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A National Seminar on "Water Resource Management of Nepal: A Strong Means for Sustainable National Development"
Organised by Institute of Foreign Affairs (IFA)
A one-day national seminar on
"Water Resource Management
of Nepal: A Strong Means
for Sustainable National
Development" was organised by
IFA at The Hotel Malla, Lainchaur,
Kathmandu, on 7th June, 2007. The
main objective of the seminar was
to bring together hydropower
experts, policymakers and diplomats
for discussing Nepal's hydropower
potential and its management
challenges. The seminar was divided
into two parts, namely inaugural
session and working session. The
working or technical session was
also divided into two parts-- First
Session and Second Session.
Inaugural Session
Minister for Foreign Aff airs, Mrs. Sahana Pradhan
graced the opening session as the Chief Guest, while
Minister of State for Water Resources, Mr. Gyanendra
Bahadur Karki was the Special Guest. Chaired by Prof. Dr.
Gopal Pokharel, Executive Director of IFA, the session
was participated in by Acting Foreign Secretary of the
Ministry of Foreign Aff airs (MoFA), Mr. Gyan Chandra
Acharya, representatives of the foreign diplomatic missions
in Nepal, water resource and hydropower experts, resource
persons, scholars, journalists, among others.
Hon'ble Minister Mrs. Pradhan formally opened the seminar
by lighting a traditional lamp. In her inaugural address, Mrs.
Pradhan emphasised the need for Nepal to go for nonpolluting
alternative forms of energy like hydropower, wind
energy and solar power.
She said that the country's huge water resources must be
harnessed and developed for meeting the growing energy
demand at home and in the neighbouring countries. She
said the development of small and medium scale power and
irrigation projects could bridge the gap of local demand in
a sustainable manner. Shedding light on the investment in
hydropower generation, she called for the participation of
international power developers.
She said that cross border inter-connection of power grids
and harmonisation of standards was a prerequisite for power
trade with India and possibly beyond the SAARC. She stressed
the urgency to develop a clear vision and strategy based on a
rationale choice and national political consensus in order to
derive sound economic benefi ts from the otherwise wasted
resources.
Focussing on the need for judicious use of the enormous
volume of water resources, she said that Nepal had to build
up more confi dence in the technical and economic aspects
of hydropower projects in the spirit of bilateral and regional
cooperation. She also said that Nepal needed to forge deeper
understanding with neighbouring countries to reap mutual
benefi ts in an equitable and sustainable manner.
Delivering his address, Mr. Gyanendra Bahadur Karki,
Minister of State for Water Resources, viewed that Nepal
needed to make best use of water resources for national
development.
Stressing the importance of the utilisation of water resources in Nepal, he said that
the country should accord top priority to that vital sector. He informed that Nepal
has generated about 280 MW more hydropower after the restoration of multiparty
democracy in 1990.
He concluded that Nepal could move ahead in the path of economic prosperity
and improved living condition of the people only through the development of
hydropower.
Speaking at the function, Mr. Gyan Chandra Acharya, Acting Secretary of MoFA,
strongly called for forging national consensus on the use of natural resources in Nepal.
He equated the water resources of Nepal to human resources of Singapore and oil of
the United Arab Emirates (UAE). He also emphasised the need for a broader national
vision for the optimum utilisation of the country's immense water resources.
He was of the opinion that Nepal needed a comprehensive plan for management,
protection and use of water resources for national development.
Earlier, in his welcome address, Prof. Dr. Gopal Pokharel, Executive Director of
IFA, was of the opinion that Nepal's vast water resources needed to be harnessed
properly so as to meet the energy demand not only of the country and to gear up its
economic growth but also to fulfi ll the energy defi cit of South Asia.
Exploring the reasons for the lack of suffi cient harnessing of water resources in Nepal,
Dr. Pokharel blamed the successive governments in Nepal for failing to introduce a
more investment-friendly policy to attract more foreign investors. He suggested that
the country should realise the past mistakes and come up with more eff ective policies
based on national interest and consensus.
Talking about the people's rising expectations after the restoration of popular
democracy in Nepal, he said that the government was unable to address even the
basic needs. He warned that the nation could face greater challenges ahead if timely
measures were not taken to solve the burning problems. He observed that the
development of hydropower alone could help give a boost to the national economy
and development.
Delivering her vote of thanks to the Chief Guest, the Special Guest and other invitees,
Ms. Anjan Shakya, Deputy Executive Director of IFA, said that the seminar would
be successful only when the Nepalese diplomatic missions abroad could convince
and motivate more foreign investors to invest in Nepal's potential hydropower sector.
