What?

Introduction
Nepal is known to be one of the richest countries in the world in terms of water resources. As of 2000, the total capacity for power generation in Nepal is estimated to be 83,000 MW - half of this amount is the potential for hydropower – but the country has only been able to produce 300 MW. Only 14% of the total population of 22 million have access to electricity, most of which is consumed in urban areas for household and industrial purposes. About 200 MW of power is to be added this year to the national grid.

The Arun is a major branch of the Koshi river-system in eastern Nepal. In 1995, Arun III was the largest hydropower project proposed for Nepal. It was one of seven project sites identified in the Sankhuwasabha District on the Arun River. The project was designed, developed and funded by the World Bank and other "donors" and was supposed to generate 201 MW of electricity for Nepal at the cost of US $1.1 billion, approximately equivalent to Nepal's annual budget. The Arun III was also the first hydropower project with an Environmental Impact Assessment (EIA) as well as some "mitigation plans".

International Institute for Human Rights, Environment and Development (INHURED International), a non-governmental organisation (NGO) based in Kathmandu, with Special Consultative Status to Economic and Social Council (ECOSOC) of the United Nations, decided to monitor the Arun III project from an environmental and human rights perspective. In collaboration with other campaign groups, such as the Alliance for Energy and Arun Sarokar Samuha (Arun Concerned Group-ACG), INHURED International chose to analyse the economic sustainability of the project. An important issue concerned the ensuring of equitable sharing of the benefits, by the local people in the Arun Valley, along with considering the macro-economic risk for the country as a whole. Another objective of INHURED International was to cross-check the effects of the preconditions of lending, by the "donors", in the social sectors as well as the overall economy of Nepal. This included monitoring the process of EIA and the establishment of participatory mechanisms for the effective implementation of mitigation plans, with adequate resources to be made available from the principal project cost.

Several issues - policy, legal and institutional - were brought together for the first time by the Arun III project in the development debate in Nepal. The project received a significant amount of attention from the media and the general public, especially with regard to its economic viability and environmental sustainability. There were very few debates prior to Arun III that questioned the transparency and accountability of state-run, foreign-funded, large-scale development projects.

Brief history

In late 1993, INHURED International took the initiative and held a series of meetings with various advocacy groups and independent experts active in the fields of energy, human rights, and environment. This process led to the formation of a coalition of these groups and individuals, called ACG, and co-ordinated its campaign secretariat until the cancellation of the project in 1995.

The legal battle began with INHURED International making a formal request to the state-owned Nepal Electricity Authority (NEA), for the release of documents and information related to Arun III. Since NEA denied the request, a public interest litigation (PIL) was filed before the Supreme Court on 16 January 1994, by Gopal Siwakoti 'Chintan' representing INHURED International, and Dr Rajesh Gautam, a leading human rights activist and university professor. The PIL was filed under articles 16 and 88(2) of the Constitution of Nepal. These articles provide for the right to information to any citizen on all matters involving public money and the freedom to file a PIL, respectively, as a constitutional remedy. As a result of the litigation, the World Bank and the Government of Nepal were compelled to postpone the signing of any agreements and contracts related to the financing and construction of the project.

The Supreme Court delivered its landmark judgement on 8 May 1994, in favour of the petitioners and asked the government to release all relevant documents and information relating to Arun III. This simultaneously established the principles and procedure for the release of similar information in the future.

However, winning the case in the Supreme Court was not sufficient to force the World Bank and other donors to withdraw from the project. INHURED International, ACG and two local victims from the Arun Valley filed the first-ever claim, at the World Bank's newly created Inspection Panel on 24 October 1994, against the Bank Management. The Panel members visited Nepal on two occasions and submitted a final report to the President of the World Bank on 21 July 1995. In its report, the Panel established a series of violations of the Bank’s internal policies and procedures, and asked the Bank Management to comply with its own rules before signing the loan agreement with the Government of Nepal. Instead of complying with the Panel's recommendations, the Bank's new President, James Wolfenson, unilaterally decided to withdraw from the Project on 2 August 1995.

