ माघमा गरिएको समझदारीपत्रको आधारमा भएको कुरा सोहि सम्झौताकै प्राक्कथनको दफा (च) मा उल्लेख छ । अनि उक्त समझदारीपत्र जीएमआर–आइटीडी कन्सोर्टियमसंग भएको थियो, जसमा निम्न ३ विदेशी कम्पनीहरुसंग संलग्न थिएः
ड्ड भारतीय कम्पनी ऐन १९५६ बमोजिम दर्ता भएको र भारतको ब्यांगलोरमा कार्यालय भएका (१) जीएमआर इनर्जी लि र (२) जीएमआर इन्फ्रास्ट्रक्चर लि, र
ड्ड (३) थाइल्यांडको ब्यांग्ककमा कार्यालय भएको इटालियन–थाई डेभलप्मेन्ट पब्लिक कम्पनी लिमिटेड ।
साथै तिनै विदेशी कम्पनीहरुसंग नेपाल सरकारले गरेको समझदारीपत्र विरुद्ध नै २०६४ फागुनमा गोरखबहादुर बी.सी. समेतले रिट निवेदन दायर गरेका थिए । यसबाट संसदीय अनुमोदनको सैवैधानिक व्यवस्था छल्नको लागि मात्रै पछि नेपालमा कम्पनी दर्ता गरिएको प्रष्ट छ ।
यस अतिरिक्त माथि उल्लेख गरिए झै धारा २७९ को उपधारा (२) को (घ) मा उल्लिखित प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड सम्बन्धमा भएका सम्झौताको अर्को पक्ष विदेशी सरकार वा अन्तरसरकारी सगठन हुन जरुरी नभएको हुनाले ती बाहेक स्वदेशी÷विदेशी प्राकृतिक वा अप्राकृतिक व्यक्तिसंग उक्त विषयमा सम्झौता गरिए पनि संसदीय अनुमोदन अनिवार्य हुन्छ । विवेचित सम्झौता अनुसार नेपालको जलस्रोत दोहन गरेर उत्पादित जलविद्युत निर्यात गरिने हुनाले संसदीय अनुमोदन अपरिहार्य भएको हो । अर्थात नेपालको जलस्रोत दोहन गरेर नेपालमा नै आपूर्ति गर्ने वा नेपालमा खपत हुन नसकेर उब्रेको जलविद्युतमात्र निर्यात गर्ने सम्झौता भएको भए संसदीय अनुमोदन आवश्यक हुन्न ।
जलविद्युत प्राकृतिक स्रोत होइन
संवैधानिक इजलासको फैसलामा उक्त सम्झौता प्राकृतकि स्रोत वा त्यसको उपयोगको बाँडफाँड सम्बन्धी होइन भन्ने ठह¥याइएको छ । प्रवर्धकले जलविद्युत निर्यात गर्न सम्झौता गरेको हो भन्ने धारणा संवैधानिक इजलासको देखिन्छ । जलविद्युतलाई प्राकृतिक स्रोत मान्ने हो भने भूमिबाट उत्पादित अन्न पनि प्राकृतिक स्रोत मान्नु पर्ने अवस्था आउँछ भन्ने पनि फैसलामा उल्लेख छ । अवश्य पनि विद्युत वा अन्न आफैमा प्राकृतिक स्रोत होइन । तर विद्युत उत्पादन गर्ने नदी र अन्न उत्पादन गर्ने भूमि प्राकृतिक स्रोत हुन् । अन्न उत्पादन गर्ने भूमि नै निश्चित अवधिको लागि सुम्पिएर अन्न निश्चित अवधिसम्म निकासी गर्न दिनु र नेपालमा उत्पादित अन्न नेपालमा खपत नभएर उब्रेको अन्नमात्र निर्यात गर्न दिनुमा ठूलो अन्तर भए जस्तै कर्णाली नदीको एउटा सबभन्दा आकर्षक आयोजनास्थल नै निश्चित अवधिको लागि सुम्पेर उत्पादित अधिकांश जलविद्युत निर्यात गर्न दिनु भनेको नेपालमा खपत हुन नसकेर उब्रेको जलविद्युतमात्र निर्यात गर्ने सम्झौता जस्तो होइन भन्ने तर्फ संवैधानिक इजालासको ध्यान आकृष्ट हुन सकेन ।
नेपाल विद्युत प्राधिकरण अन्तर्गतका ५ वटा विद्युतगृहबाट ३१३ मेगावाट र निजी क्षेत्रले प्रवर्धन गरेका ९ वटा विद्युतगृहबाट ३१९ मेगावाटसमेत जम्मा १४ विद्युतगृहहरुबाट ६३२ मेगावाट बिजुली निर्यात गर्न भारतीय एनपीटीसी विद्युत व्यापार निगम लिमिटेडसंग प्राधिकरणले सम्झौता गरेकोसंग उक्त सम्झौताको तुलना गर्दा परिवेश प्रष्ट हुन्छ । प्राधिकरणले गरेको सम्झौता निश्चय नै जलविद्युत निर्यात गर्नैको लागि नै हो, जस अन्तर्गत प्राधिकरणले नेपालमा खपत हुन नसकेर उब्रेको, खेर जाने जलविद्युतमात्र निर्यात गर्छ । यसमा के कति परिमाणको बिजुली के कति दरमा निर्यात गर्ने भन्ने लगायतका विषय उल्लेख छ । तसर्थ प्राधिकरणले माथि उल्लिखित १४ विद्युतगृहहरुका आयोजनास्थलहरु सुम्पेको होइन, ती विद्युतगृहरुहरुबाट उत्पादन हुने जलविद्युत मध्ये नेपाललाई आवश्यक नभएर खेर जाने जतिमात्र निर्यात गर्ने हो; नेपालको भूमिमा उत्पादित अन्न नेपालमा खपत नभएर बाँकी निर्यात गरे जस्तै । तर विवेचित सम्झौताको सन्दर्भमा प्रवर्धकले के कति परिमाण जलविद्युत कसलाई के कति दरमा निर्यात गर्छ भन्ने कुनै व्यहोरा उल्लेख छैन । त्यसैले जलविद्युत निर्यात गर्ने र नेपालको नदी विषेशको एउटा आयोजनास्थल नै निश्चित अवधिको लागि सुम्पेर जलविद्युत निर्यात गराउने सम्झौताबिच ठूलो अन्तर छ भन्ने तर्फ संवैधानिक इजालासको ध्यान आकृष्ट भएन ।
साथै जलविद्युत उत्पादन प्राकृतिक स्रोतको उपयोग हो कि सदुपयोग हो वा दुरुपयोग हो भन्ने सम्बन्धमा पनि अदालतमा लामो बहस भएको बुझिन्छ । जलविद्युत उत्पादन प्राकृतिक स्रोतको उपयोग हो र नेपालले उक्त आयोजनाले उत्पादन गर्ने बिजुली मध्ये १२ प्रतिशत लिएर बाँकी ८८ प्रतिशत निर्यात गर्न दिनु प्राकृतिक स्रोतको उपयोगको बाँडफाँड भएकोमा कुनै शंका गर्ने गुञ्जायस छैन ।