She informed that the outcome of the seminar would be made available even to those
Nepali ambassadors who were not present at the gathering. She anticipated that the
process of the nation's economic development and social progress would start gaining
momentum together with massive investment in hydropower sector.
Working Sessions
(First Part)
The working sessions were followed by the inaugural session. The fi rst part of the
working session was chaired by Mr. Surya Nath Upadhyaya, Secretary General
of Water Resource Development Institution, and former Chief Commissioner
of the Commission for Investigation of the Abuse of Authority (CIAA) and
Secretary at the Ministry of Water Resources. Three working papers were
presented. Dr. Govind Nepal, Associate Professor, Department of Economics,
Patan Multiple Campus, presented a paper on "Current Issues and Desirable
Future Course of Action in the Hydropower Development of Nepal" Dr. Sandip
Shah, the President of IPPAN (Independent Power Producers' Association,
Nepal), and Mr. Gyanendra Pradhan, Member of Core Group, Nepal Chamber
of Commerce, presented their papers on "Status of Nepal's Power Sector- In
Regional Context" and "Hydropower for the Development of Village and
Nepal" respectively. Mr. Kush Kumar Joshi, Vice President of FNCCI, also made
his observations on the country's water resources and hydropower policies.
Paper Presentation
In his paper, Dr. Nepal has portrayed various hydropower projects and contribution
of electricity to sectoral energy consumption in Nepal. His paper has also touched
upon varied issues of Nepal's hydropower sector. He has highlighted ineffi ciency of
Nepal Electricity Authority (NEA), restructuring or unbundling of NEA, license holding
practices, delayed power purchase agreements and investment in hydropower sector
as major issues.
He has also proposed a future course of action for expediting the country's unlimited
hydropower potential. The proposed future course of action include role of NEA,
private sector and community, a regulatory body of Power Purchase Agreement
(PPA), power tariff fi xation and pricing of monopoly services, license binding system
and wider investment framework.
In his paper, the author has said that the legal and political environment should
be reset making it compatible to new political consensus and economic reality in
order to make the hydropower sector a vehicle for socio-economic transformation
of Nepal.
Dr. Shah's paper is focussed on sustainable power sector development, barriers to
private sector involvement, national and regional power trade and international
scenario.
He has also highlighted some objectives of Nepal's power-sector reform programme
like reducing costs, attracting private investment, maximization of public revenue,
creating energy security in an environmentally and socially sustainable manner and
optimising power plants with possibilities of exports on sustainable power sector
development.
Under the barriers to private sector involvement, the author has pointed out lack
of political and policy stability, insecurity of investment, lack of single window
system, fi nance, regulatory regime and risk mitigation covering market as barriers
of hydropower development. Similarly, he has mentioned fi nancial risks and lack
of dispute resolution mechanisms as other obstacles to the development of
hydropower in Nepal. Besides, other constraints of private sector involvement in
power development are commercial issues.
The author has also identifi ed some key impediments on national and regional
power trade. They include lack of political willpower, infrastructure, funding, market
access and supportive legal and regulatory framework. He has demanded that power
be treated as a commodity. The author has also said that hydropower was a capitalintensive
industry bearing high risk. In the paper, he has made some recommendations
for the improvement of power situation. They are: provision of proper incentives and
policy stability, treatment of power as a commodity. Similarly, he has stressed the
need for delinking hydropower sector from water issues, transparency in information
dissemination, decision making and time-bound solutions and involvement of all
stakeholders on key issues.
In his paper, Mr. Pradhan has focussed his attention on the overall situation of energy
demand and consumption pattern in Nepal. According to him, traditional forms of
energy consumption account for about 87%. Under this, fuelwood covers about 78%,
agricultural waste (4%) and animal dung (6%). The commercial sector consumes only
about 12% of the total energy consumption. Coal accounts
for 2%, petroleum products 9% and hydroelectricity 1.69%.
The author has also projected a picture of load shedding that
would be loaded to the people in the days to come. He has
mentioned in his paper that in Marga to Ashwin 2068-2069,
the load shedding would go up to 17 hrs. per day than that of
Marga to Jestha, 2064-2065 eleven hours a day.
He has also shown the required amount of hydroelectricity to
be imported in the nation for eliminating load shedding even
after 220 kW interlinks are being completed. According to
him, in 2065-2066, net import of 210GWh of hydro electricity
would be necessary even if new P/P is completed, which is
equivalent to Rs. 1,680 million cash outfl ow. As of the 10th
Five Year Plan (2002-2007), about 40% of the total population
has access to electricity at present and the percentage is
expected to increase up to 55 in 2007. Similarly, current per
capita electricity use (in KWh) is 60% and it is projected to
reach up to 100% in 2007. To get rid of electricity defi cit in the
nation, he has rightly forwarded the AOP Plan i.e, awareness
in the short term, optimisation in the medium term and
planning in long term.
