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Dam Dilemma

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September 15, 2010

Opportunistic speculators are eying Nepal’s burgeoning hydropower potential. Does wealth or woe lie ahead for the poverty-stricken nation?

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“Photo by Vibek Raj Maurya via Flickr “:http://www.flickr.com/photos/rvibek/208072582/

It’s not about the anonymous offices back in Kathmandu with fingerprint recognition devices installed on every door or the blankets of steel and concrete draped over the nearby hillsides. It’s not about the transmission lines shooting out through the valley or the coiled transformers glinting in the sun. The heart of it, at the end of a mile-long tunnel bored into the rock, amid the soft hum of machinery in the powerhouse and the muffled roar of eastern Nepal’s Khimti River, is a pipe, narrow enough to wrap your arms around. Pumping through it is 10,750 liters per second of liquid gold.

It’s an unlikely centerpiece for a debate which is shaking Nepal, a young republic dusting itself off after years of conflict with insurgent Maoists and royal massacres, and one of the poorest nations on earth. The valve matters because the water gushing through it could transform the fortunes of this tiny mountain state, not to mention those of its energy-hungry neighbors, India and China. Nepal’s political class and the corporate interests who stand to benefit say hydropower could be a desperately-needed engine of wealth and stability, yet critics argue that a massive dam-building program will cause untold environmental devastation and forced resettlement, the hallmarks of countless projects elsewhere. Long consigned to the more distant reaches of the international radar, the home of Everest is back in the limelight—not because of a civil war, or violent elections, or corrupt politicians, but because of its rivers. The landlocked country’s watery veins, thousands of which snake down the Himalayas, are at the frontline of what could be an energy revolution in Southern Asia; by some estimates the hydroelectricity this water could generate is enough to power Britain twice over every year.

It’s a treacherous highway; vehicles dodge landslides, flash floods, and herds of goats on their way to ritual slaughtering at the national festival of Dashain.

The gross disparity between Nepal’s hydropower potential and the extent to which it has been exploited is attracting interest from Beijing and Delhi but also international NGOs, multinational corporations, and the World Bank. It’s also pitting local communities against their government, foreign companies, well-meaning donors, and even each other. “Everyone is here, and everyone has their own strategic interests,” said Gopal Chintan, a Nepalese lawyer who helps run the Water and Energy Users’ Federation of Nepal (WAFED), a national organization which is skeptical of huge dams’ potential to enrich his country. “It’s a critical time for Nepal. And the country could not be in a more disadvantageous situation going into it.”

East of the capital—on the road up the Bhote Koshi river where huge Tata trucks with Che Guevara stencils on the back trundle towards Tibet—is the first focal point of Nepal’s coming hydropower boom. It’s a treacherous highway; vehicles dodge landslides, flash floods, and herds of goats on their way to ritual slaughtering at the national festival of Dashain. Pylons dot the rich, green slopes; when it comes to electrification, this fertile, river-snarled district is lucky. Most Nepalis live in the hills where only 27 percent of rural households have access to electricity. In urban areas access is higher, but the majority of the population remains stubbornly isolated from the national grid; in Kathmandu, power cuts of up to sixteen hours a day are common.

Hydropower is nothing new in Nepal; the country’s oldest working plant is about to celebrate its centenary and over 90 percent of the national power supply comes from water. But since Maoists ended their rebellion and joined the government three years ago, something has changed. To date, Nepal has developed six hundred megawatts of hydropower capacity.

Pumping through it is 10,750 litres per second of liquid gold.

Bhote Koshi is part of a large river system in north-eastern Nepal, one of seven that make up the giant Sapta Koshi river basin that stretches across China, Nepal, and India. Nepal boasts five other major river basins as well. Today, in Bhote Koshi’s sub-basin alone, new developments capable of generating over twelve hundred megawatts are being planned. It’s part of the government’s commitment to developing ten gigawatts of renewable energy over the next decade—enough to power London. Supporters argue that hydropower will fuel development in Nepal and could be sold to India and China, who are under pressure to find new energy sources without increasing their carbon footprint. It’s little surprise then that despite the daily blackouts across Nepal—euphemistically termed “load shedding” by the industry—the political and business elite is pulsing with optimism.

For a glimpse of the future, jump on a helicopter and head for the Khimti I plant, home of that valve through which 10,750 liters of water pass each second. Khimti was built by a workforce of four thousand who carried construction materials thirteen kilometers on foot over a tree covered mountain. Completed in 2000, it was the first fully private development in the country and Nepal’s first dam built by modern multilateral capital (it’s owned by SN Power, a commercial arm of the Norwegian government). You can’t tell from the clean roads and polished metal fences around the powerhouse, but it’s also a civil war veteran—the site of wartime shootouts between rebel militias and army troops. It was bombed twice. “We began building here in 1996, the year the Maoist uprising began,” said Nadia Sood, SN Power’s Executive Vice President for South Asia. “So we’ve got a pretty unique approach to risk; the fact that we were the only foreign company in the energy market throughout the insurgency gives us a very credible calling card when it comes to developing other big projects today.”