अझ संविधानको धारा २७९ उपधारा (२) को खण्ड (घ) मा प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड भन्ने शब्दावली प्रयोग गरिएको छ । यदि संविधान निर्माताहरुको मनसाय प्राकृतिक स्रोतको उपयोगको बाँडफाँड सम्बन्धी सन्धि वा सम्झौतामात्र संसदबाट अनुमोदन गरिनु पर्छ भन्ने भएको भए उपरोक्त खण्ड (घ) मा “प्राकृतिक स्रोतको उपयोगको बाँडफाँड” भन्ने वाक्यांश मात्र लेखिन्थ्यो । तर उक्त वाक्यांश नलेखेर “प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड“ भन्ने वाक्यांश नै लेखिएको हुनाले (१) प्राकृतिक स्रोत सम्बन्धी र÷वा (२) प्राकृतिक स्रोतको उपयोगको बाँडफाँड सम्बन्धी दुवै किसिमका सन्धि सम्झौता संसदीय अनुमोदनको परिधि भित्र पर्दछ । यसबाट यी दुवै प्रकारका सन्धि वा सम्झौता संसदबाट अनुमोदन गरिनु पर्छ भन्ने संविधान निर्माताहरुको मनसाय हो भन्ने प्रष्टिन्छ ।
वैदेशिक लगानी र जलविद्युत निर्यात
यस अतिरिक्त संविधान निर्माताहरुको मनसाय नेपालमा जलविद्युत आयोजना निर्माण गरेर नेपालमा नै बिक्री गर्न गरिने विदेशी लगानी सम्बन्धी सन्धि वा सम्झौतापनि संसदबाट अनुमोदन गरिनु पर्छ भन्ने पनि होइन । जस्तै खिम्ती, भोटेकोशी जलविद्युत आयोजनाहरुमा विदेशीले लगानी गरेर उत्पादित बिजुली नेपालमा नै बिक्री गर्ने सम्झौताहरुको सम्बन्धमा संसदीय अनुमोदनको प्रसंग नै उठेन । तर कुनै विदेशीले नेपालमा लगानी गर्ने सम्झौता गरेर अधिकांश उत्पादित बिजुली निर्यात गर्ने सम्झौता गरेको अवस्थामा मात्र संसदीय अनुमोदन आवश्यक हुने हो ।
त्यस्तै नेपाली लगानीकर्ताले जलविद्युत आयोजना बनााएर त्यसबाट उत्पादित बिजुली नेपालमा नै उपयोग गराउने गरेर नेपाल सरकारसंग सम्झौता गरेको अवस्थामा पनि संसदीय अनुमोदन आवश्यक हुन्न । तर नेपाली लगानीकर्ताले जलविद्युत आयोजना बनाएर त्यसबाट उत्पादित अधिकांश बिजुली निर्यात गर्ने सम्झौता गरेकोको अवस्थामा भने संसदीय अनुमोदन आवश्यक हुन्छ भन्ने धारा २७९ को अर्थ हो ।
निष्कर्श
प्राकृतिक स्रोत र÷वा त्यसको उपयोगको बाँडफाँड सम्बन्धमा भएका सम्झौता अथवा नेपालको जलस्रोतको दोहन गरेर विदेशी लाभान्वित गराउने सबै सम्झौताको संसदीय अनुमोदन अनिवार्य छ । तर कार्यपालकिाले प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड गरिने गरेर सम्झौताहरु गर्दै गयो, तर संसदीय अनुमोदन भने गराएन । जब कि संविधानको २७९ उपधारा (२) मा किटानीसाथ उल्लेख नगरिएको विद्युत प्रशारण लाइन निर्माण गर्न एमसीसी नामक एक अमेरिकी निगमसंग अनुदान प्राप्त गर्ने सम्झौता भने ठूलो तामझामका साथ संसदबाट अनुमोदन गराइयो । साथै ससाना कुरामा पनि सांसदहरुले संसदमा होेहल्ला गर्ने मात्र होइन महिनौं सम्म संसद नै अवरुद्ध पार्छन् । तर सरकारले प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड सम्बन्धी सम्झौताहरु गरेर संसदमा अनुमोदन नगराउँदा कुनै पनि सांसदले एक शब्दपनि विरोधमा बोलेको सुनिएन ।
यसबाट प्राकृतिक स्रोत तथा त्यसको उपयोगको बाँडफाँड सम्बन्धी सम्झौताहरु संसदबाट अनुमोदन नगराउनुमा कार्यपालिकामात्र होइन व्यवस्थापिका समेत उदासीन देखियो । साथै सर्वोच्च अदालतले समेत यस सम्बन्धी संवैधानिक व्यवस्थाको अपव्याख्या गरेर पटक पटक फैसला गरेको दुभाग्यपूर्ण अवस्था छ ।
२०८० चैत ११ गते अनलाइन खबरमा प्रकाशित
Ratna Sansar Shrestha
https://www.onlinekhabar.com/2024/03/1453671?fbclid=IwAR1vOL8lKD0_FDgS_ygKMn5D1XURj9WM94RDOoNFClALmqMyK4Z9tBmkgf0_aem_AWC-5Fjv9wl8Jt-P-35oDzlibkbDH74z-Ao-kuCESfx3ZSOKvL0sRyKmabjKWeIlPxVzYe2l9ueOl0db6lgKg8SS
Violation of Parliamentary Ratification Provision
Each country has different practices regarding parliamentary ratification of treaties. It is constitutionally mandatory in the Netherlands, Japan, USA, Bhutan, etc. While there is no provision for parliamentary ratification in the constitutions of UK, Australia, India, etc.
In Nepal, provision for parliamentary ratification was introduced in 1990 in Article 126 of the Constitution of the Kingdom of Nepal, which was repeated verbatim in Article 156 of Interim Constitution of Nepal 2007 and in Article 279 of Constitution of Nepal 2015. Mahakali Treaty was the first bilateral treaty ratified by the then parliament in September 1996, which was signed in February 1996.
Upper Karnali Hydropower Project
