Navin Singh Khadka

The government has no doubt been given a bloody nose by the renewed criticism of the West Seti hydropower project. But the objections raised by the parliamentary Public Accounts Committee (PAC) have also disclosed a stream of uncomfortable details for the major donor, the Asian Development Bank. The multilateral agency has already previously been criticized for its plan to lend the government 45 million dollars for the project that will export power to India while Nepal is left with crippling load shedding.

The bank’s officials however had been assuring and reassuring their critics that increasing power generation that would be used in the country was also their priority. To corroborate this point, government authorities also had a list to show how donors including the ADB were trying to help scale up transmission and distribution so that there are less power cuts this winter. All this may be debatable. At the moment, it is the findings of the PAC that has put the spotlight on the international finance agency.

Here are the first three among many of the points the committee has red marked in the project details:

First, while submerging thousands of hectares of Nepalese land the water in West Seti’s storage will irrigate a huge swath of Indian land downstream. What will Nepal get in return?

Second, the government shall receive the agreed royalty only after the project makes profit, its loans are serviced and compensations for strikes and protests are deducted.

And third, will power-starved Nepal be allowed to buy electricity from the 750 MW plant at the same price that it will be sold to India?

“There are many other points and issues that show that the project means loss for the country,” says Prakash Chandra Lohani a member of the PAC. “One example is: while the project will be operated under the law of Nepal, in case of disputes and conflicts, the laws of England and Wales shall govern.”

Energy minister Prakash Sharan Mahat agrees that provisions such as that could be a booby trap.

“Should such disputes arise and we are left defending in the courts of foreign lands, it will be quite difficult for us given the (financially) weak governments we have,” he said in an interview with the BBC. “Personally, I would leave such projects for the private sector.”

But how come the Manila-headquartered bank did not see what the PAC says are such big pitfalls?

Why did it instead keep on saying that “the project will promote economic growth in the region and across Nepal through generating significant revenue for the government” even when the royalty provision was so iffy?

That was all before the PAC’s recent unearthing of the details, the bank may argue.
Might it also like to point at the approval of the project by the parliamentary natural resource committee more than two years ago?

Fair enough, if it does so. But did it not know about the controversies surrounding the storage-type project that have arisen every now and then?

The most frequent one has been about the amount of electricity the country will be getting once the project is commissioned. When it was signed in the late 90s, there were ambiguities regarding the amount of such power. Then there was this clandestinely made change that the government would be given money instead of power.

And then again a correction was made requiring the project developer to build a separate plant to supply the power that the West Seti was supposed to deliver to the country. And now we get to hear that it will be the main plant itself that will supply 10 percent of its generation. As the mystery of free power engulfed the country’s hydrocracy, the project’s wannabe developer — Snowy Mountain Corp. of Australia — never got tired of saying it was looking for financers.

And the “frantic search” never ended. The signing of the power purchasing agreement with India, the proposed buyer of the power from the 750 MW project, is yet another riddle. Above all, the project from day one has been dogged by claims that it involves sharing of natural resources and therefore needs parliamentary approval.

The PAC’s first point bolsters that argument although the Supreme Court has ruled otherwise.

Understandably, the bank with its expertise in cross border power development must have seen some opportunity to shine through this project. “The importance of West Seti is the model it would set for the future development of cross border power,” Barry Hitchcock, ADB’s Nepal office chief had told the BBC earlier this year. It could. But if what the PAC has pointed out means anything, the project could set a different model — ripping off taxpayers for something that is not even meant for them. And going by the ADB’s track record, it may not even be able to prevent that.

The multilateral agency that claims to have zero tolerance of corruption had failed to check an irregularity in the Kali Gandaki hydropower project it funded. Around 50 million dollars had been paid as cost overruns to the biggest hydroelectric project’s contractor without the approval of the developer, Nepal Electricity Authority board. And yet, the bank said nothing. In West Seti’s case, news of hanky-panky has started even before project construction. And yet, the bank still hasn’t said anything.

(The writer is a BBC journalist based in London)
Soruce The Kathmandu Post,