Developing other big projects is what SN Power and dozens of competitors intend to do. When liberalization of the hydro market really took off at the end of the civil war, survey licenses were snapped up at breakneck speed. Anybody familiar with Naomi Klein’s bestseller The Shock Doctrine would identify in Nepal’s conflict the classic signs of a vulnerable, war-ravaged economy being swooped on by opportunistic speculators. “2006-7 was the gold rush; people were trying to grab any stretch of the river they could,” recalled Sood. “You had a situation where a person on the street with one thousand rupees could buy a license then sell it on the market at a huge profit. Thankfully things have calmed down now. The government is being stricter and more savvy about exploiting this asset, and in the past eighteen months we’ve seen the real long-term players emerge.”

The long-term players are eager to flog their caring agenda and commitment to corporate social responsibility. SN Power’s managers marched me around their development projects: a school and a clinic which reportedly hosts twelve thousand patients annually. “Before this was built it used to take local children an hour to walk to their nearest school,” Bala Krishna Sharma, the headmaster, said. He gushed about SN Power’s generosity and his plan to add a cybercafé on the premises. Other big developers operating in Nepal are equally keen to showcase their community credentials. Those developers come from everywhere: alongside the Norwegian Tamakoshi III behemoth, there are hydro plants in some stage of development in Arun (by Indian and Brazilian firms), Karnali (by Indian construction giant GMR), Marsyangdi (where GMR has a majority stake), and West Seti (by Australian outfit SMEC), not to mention ongoing discussions regarding a six thousand megawatt installation at Pancheshwar, on the Indo-Nepal border—potentially one of the world’s largest dams. Chinese corporations are involved in financing and providing technical support to many of the projects. Often at least part of the funding comes from pan-national institutions like the Asian Development Bank.

Nepal’s mega-dam development program is a rainbow coalition of international companies preaching the same message of people first, profits second, promising that their turbines will spin Nepal out of poverty.

“Hydro is very capital intensive, and we don’t have the money here,” argued Sandip Shah, SN Power’s Nepalese Country Director. “Nepal has very little mineral resources and hydro is probably the only asset we have for sustainable growth. But we can’t do it all ourselves; we need to follow the Norwegian model where foreign investors came in to develop the oil and gas fields and then transferred those resources back to Norway.” The fragmented government obviously agrees, signing complex agreements with foreign developers which typically require the latter to pay royalties on their profits, and to hand over the power plants to the state after thirty-five years.

What’s at stake though is more than just electricity; hydropower is the heart of the political class’s vision of a “new Nepal” and the investors are being invited to help build it—and land some windfall profits in the process. “Nepal stands at a historical juncture,” said the Maoist former Prime Minister “Prachanda” last year, “between the past—characterized by a feudal structure, oppression, conflict, poverty, and stagnation—and a future that is filled with optimism.” He left potential investors in no doubt about where that optimism stemmed from, promising to encourage a “massive injection of foreign investment in big infrastructure and mega hydro projects… On behalf of the government, I would like to assure them of all the necessary cooperation and guarantees for a secure and successful investment.”

With the establishment racing into a hydro-powered future, you have to search between the cracks to find the dissenters. But they’re there, wedged into the “news in brief” columns of daily newspapers: “Villagers in the remote district of Dailekh have forced GMR to halt work on their three hundred megawatt Upper Karnali project;” “The residents of thirteen village development committees have threatened to demolish the Gandak Dam;” “Maoists warn that Pancheshwar dam may be against welfare of the nation.” They’re hidden in the far-flung valleys of West Seti, where nine thousand lower caste villagers are fighting a forced resettlement program to make way for a new dam. In Kathmandu the center of hydro dissent is on the fourth floor of a crumbling building in one of the more run-down eastern neighborhoods. This is the home of WAFED.

“Can you give me any examples of a mega hydro project where the community has benefitted?”

WAFED emerged out of the high-profile struggle against Arun III, a planned mega dam backed by the World Bank in the nineteen nineties that was eventually stopped by activists. It took rulings by the Supreme Court to force both the companies involved in the project and the Nepalese government to provide information on Arun III to the local communities set to be flooded or otherwise affected by it. In 2010, the rhetoric of Environmental Impact Assessments, mitigation plans, and the rights of indigenous populations may be de rigueur but back then they were relatively new concepts, dragged reluctantly out of the dam’s major stakeholders through the dogged work of campaigners. “Benefit-sharing” and “participatory rights” are all now firmly part of the corporate lexicon, but the battle to get ordinary residents included in debates over Nepal’s hydro development continues unabated.