After a memorandum of understanding (MoU) was signed between Government of Nepal (GoN) and the GMR-ITD Consortium for 300 MW Upper Karnali Hydropower Project in January 2008, a public interest writ petition was filed at the Supreme Court in February 2008 praying the Court, amongst others, to direct GoN to have it ratified by the parliament pursuant to the then prevalent Article 156 of the Interim Constitution. But the petition was rejected by the Supreme Court in July 2012.
After this, the anti-national activity of handing over attractive sites on Nepal’s rivers as export-oriented hydropower projects to Indian companies was begun, without having to sign bilateral treaties between the governments of Nepal and India. Developers from any country could have implemented the projects that are awarded through competitive bidding, but electricity was to be exported. So far, 7 hydropower sites with a total capacity of 4,649 MW have been made export-oriented and handed over to Indian companies.
Meanwhile, on the basis of the MoU, GoN issued a survey license for Upper Karnali project in May 2008 for an upgraded capacity of 900 MW in the name of GMR Upper Karnali Hydropower Ltd. (GMR). Later, GoN signed a project development agreement (PDA) with GMR in September 2014.
Verdict of Constitutional Bench
Deliberating few public interest writ petitions filed against GoN for failing to get the PDA ratified by the parliament, the Supreme Court's constitutional bench issued its verdict in May 2023 saying that “the PDA does not appear to fall under the category of treaty described in Article 279 of the Constitution”.
Treaty or Agreement
The Constitutional Bench basing its verdict on Section 2(a) of Nepal Treaty Act, which stipulates that a “Treaty means an agreement concluded in writing between two or more states, or between any state and any intergovernmental organization” said that since PDA was not signed with another state or intergovernmental organization, it does not constitute a treaty and, therefore, no ratification required. It implies that if the other party to that PDA was another state, parliamentary ratification would have been mandatory. A closer examination of Article 279 will reveal that the intention of the constitution framers was different.
Article 279 (1) of the Constitution stipulates that "a treaty or agreement to which the State of Nepal or the Government of Nepal is a party" will require parliamentary ratification if it deals with matters specified in Clause (a) through (d) in Article 279 (2), which includes natural resources and division of its use. Article 279 (1) has not stipulated that the other party must be another state or government or intergovernmental organization. Nor has it stipulated that the other party must be a foreign natural or artificial person. Therefore, Article 279 is applicable if the government of Nepal enters into a treaty or agreement with Nepali or foreign natural or artificial persons in addition to another state or government with regard to Nepal’s natural resources which would benefit countries other than Nepal.
In other words, the provision of Section 2(a) of the Nepal Treaty Act is applicable only in case of a treaty signed between two or more states or a state and an intergovernmental organization. However, it is not applicable in the case of agreements other than treaties in which the other party is not another state or intergovernmental organization. Because according to Sub article (1) of Article 1 of the Constitution, the Constitution is the basic law of Nepal and it supersedes any and all law to the extent it conflicts with the Constitution. Further, the constitution framers did not use the words treaty or agreement as synonymous in Article 279; the word “or” is used by the constitution framers by way of either treaty (under Nepal Treaty Act) or agreement (other than treaty).