On the occasion, Mr. Kush Kumar Joshi, Vice President of
FNCCI, made few comments on the papers. Giving example
of Bhutan's progress in electricity, he urged all the concerned
authorities of Nepal, especially NEA to consider electricity
as a commodity. Likewise, he had also opined for political
stability in the country for having desirable economic growth.
Emphasizing on the need of private sector's investment in
hydro electricity, he opined for national consensus on the
policy formulation and strategy set up. Similarly, he had
strongly suggested for economic diplomacy to be maintained
by our diplomats outside Nepal.
Floor Discussion
Experts from various fi elds made their comments on the
paper in the fl oor discussion. Mr. Prakash A. Raj, a former
UNHCR representative in Pakistan, was of the opinion that
Nepal needed to adopt the policy of developing hydropower
as a commodity and stressed the need to follow the power
development model of Bhutan.
Responding to Mr. Raj's queries concerning the use of
hydropower as a commodity and Bhutan's model, paper
presenter Dr. Nepal said that about 60% people in the Druk
Kingdom were still compelled to live in darkness. In another
query as to why NEA has been a loss making organisation,
the author said that it was due to over staffi ng.
In response to Mr. Raj's question of security for investors of
hydropower sector, Dr. Shah said that there was confusion in
Nepal's policy whether foreigners were allowed to invest in
this sector or not. He expressed the view that Nepal should
start with small hydropower projects in which local investors
could be attracted.
Dr. Shah emphasised the need for Nepal to explore the Indian
market where there were many power buyers and sellers. He
said that Nepal should make proper negotiations with them.
Addressing the various queries raised from the fl oor, Mr.
Pradhan said that Nepal had been and would be unable to tap
the Chinese market because of unfavourable topography.
One of the participants from the fl oor opined that more
power projects like Chilime should be developed with local
investment. Commenting on this view, Mr. Pradhan lobbied
for reducing prices of electricity.
Mr. Pradhan also accused political leadership in NEA of
paralysing the organisation and demanded for its autonomy.
In a demand put forward by Dr. Shankar Man Singh, an expert
from Nepal Chamber of Commerce, to reduce VAT (value
added tax) and income tax, Mr. Pradhan said that there would
be no national saving with the reduction of VAT and tax.
Chairman's Remarks
Upon conclusion of the fl oor discussion, Chairman of the
session Mr. Upadhyaya made his remarks on the experts'
papers as well as the comments from the fl oor. He was of
the opinion that the nation had to adopt a strategic vision
and concrete policy to explore hydropower in Nepal.
Appreciating the proposal of Prof. Dr. Mohan Prasad Lohani
to submit some genuine and concrete recommendations to
the policymakers, Mr. Upadhyaya said that such suggestions
would help give a boost to the hydropower and the process
of socio-economic transformation of the people. Regarding
the issue of delinking hydropower from water resources, Mr.
Upadhyaya expressed his doubts.
He was also in favour of treating hydropower as a
commodity. However, he was sad that the policymakers
were lacking transparency and clear vision and strategy for
the development of this vital sector.
He agreed with the view that policy instability and not-sosecure
environment had discouraged the potential investors
to invest in the country's hydropower sector.
Second Part
The second part of the working session was conducted under
the chairmanship of Dr. Deepak Gyawali, former minister and
interdisciplinary analyst and coordinator for Core Group of
Nepal Chamber of Commerce. At the session, three experts-
-- Mr. Radhesh Pant, President of Nepal Bankers' Association,
Dr. Jeevendra Jha, General Manager of NEA, and Mr. Keshav
Dhwoj Adhikari, Senior Divisional Engineer at the Ministry of
Water Resources-- presented their working papers. Mr. Panta,
Dr. Jha and Mr. Adhikari presented their papers entitled
"Prospects of Hydropower Development in Nepal",
"Role of NEA in Development of Hydropower in Nepal"
and ".Policy Problems of Water Resources Sector and
Probable Solutions" respectively.
Paper Presentation
Presenting his paper, Mr. Pant stressed the importance of
Nepal's hydropower development that would contribute to
the country's overall economic growth. He said that India was
interested in importing hydropower on Availability Based
Tariff (ABT) for which Nepal and India needed to discuss and
resolve the issues of mutual benefi t.