“We are not anti-dam or anti-hydropower,” insisted Chintan. “We’re anti destructive development projects. There are big projects that can be done well and small ones that are disastrous for the community. But can you give me any examples of a mega hydro project where the community has benefited? The World Bank has been funding big dams for sixty years now, is there anywhere on Earth which you can point to and say, ‘Yes, the locals did well out of that’?”

WAFED’s campaigning is focused on hydro but it feeds into a far deeper set of uncertainties running through Nepalese society, not least the vulnerability that stems from being at the mercy of international donors and investors. The danger, from Chintan’s point of view, is not only that the latest raft of hydro plants will destroy local biodiversity, upend established communities, and repress the democratic involvement of villagers in local decision-making; it’s also that as new money pours into Kathmandu, the Nepalese themselves are being sidelined from their own development. “Because of the economic competition between India and China and our strategic location, we’ve become an investment hotspot,” he explains. “There’s so much pouring in that Nepalese investment, and our ability to utilize resources for ourselves, is being drowned out. We have hydropower skills and experience here but you never see those engineers and experts in government. We could build our own turbines in Nepal but the Japanese want to produce them for us, so they do. Chinese companies are getting involved in even the smallest projects but ask them about social, cultural, or environmental responsibilities and there’s silence. The Nepalese themselves have been displaced from all these opportunities, from our own future.” Nepal’s energy ministry declined to comment for this article.

“There has been no meaningful consultation process with the Tharu people and no consent has been obtained from us.”

The extent to which Nepal’s population is granted a say over its own future is particularly sensitive since the country relies so heavily on foreign aid. The government is currently wrangling over a new constitution and the ensuing political conflicts playing out in parliament—and in the opinion columns of the press—have thrown every aspect of Nepalese identity into sharp relief. The day I visited WAFED’s offices the media was in uproar over the latest Maoist proposal: to replace Nepal’s distinctive non-rectangular national flag because of its alleged Hindu symbolism (Nepal also has significant Buddhist and Muslim populations). Jockeying for the new political resources opened up by the abolition of the monarchy in 2008 has led to a popular campaign for federalism that some fear could Balkanize the country, giving specific regions, ethnic castes, and religious communities a degree of independence. “In the course of making ‘New Nepal’ is it necessary that we dismantle each and every tradition, custom and symbol?” plead one letter writer in the _Kathmandu Post_. For some, the answer is yes.

Hydropower is at the heart of this debate because it involves questions of moral ownership. Can a minister in Kathmandu, an aid agency, or a European multinational lay claim to a river? Or does it belong to those who live and work on the river’s banks as their ancestors have for centuries? “People are losing their trust in central government more and more,” said Chintan. “They have allowed the state to exploit their forests, rivers, and other ecological resources for half a century and got nothing in return.” The result is that communities are asserting localized and sometimes exclusionary identities in an attempt to re-impose a measure of control over their surroundings. “We have a very large population on a very small area of land,” Chintan said. “If you build just four or five of the biggest dams being proposed, then you destroy most of Nepal’s food security and the habitat where most of the population live. Where do these hundreds of thousands, potentially millions of people go?” He produced a press release from a community organization in Terai, an area of the country occupied by indigenous Tharu people which has been earmarked as a future home for the West Seti project’s refugees, all of whom hail from different ethnic backgrounds. “There has been no meaningful consultation process with the Tharu people and no consent has been obtained from us,” it thunders. “We have never even received a complete version of the [environmental assessment and mitigation] plans in English, let alone in Nepali or our own Tharu language, that we can understand.” The issue of exporting energy across the border—the West Seti project is designed almost exclusively for shipping power directly to India—muddies the water even further; it’s hard to fathom the logic of selling off the small amount of electricity the country is currently managing to produce when the majority of its own population lives in darkness.

Herein lies Nepal’s conundrum, though it’s not one you’ll generally hear mentioned in the high-security offices of the country’s latest generation of hydro projects. Is Nepal too weak to actually benefit from this immense national resource, a potentially endless supply of renewable energy? Are mega projects even the way forward? An alternative model, based around village cooperatives owning and operating local “micro hydro” projects, has long been touted as an effective way to promote electrification in remote areas, without involving corporate giants—and without displacing residents. “Water is a common property, and micro hydro is all about making it a common project that excludes no one,” said Kiran Singh, National Programme Manager at the Rural Energy Development Programme (REDP), a joint effort between the government, the UN, and the World Bank, all of whom help fund and facilitate the building of small turbines that generate only up to one hundred kilowatts of power, about what it takes to power a single medium-sized car engine—enough to transform the life of a village, for example, by bringing it electric light. What micro hydro doesn’t do is generate revenue that would be interesting to a multinational corporation.