Therefore, agreements other than "treaties" signed by GoN fall outside the purview of Section 2(a) of the Nepal Treaty Act. Because the intention of constitution framers was that the agreements other than treaties also must be ratified by the Parliament in accordance with Article 279, if the subject of the agreement is related to clauses (a) through (d) of sub-Sub article (2) of Article 279.
The Judiciary does not have the authority to interpret the constitutional provision, with overarching meaning, narrowly on the basis of any Act. Only limitation is provided in the proviso clause of Sub Article (2) of the said Article with respect to agreements or treaties related to (1) peace and friendship and (2) natural resources and division of its uses. Treaties or agreements on these two subjects can be approved by a simple majority of House of Representatives if it does not pose an extensive, serious or long-term impact on the nation. In other words, the parliamentary ratification of the treaties or agreement related to above two subjects, although mandatory, could be ratified by a two-thirds majority of the total members existing in both houses or by a simple majority of the House of Representatives depending upon whether it poses extensive, serious or long-term impact on the nation. It was for the federal government to promulgate a law to determine what kind of treaty or agreement will pose an extensive, serious or long-term impact on the nation, which has yet to be done.
Therefore, various benches of the Supreme Court and the Constitutional Bench have misinterpreted the provision of Article 279 and all judgments deeming parliamentary ratification of agreements related to export-oriented hydropower projects unnecessary is unconstitutional.
Tanakpur Precedent
The Constitutional Bench, quoting Section 2(a) of the Nepal Treaty Act, stated that parliamentary ratification is required only for treaties in writing. However, in December 1992, a special bench of the Supreme Court had issued mandamus directing GoN to arrange ratification of the understanding reached by the then Prime Minister Girija Prasad Koirala with Indian government regarding the Tanakpur dam as it is related to the ‘natural resources and division of their use' specified in Clause (d) of Sub article (2) of Article 126 of the Constitution of Nepal 1990, although no formal treaty in writing was signed. It was merely published as a notification of the Ministry of Water Resources in Part 4, Section 41, Number 36 of the Nepal Gazette in December 1991.
From this perspective, although the Nepal Treaty Act states that there must be a "written" treaty, the Supreme Court has established constitutional supremacy and set a precedent that parliamentary ratification is mandatory even in the absence of a formal written treaty if the matter is related to Nepal’s natural resources and division of its use. Therefore, when considering parliamentary ratification, it should be done on the basis of Article 279 of the Constitution, not be limited to Section 2(a) of the Nepal Treaty Act.
Foreign Company
The Constitutional Bench opined that since the other party to the PDA was not another state or government, but a company established in Nepal under Nepal law, its parliamentary ratification is unnecessary. GMR is definitely a company established in Nepal. But 73% of its equity is held by GMR Lion Energy Limited registered in Mauritius. In other words, GMR is a subsidiary of a foreign company and the equity will also be injected from abroad. Further, most of the profits earned by it will be repatriated abroad. Therefore, even though the company is registered in Nepal, in spirit it is a foreign company.
Besides, the PDA was signed as a result of GoN’s endeavor to mobilize foreign investment. Similarly, the Department of Industries had approved foreign direct investment to be injected into the project. From these perspectives too, GMR is foreign company registered in Nepal in order to circumvent parliamentary ratification.
Moreover, clause (f) of the preamble of PDA mentions that it is based on the MoU signed between GoN and GMR-ITD Consortium in January 2008, which had only following 3 foreign partners:
(1) GMR Energy Ltd. and (2) GMR Infrastructure Ltd. (both registered in Bangalore, India, under the Indian Companies Act, 1956), and
(3) Italian-Thai Development Public Company Limited with an office in Bangkok, Thailand.
Furthermore, the first writ petition filed in February 2008 was against the MoU signed by GoN with those foreign companies. From this, it is clear that the GMR was registered as a Nepali company only to circumvent the constitutional provision of parliamentary ratification.
Besides, according to Article 279 (1) the PDA could have been signed with any Nepali or foreign natural or artificial person besides another state and an intergovernmental organization, but parliamentary ratification is mandatory if it is related to Nepal’s natural resources and division of their use. Basically, as the PDA has handed over a hydropower site on a river in Nepal for a fixed period to export most electricity generated therefrom, parliamentary ratification is mandatory. In other words, the agreements to harness Nepal’s water resources and supply electricity mainly in Nepal and export the surplus electricity that cannot be consumed in Nepal, no parliamentary ratification is necessary.
Hydropower isn’t Natural Resource
The Constitutional Bench’s verdict had stated that the PDA is not related to natural resources or division of its use, rather to export hydropower. The verdict adds that if hydropower is to be considered natural resources, then the food-grain produced from land will also have to be considered natural resources. Of course, electricity, food grain, etc. on their own are not natural resources. But the river from which electricity is generated and the land that grows food-grain are Nepal’s natural resources. There is a huge difference between handing over the food-grain producing land for a certain period of time to export food-grain grown therefrom, and allowing export of the surplus food grain. Similarly, handing over the hydropower project site on Nepal’s River for a fixed period in order to export most electricity generated therefrom is different from exporting surplus electricity that would have been wasted. The Constitutional Bench’s attention should have been focused on the distinction between exporting electricity whenever there is surplus versus handing over a site on Nepal’s river for a specific period.