He said that Nepal needed to add new generation
capacity promptly for the development of hydropower.
His main focus was on attracting more private investment
in hydropower to fi ll in the gap. Considering the huge
Indian power market, he called for establishing India as an
energy hub. He said both the nieghbouring countries
would benefi t from hydropower of Nepal through improved
effi ciency and judicious and joint eff orts. He further suggested
that the process of increasing the Purchasing Power Parity
(PPP) of the people should be initiated for hydropower
generation. He also was of the view that domestic investment
in hydropower generation through capital market should be
encouraged and mobilised.
In his paper, Dr. Jha asked the government to improve its
community-based electrifi cation policy. Further elaborating
the issue, he said that the communities were making unfair
practices, as they purchased energy at a subsidised rate from
NEA and sold it to the customers at an average NEA tariff .
He also drewn the government's attention towards
electrifi cation in the remote rural areas so that the situation
of the underprivileged lot could be uplifted.
Indicating some of the major problems of hydropower
development such as resource crunch, socio-political
problems, license trading and gap between demand and
supply of energy, he stressed the need to improve operations
system and formulate appropriate policies.
Presenting his paper, Mr. Adhikari called for national political
consensus before starting any hydropower project. The
author also said that the concept of water diplomacy should
be adopted and practised while dealing with India and other
neighbouring countries.
He said that the offi cials at the Ministry of Foreign Aff airs of
Nepal were showing very dismal performance while dealing
with water-related issues. He suggested that the MoFA
employees should be given proper orientation on water and
other issues of national interest.
He urged for the provision of private sector's involvement
in land reclamation and water disaster management eff orts.
He was of the opinion that power generation could not be
possible from remittance, as it was insuffi cient to invest.
Floor Discussion
Experts from various fi elds raised their queries on the papers.
Mr. Shankar Man Singh made his query on restructuring
of Nepal Rastra Bank (NRB) and investment of NRB in rural
electrifi cation. Answering his query, Mr. Pant said that the
NRB could be restructured if found necessary. On the issue
to investment by NRB in hydropower, he answered that the
bank had no large fund. He informed that if the fi nancing
in hydropower could be checked, there would be suffi cient
profi t margin. Dr. Jha said that NEA was in fund crunch and
could not address the issues related to NEA on time. Mr.
Shyam Basnet from the fl oor asked to invest in research
works. Responding to Mr. Basnet, he said that the association
invested a lot in this sector. He further assured that
the association would invest in research works in the near
future too.
In response to Dr. Shankar Man Singh's query regarding
improving public-private partnership in power generation,
Mr. Adhikari called for formulating rules and regulations
to encourage private sector to invest in natural disaster
management.
Answering another question of Dr. Singh, Mr. Adhikari revealed
that 12% of the total royalties generated from the local level
was allocated for local development. Mr. Adhikari also said
that the political leadership should have strong commitment
and long-term vision and planning to accelerate the process
of economic development. In regards to yet another query
from the fl oor, he stressed the need for both Nepal and India
to harness water resources for mutual benefit.
Chairman's Remarks
Chairman of the session Mr. Gyawali made his remarks on the
papers of experts as well as the comments from the fl oor. He
opined for providing training to the offi cials of the Ministry
of Foreign Aff airs so that it would be easy for them to deal
with their India counterparts while settling water related
issues. Similarly, Mr. Chairman also stressed to look at the
policy but not at the projects while launching any project
in Nepal. In case of India, he was of the opinion that Nepal
could not locate the market properly and set strategic vision.
He stressed enhancing cooperation with India for water
but electricity. Speaking on the issue of security, he said
that it had no impact on water. Mr. Gyawali also said that it
was a big failure of Nepal to recognize the politics of water.
He suggested that Nepal's parliament should settle water
politics logically.
Vote of Thanks
Extending his vote of thanks, Prof. Dr. Gopal Pokharel,
Executive Director of IFA, said it was high time that
the government and private sector learn from the past
experiences and move ahead accordingly. Highlighting the
rationale of organising the seminar, Dr. Pokharel said that it
aimed just at understanding the national interest in the issue.
He informed the participants that IFA would submit the
outcomes of the seminar to the Ministry of Foreign Aff airs.
At this juncture of our history which envisages restructuring
of the society, ensuring inclusion to every section and
segment of the Nepali society, which is marginalised and
neglected till now, and forge an alliance for equity and social
justice, it is imperative to have a paradigm shift in our thinking
and approach in our development endeavours. At the end,
the Executive Director thanked all, especially the chief
guest, the guest of honour and all paper presenters and the
participants for their active support to conclude the session
successfully.
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