So far Nepal has one hundred and forty-five micro hydro plants, all managed by locals, and another one hundred in the pipeline. “Our experience is that if projects are built by someone else and things go wrong, the community will go cap in hand to that institution,” said Singh—a view also expressed to me by the managers of some large hydro installations who were frustrated at the constant demands made on them by local villagers. “But we are making the community the owners from the very beginning and we exclude no one, not even those that can’t afford to pay for electricity.”

Unlike bigger projects which almost always direct electricity onto the national grid, micro projects serve the immediate area. All of REDP’s micro hydro projects amount to a grand total of three megawatts, insignificant static on the mega hydro landscape but one that directly benefits thousands of households and—if their aim of reaching fifteen megawatts by 2012 is achieved—one that will eventually bring electricity to over one million people. “You can’t measure what we’re doing in watts, only in sustainability,” argued Singh. “Micro hydro can be an engine of rural development; small industry, higher education levels, agro-processing machinery that takes the drudgery out of the lives of women. The benefits are huge.” The government doesn’t see any contradiction between throwing its weight behind mega dams and also supporting micro projects; the international investors behind the big dams insist the two approaches are perfectly complementary. “In this market there’s space for everything,” said Nadia Sood of SN Power, which constructed its own micro installation for locals alongside their large Khimti plant. “Micro hydro will never produce enough electricity on its own to meet all of Nepal’s needs, but if more are built then that’s a good thing.” But some in the hydro establishment see an inherent contradiction between mega and micro. “The community doesn’t feel linked to big hydropower projects because so far they are developing in such a way that [villagers] are not taken into consideration properly,” said Singh. “[Big developers] talk about corporate social responsibility, but implementation of this in Nepal has not been successful.”

Even as new micro hydro projects pop up, existing ones are gathering dust. Back on the Bhote Koshi river, just south of Sukute, a dramatic hanging bridge out of an Indiana Jones film set leads to Chehere village. Once the home of a successful micro site, now the boulders weighing down the corrugated iron roof of the powerhouse are covered in moss and nettles wend their way round the fastened padlock on the door. Locals claimed that it stopped generating electricity six years ago and the government has not provided the promised four thousand dollars it would cost to repair it. “They just talk, the politicians, whilst we work—all day talking but nothing ever happens,” said Upendra Parajuli, who used to have a job checking the plant’s turbines, but now spends his days studying in his family’s longhouse across the paddy field. Despite Nepal having a multi-party democracy, Chintan said that the government inevitably sides with the interests of international capital. “Inevitably alternative models of development like micro hydro that don’t fit with the mega-dam vision aren’t receiving enough support,” Chintan said. “There’s a political interest in conforming to the views of the World Bank and its allies, and a personal profit motive as well because big projects go hand in hand with corruption.” The World Bank, which has just committed another $12.2 million to micro hydro schemes, would dispute his analysis but it’s hard to deny Chintan’s basic point—that set alongside the billions pumped into big dams, the money set aside for micro hydro looks pitiful.

Prithvi Narayan Shah, the architect of the modern Nepali nation, once called his country “a yam between two boulders.” Forever overshadowed by India and China, Nepal’s waterways have thrust it into the global energy debate. The history of unstable countries unexpectedly blessed with insanely profitable natural resource isn’t reassuring; diamonds have brought misery to Sierra Leone, oil fomented dictatorship in Saudi Arabia. The development of water into hydropower could be the key to this Himalayan nation’s long climb out of poverty, but there is also a risk that the yam could be carved up by speculators, leaving its residents with nothing. “We are lost right now,” says Chintan, “with no direction, no policies. There is still an attitude of ‘who are we?’ That needs to change.”

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Jack Shenker is a London-born journalist who reports for the _Guardian_ from Egypt. His work has covered India and Nepal, Central Asia, the Balkans, the U.S., and Gaza, and has been published in a wide range of magazines and newspapers across the globe, including the _Times_, the _Independent_, _The New Statesman_, and _Monocle_. He is currently based in Cairo and his website is JackShenker.net.

Writer’s Recommendations:

Silenced Rivers: The Ecology and Politics of Large Dams by Patrick McCully.

McCully’s definitive guide to the controversies generated by large hydro projects also charts the rise of the opposition movement against them.

Tutor of History by Manjushree Thapa.

Thapa’s sprawling social saga is the perfect introduction to Nepal’s nuanced political history.

The Shape of the Beast by Arundhati Roy.

One of the subcontinent’s most prominent anti-dam activists, Roy’s musings on the connections between industry, exploitation, and resistance make for compelling reading.

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