The context can be illustrated by comparing the agreement signed by Nepal Electricity Authority (NEA) to export up to 655 MW of electricity to India from 14 powerhouses, including up to 321 MW from NEA owned 5 powerhouses and up to 334 MW from 9 private sector powerhouses with the said PDA. The agreement signed by NEA is definitely for the purpose of exporting excess (surplus/spill that cannot be consumed in Nepal or would go waste) electricity. This means, NEA has not handed over the above-mentioned 14 powerhouses; only surplus electricity generated therefrom gets exported, which is comparable with exporting surplus food grain produced in Nepali land. But the PDA was signed to hand over a site on Nepal’s river to GMR in order for it to export most of the electricity generated. Thus, the Constitutional Bench did not distinguish between exporting merely surplus electricity with handing over a site on a river in Nepal for a specific period in order to export most of the electricity generated therefrom.
During the hearing at the Constitutional Bench there was a long debate as to whether hydropower generation is the use of natural resources or not. Hydropower is definitely generated by using natural resources (water resources). Further there is no doubt that Nepal receiving 12% electricity and allowing 88% (almost all) to be exported is a division of the use of natural resources. In other words of the 3,153.6 GWh of hydropower that this project would generate annually Nepal would receive only 378.4 GWh (12%), while depriving Nepal from 2,775.2 GWh (88%), which is much required for Nepal for her industrialization (thereby creating highly required employment), electrification of transportation (thereby displacing imported petroleum product that pollutes local environment and make people sick), etc., which would have raised living standard of people in Nepal. Speaking in terms of multiplier effect, as a USAID study has concluded that “average value addition per unit (kWh) of electricity use is approximately US$ 0.86/kWh”, by exporting 88% of hydropower generated by this project Nepal stands to be deprived of $ 2.38 billion/year (Rs 317.423 billion/year at currently prevalent exchange rate) in value addition in Nepal’s economy. Therefore, this PDA results in huge economic loss to Nepal as it is for an export-oriented project.
Further, the term specifically used in Clause (d) of Sub article (2) of Article 279 is “natural resources and division of its use”. If the intention of the constitution framers was that only treaties or agreements related to the division or sharing of natural resources is to be ratified by the Parliament, they would have simply written the phrase “division/sharing of natural resources” in clause (d) Sub article (2) of Article 279. However, since the constitution framers used the phrase “natural resources and division of its use", it encompasses treaties or agreements (1) related to natural resources and/or (2) related to division of natural resources and both types require parliamentary ratification. Hence, the intention of the constitution framers is that all treaties or agreements should be ratified by the Parliament if it benefits a foreign country by using Nepal’s natural resources.
Foreign Investment and Hydropower Export
Besides, the intention of the constitution framers is not to require parliamentary ratification of all agreements signed with foreign investors. In case a foreign investor signs an agreement to implement a hydropower project mainly to sell electricity in Nepal, it does not require parliamentary ratification. For example, the issue of parliamentary ratification did not arise when agreements were signed with foreign investors for Khimti and Bhote Koshi hydropower projects, because these are not export-oriented; parliamentary ratification is required only when a treaty or agreement is signed for an export-oriented project. In the same way, even when an agreement is signed with Nepali investors for export oriented projects, parliamentary ratification would still be mandatory under Article 279.
Conclusion
Therefore, the intention of the constitution framers was to make parliamentary ratification mandatory for all treaties and agreements related to the Nepal’s natural resources and/or division of their use that benefits another country/ies irrespective of whether the other party to the agreement is another state, intergovernmental organization, or Nepali or foreign natural or artificial person. While no parliamentary ratification is required in the case of the treaties or agreements signed with anyone related to Nepal’s natural resources that do not benefit another country.
The executive arm of the state went on a spree of signing agreements for export-oriented hydropower projects without having them ratified by the parliament. While the Compact to receive a small grant ($100 million/year) from MCC, an American corporation, to build 400 kV transmission line was ratified by the Parliament with great fanfare, although grant agreement find no mention in Article 279 (2) and it did not require ratification constitutionally. Further, the Compact does not even constitute a treaty according to Section 2(a) of Nepal Treaty Act to require parliamentary ratification.
Also, parliamentarians not only object to minor matters in the parliament but even obstruct the parliamentary proceedings for months on small pretexts. But while GoN signed agreements related to Nepal’s natural resources or division of its use but did not submit them to the parliament for ratification, no parliamentarian objected.
While the executive arm of the state acted in contravention of the Constitution, the legislature became an accomplice by demonstrating indifference. And, the Supreme Court has repeatedly mis-interpreted the constitutional provision in this respect.
Published in People’s Review of March 28, 2024
https://www.peoplesreview.com.np/2024/03/26/violation-of-parliamentary-ratification-provision/
Saturday, March 9, 2024
जलविद्युतको औपनिवेशीकरण
Thursday, December 14, 2023
Reform to End NEA’s Exploitation of Consumers
A finding of Auditor General’s Office stated that the average cost of powerhouses built by Nepal Electricity Authority (NEA) was Rs 364.6 million per MW, basically due to failure in financial engineering manifest in cost and time overruns. Specifically, the cost of 60 MW Upper Trishuli was Rs 280.5 million/MW, 14 MW Kulekhani III Rs 323.5 million/MW and 30 MW Chameliya Rs 490 million/MW. While, independent power producers’ (IPPs) average cost was Rs 162.2 million/MW only. Of which, 42 MW Mistri Khola cost Rs 134.3 million/MW, 3.8 MW Super Mai Cascade Rs 146.8 million/MW, 7.8 MW Super Mai II Rs 190.8 million/MW and 6.6 MW Rudi Khola 'B' Rs 177 million/MW.
NEA’s subsidiary too spent hopping Rs 196.2 million/MW on 456 MW Upper Tama Koshi, which was announced to be the most attractive project initially; almost thrice the estimated cost and 20% more than IPP average cost.
Construction cost and tariff
Logically consumer tariff from expensive powerhouses would be higher than from inexpensive powerhouses. Because the tariff is based on cost of generation which is based mostly on construction cost. In the competitive electricity market, the electricity from expensive powerhouses would not find buyers or even if found, will incur loss or the profit will be very slim, while the powerhouses built at low cost would be profitable. This is a general principle of economics that applies to all commodities and products.
Ground reality
But the ground reality of Nepal’s electricity sector is just the opposite. Although NEA constructed costly powerhouses, it made an astoundingly high net profit of Rs 21.38 billion (after adjusting loss on trade with India) by selling electricity worth Rs 89.57 billion to domestic consumers last fiscal year; net profit 24% of sales. It is a manifestation of NEA profiteering by exploiting consumers, although it failed to achieve economy, efficiency and effectiveness in construction of powerhouses.
According to Section 3 of the “Black Market and Some Other Social Crimes and Punishment Act 2032,” more than 20% profit constitutes profiteering and is punishable. Legally a profiteer is subject to imprisonment for up to 1 year or fine up to Rs 250,000 or both. If an ordinary businessperson had committed such a crime, s/he would have been prosecuted and sentenced with imprisonment or fine. However, NEA has not been prosecuted for profiteering at all.
NEA did not just make profit by more than 20%, rather net profit of 24%. When net profit is 24%, the proportion of profit must be a lot higher.
Moreover, NEA is a monopoly and it is a heinous crime for a monopoly to profiteer by exploiting consumers. However, the state agencies including the Electricity Regulatory Commission (ERC) turned deaf ear and consumerist NGOs adopted a mysterious silence. This is a huge distortion and anomaly existing in the electricity sector, which has to be abolished.
Unbundling Electricity Sector
Section 18 of the Electricity Bill, currently under consideration of the House of Representatives, has provision for unbundling of the electricity sector which will mitigate the distortions and anomalies, under which a single organization could not be generator, transmitter or distributor. Once the bill is passed, a competitive market will be established where consumers could buy electricity directly from generators that build powerhouses economically, efficiently and effectively thereby ending NEA’s profiteering.
Natural monopoly
NEA is a natural monopoly from an infrastructural standpoint. As the electricity generated by powerhouses reach the consumers through the transmission and distribution networks, it is physically impossible for each generator to build separate sets of transmission and distribution networks to sell electricity to each individual consumer. Before the introduction of cellphones, Nepal Telecommunication Corporation too had a natural monopoly on landline telephone systems (actually monopoly over landline phones had been broken in some western countries, but due to space constraints it’s not possible to discuss here).
Before NEA was established, there were the Electricity Department of GoN, Nepal Electricity Corporation, Purvanchal Electricity Corporation and the Small Hydropower Development Board. Therefore, it was possible to compare the cost of powerhouse construction and competition existed to an extent. But after the promulgation of the Nepal Electricity Authority Act 2041, these four institutions were merged to establish NEA, which was given full monopoly in electricity generation, transmission and distribution.
Electricity Act
As mentioned above, although electricity is part of the infrastructure sector, the Electricity Act 2049, had a provision to issue licenses to the private sector for generation, transmission and distribution. First license was issued for the 60 MW Khimti project in late 2049 and NEA signed the first power purchase agreement (PPA) for it in late 2050, thereby breaking the monopoly of NEA in generation. Now there are almost 400 IPPs generating, constructing powerhouses and awaiting financial closure.
The private sector did not evince interest in transmission. NEA has a monopoly over 90% distribution, while community entities and BPC distribute to 10% consumers.
In this manner, as an integral part of the reform of electricity sector, the first stage of competition was implemented by disallowing NEA to have monopoly over generation, due to which comparison of construction cost between NEA and IPPs has become possible. Prior to the 1990s nobody was in a position to question NEA in this respect.
Monopsony and monopoly
At present, IPPs are not allowed to sell electricity anywhere else. Therefore, NEA is the single buyer, ergo a monopsony. On the other hand, NEA, community entities and BPC enjoy monopoly over distribution in respective areas. Hence, there is monopsony and monopoly together currently in the electricity sector, a manifestation of anomalies and distortions.
Due to which, notwithstanding that NEA has built costly powerhouses, it succeeded to make a huge net profit of Rs 20 billion, illegally. If any IPP was to build a costly powerhouse it would go bankrupt since NEA would not purchase at rates higher than agreed in the PPA and, consequently, that IPP would suffer loss.
Electricity Regulation Commission
IPPs are forced to avoid cost and time overrun during construction, due to risk of bankruptcy. But NEA did not have to go bankrupt even though it had incurred huge time and cost overrun; on the contrary it illegally made huge “net profit.” Because ERC fixes consumer tariff based on cost of generation and purchase from IPPs.
ERC is required by section 13 (1) (d) of Electricity Regulation Commission Act 2074 “to identify and implement measures to minimize the cost of electricity.” In other words, ERC has the mandate to tell NEA that it cannot impose its failures to control time and cost overrun in the construction of powerhouses upon the consumers and refuse to fix unconscionably high tariffs. ERC should have refused to accept additional costs incurred due to time and cost overrun while fixing tariff. But ERC demonstrated dereliction in fixing consumer tariffs. Hope it is not for lack of competence on the part of the chair, members of ERC and its bureaucracy.
Competitive wholesale market
The second stage of reform is introduction of competition in the wholesale electricity market. Distribution companies (DISCOs) would be set up in geographic regions and these would buy electricity in bulk directly from generators of any region at competitive wholesale rates. At this stage, the transmission network operator facilitates the wholesale market, which would levy wheeling charges.
For example, Kanchanpur district DISCO in Sudur Paschim Province can buy from a generator in Panchthar district of Koshi Province and retail it to consumers in Kanchanpur district.
Due to the competition between the generators, powerhouses built economically, efficiently and effectively would be able to fix low wholesale rates. And since profiteering is illegal, DISCOs buying at low wholesale rate would be forced to sell to consumers at low tariff.
Competitive retail market
Last stage of the reform is competition in the retail market; consumers would also be allowed to participate in the competition. Like the transmission network operator facilitating the wholesale market, at the final stage the distribution network operator would facilitate the retail market for a certain fee. The consumers would not be limited to the DISCOs of their respective regions. Any consumer can buy from any DISCO that offers competitive rates.
At this stage, not only generators and distributors do not have to be bound by geographic boundaries, but consumers too would not be bound by geographic boundaries. A DISCO in any region can sell to a consumer in another DISCO’s area at a competitive rate. In other words, in the second stage, the generator is not limited to the geographic area and could sell to any DISCOs. In the final stage, DISCOs can also buy from the generator anywhere and sell to the consumer everywhere.
For example, Sunsari district DISCO of Koshi Province can buy electricity from a generator in Darchula district in Far Western Province, while a consumer in Kathmandu in Bagmati Province can buy electricity from Kaski district DISCO of Gandaki Province. That is, Jhapa DISCO can buy from the generator in Tanahun district and sell to the consumer in Bardia district. In this manner, full competition in the electricity sector becomes possible, ending the current situation where NEA as a monopsony exploits IPPs while consumers are exploited by monopoly distributors.
Conclusion
Some officials of NEA, its unions, misguided intellectuals, etc., reportedly, have opposed the above-mentioned provision of the Bill. It must have been done so due to failure to fully appreciate this provision. Since all the generators and consumers will benefit after this provision is fully implemented, the employees of NEA and their family members will also benefit as they too are consumers and it is illogical for them to oppose this provision. Moreover, due to competition in generation, cost of construction of powerhouses including by NEA would be reduced substantially and electricity tariff would be reduced by a lot, which will not only benefit all segments of consumers, but the economy and the country. Therefore, it is important to fully appreciate the spirit enshrined in the said section and help in the implementation of such a positive revolutionary step.
Ratna Sansar Shrestha
Published in People’s Review of December 14, 2023.
https://www.peoplesreview.com.np/2023/12/12/reform-to-end-neas-exploitation-of-consumers/
Wednesday, December 6, 2023
प्रतिस्पर्धात्मक विद्युत् क्षेत्र
Friday, December 1, 2023
Unbundling Electricity Sector
Sub-section (1) of Section 18 of the Electricity Bill 2023, which is under active consideration by the House of Representatives, stipulates that a single organization cannot generate, transmit and/or distribute electricity. It means, a power producer cannot transmit or distribute electricity, a transmission company cannot generate or distribute electricity, and a distribution company cannot produce or transmit it. In other words, a generator can only sell the electricity in bulk, the transmission company’s responsibility is limited to operation of transmission infrastructure and transmission of electricity and the distribution company is only to buy bulk electricity from the generator and retail it.
Existing institutions
Similarly, sub-section (4) of section 18 of the Bill makes it mandatory for vertically integrated institutions currently engaged in electricity generation, transmission and distribution businesses to form separate organizations for generation, transmission and distribution within 5 years. Accordingly, the Nepal Electricity Authority (NEA), which is a vertically integrated institution, will not be able to continue the generation, transmission and distribution 5 years after the Bill is passed by the parliament. Section 6.15.2 of the Hydropower Development Policy 2001 also stipulated that “the functions pertaining to the operation of the power centers, operation of electricity transmission and national grid, and electricity distribution owned by NEA shall be gradually unbundled and appropriate institutional arrangement shall be made therefor.” It also states that an autonomous public body shall be entrusted with the responsibility for the operation of the national grid. It had envisaged that local bodies, community organizations and the private sector shall also be allowed in distribution business.
Currently Butwal Power Company (BPC) is also generating electricity and is also distributing it in 4 districts. According to this Bill, BPC too will have to set up separate organizations within 5 years for generation and distribution.
This provision has been denounced by certain sections of the populace and some have even started to protest. In this backdrop, a critical assessment of this provision is warranted.
Distribution
In the last fiscal year, NEA had 5.13 million consumers and 471 community rural electrification entities (CREEs) had 514,000 consumers in 43 districts. Meaning more than 10 percent of the consumers were served by CREEs. Similarly, BPC too generated hydropower from Andhikhola and Jhimruk and retailed it to 62,000 consumers in Syangja, Palpa, Pyuthan and Arghakhanchi districts and sold the remaining to NEA in bulk. CREEs and BPC retail electricity mostly in rural areas.
The consumers of CREEs and BPC are not required to spend almost equal to or more than the electricity bill on the bus fare or be absent from work for the whole day in order to travel to pay the bill. Also, the non-technical leakage of these institutions is significantly lower than NEA’s. From this NEA also benefits. Moreover, the problem of unpaid bills under CREEs and BPC is almost nonexistent. Therefore, unbundling of distribution business will be beneficial not only to the consumers, but also to NEA and the country.
If all the 753 local bodies are to be allowed to distribute electricity as envisaged by the Policy, the above mentioned benefits would also increase exponentially.
From this perspective, the principle enshrined in Section 18 of the Electricity Bill has already been implemented to an extent and its full implementation is in the interest of consumers, the sector and the country.
Transmission
NEA is currently operating the existing 66 kV, 132 kV, 220 kV and 400 kV transmission infrastructure and is also engaged in constructing new transmission lines of different capacities.
Moreover, the Rastriya Prasaran Grid Company Limited was established in 2018 by GoN to transmit and evacuate electricity; also, to collect revenue like wheeling charges, royalties, etc. from the users of the grid. This provision is in line with the Electricity Bill and the Policy.
Generation
Total generation capacity last year was 2,684 MW, of which NEA owned 583 MW hydropower, 53 MW of thermal and 25 MW solar power. NEA’s subsidiaries, with investment from the general public generated 478 MW hydropower. Similarly, Independent power producers (IPPs) generated 1,477 MW hydropower, 62 MW solar power and 6 MW from bagasse. In other words, of the total electricity generation, NEA generated 662 MW and NEA’s subsidiaries with general public investment and IPPs together generated 2,023 MW. Therefore, only 25% electricity was generated by NEA while 75% electricity was generated with the private sector investment.
Besides NEA, 2 subsidiaries of NEA with investment from the general public and 157 IPPs had generated electricity. In other words, NEA generated 25% electricity, while 159 organizations with private investment generated 75%.
Moreover, 3 subsidiaries of NEA and 3 more with investment from the general public are constructing power plants, while 114 IPPs are constructing hydropower plants and 4 IPPs are constructing solar power projects. Further, 106 IPPs and 1 subsidiary of NEA are awaiting financial closure. Hence, there are in total 391 organizations in generation business, some already generating, some constructing power plants and some awaiting financial closure. From this, it becomes clear that NEA does not enjoy monopoly over electricity generation business anymore and multiplicity has come to exist in it.
Furthermore, Vidyut Utpadan Company Limited was established in 2016 by GoN, with 29 percent shares from project-affected local people, under-privileged and general public. Of course, the proportion of electricity generated by NEA will become very small in the near future.
Hydropower construction cost
In view of the multiplicity in the generation business, construction cost should be compared. The Auditor General's Office in its 60th report had pointed out that the average construction cost of IPPs was Rs 162.2 million per MW while it cost Rs 364.6 million/MW to NEA; more than double.
The construction cost of hydropower projects of IPPs was Rs 134.3 million/MW for 42 MW Mistrikhola, Rs 146.8 million for 3.8 MW Super Mai Cascade, Rs 198 million/MW for 7.8 MW Super Mai II and Rs 177 million/MW for 6.6 MW Vindhyavasini. While it cost NEA Rs 285 million/MW for Upper Trishuli, Rs 323.5 million/MW for 14 MW Kulekhani III and Rs 490 million/MW for 30 MW Chamelia.
NEA blamed COVID19 pandemic and repeated lockdowns for the cost overrun. But, both NEA and IPP projects were commissioned during the same period. Whereas, NEA had begun construction of Upper Trishuli in 2011, Kulekhani III in 2010 and Chameliya in 2005.
Moreover, Upper Tamakoshi project, 456 MW, built by NEA’s subsidiary with investment from the general public cost Rs 196 million/MW, which initially was described as the most attractive project and was estimated to cost only Rs 77 million/MW. But it ended up costing nearly 3 times the estimate, and 20% more than IPPs.
According to the theory of economies of scale, larger projects should cost relatively less than smaller ones. Although NEA and its subsidiaries have constructed relatively large projects, the cost of IPP projects are substantially lower; in direct contrast to the principle of economies of scale. By allowing IPPs to construct power projects, NEA’s high cost of construction has been exposed.
It becomes clear from this analysis that compared to NEA and its subsidiaries, the IPPs are more economic, efficient and effective. From the perspective of the country, its people and the economy, if hydropower projects are constructed at lower cost, electricity generation cost in turn would be substantially lower and, therefore, retail tariff too would be lower. Nepal Electricity Regulatory Commission takes the construction/generation cost into account when fixing electricity tariff.
From this perspective, section 18 of the Electricity Bill is in the interest of the country, the people and the economy.
Conclusion
Unbundling of NEA into generation, transmission and distribution businesses should not be equated with partitioning of that empire in the lines of creation of Kathmandu, Lalitpur and Bhaktapur states after the death of Yaksha Malla, last king of unified Nepal Mandal in 1538. Unbundling is not the disintegration of NEA, rather it is the spinning off of specialized entities to do generation, transmission and distribution businesses separately.
Currently anomalies and distortions have crept in the vertically integrated entity involved in the disparate nature of businesses. Large scale industries too specialize in production only and they do not involve in transportation of their production, nor do they retail it.
It is now clear that unbundling will benefit the consumers, the country's economy and the related organizations. Once the generation, transmission and distribution businesses are unbundled, it could be easily determined how much electricity was handed over for transmission by the generator, how much electricity was received and transmitted by the transmitter and how much electricity received from the transmitter was distributed to the consumers. It would afford a double entry bookkeeping system and would help determine how much and where leakages occurred, and help eradicate it.
The provision in the Bill to provide value added water and lean season augmented flow to downstream countries free of cost is anti-national. Whereas, the provision related to unbundling is in national interest.
Ratna Sansar Shrestha, FCA
Published in People’s Review on November 30, 2023
https://www.peoplesreview.com.np/2023/11/28/unbundling-electricity-sector/
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