The promoters of the project in Nepal were furious about the Bank's decision and urged the Bank to reconsider its move. The Bank, however, was more supportive of small and medium-size hydropower projects for Nepal, with the creation of a power development fund. Since Arun III had become a prestige issue for the major political parties in Nepal, they called for a global tender in 1999 and are now considering awarding a license to EurOrient, a US-based company. Understandably, the past performance and the inexperience of the company are being seriously questioned.

Background

Electricity in Nepal is considered a luxury commodity and, at the same time, a symbol of development. The inauguration of a power-site is an event that is celebrated with singing, chanting and dancing by the local people; ironically, they have no knowledge of the price they will have to pay in the future. The consumption of electricity without any extra income, or in the absence of local industries, has proved to be a huge burden for families living in extreme poverty.

At present, the Nepali people are paying one of the highest tariff rates in the world for their electricity. The high costs for the construction of Arun III - and of the projects that have been under construction after the cancellation of Arun III - have been widely criticised; the costs are to be paid essentially to private companies, in foreign currency.

Arun III was claimed as the best option for Nepal to meet its energy demands cheaply. By adding 201 MW in the national grid it was to make Nepal a "paradise". Acting through the NEA, the World Bank was the leading agency to design and implement the project. Other co-financiers of the project included the Asian Development Bank, the Japanese Overseas Development Assistance, KfW in Germany, France, Sweden and Finland.

Socio-economic and ecological context

Nepal is still one of the poorest countries in the world with an annual Gross Domestic Product (GDP) of US $210. Over 60% of the population are believed to be living below the poverty line. Agriculture is the main occupation for over 85% of the people and more than half the annual budget remains dependent on foreign loans and assistance. Government spending on social programmes is very much on the decline due to the free market economic policy of Nepal. Privatisation and implementation of the Structural Adjustment Programme (SAP) of the World Bank, the Asian Development Bank and International Monetary Fund (IMF) have significantly contributed to these changes.

The policies and standards of ecological conservation in Nepal are very poor. The Environment Protection Act was not introduced in the country until 1996. Before this Act was enacted, there were no legal or institutional mechanisms with which to address environmental problems created by large development projects. The construction of Arun III was to take place in one of the world's most pristine valleys with a rich biological diversity.

Though an EIA was done in the case of Arun III, there was no informed and meaningful participation by the local people in the process. The local people were not given any information that could help them understand the positive and negative aspects of the project. A comprehensive Regional Action Plan (RAP) was prepared as part of the mitigation plan, though it did not receive any funds or get other institutional commitments for effectively implementing it. If constructed, Arun III would have destroyed a biologically rich valley and brought about a food security problem in its wake; the societies and cultures in the valley would have inevitably suffered.

Challenges

The lack of detailed information about the project was a major challenge in campaigning against the dam. In addition, there was neither the space nor the opportunity for the expression of alternative views in the government media. The government had the upper hand in influencing public opinion; it could use any amount of financial and state power to achieve its ends. It was portrayed as if Nepal was being given the loan at a marginal rate of interest, to be paid in 40 years; Arun III was to be the cheapest and most suitable option to meet Nepal's electricity needs and attract foreign investments. Other important challenges have been as follows:

• to bring the various stakeholders into the public debate. Arun III was the first development project that was questioned by the public, but its outcome was very uncertain. At the international level, the World Bank and other co-financiers had developed a strong network to suppress the anti-dam arguments; proposals for alternatives sources of energy made by the activists were ignored or not taken seriously;

• most of the people and groups involved in the campaign were new and young, in terms of experience and public action;

• to counter and work, despite the government and the pro-dam media that were engaged in character assassination of the activists, who were accused of being foreign agents, western-style environmentalists and anti-development elements;

• the campaign began at a time when the contract was about to be signed (27 December, 1993) with Cogefar - now Impregilo Inc. - an Italian company, and the loan agreement with the World Bank was also to be signed around the same time; and;

• to continue the campaign for the implementation of already existing small and medium-size hydropower alternatives for Nepal.

Organisations>

There were several limited initiatives with regard to questioning the feasibility of Arun III, when INHURED International became involved with the project, bringing with it its skills, strength and a wide range of contacts. The Alliance for Energy, a voluntary group of engineers, economists and journalists, had already been working on the technical and economic aspects of the project; they asked for the implementation of better possible alternatives, which could be carried out by Nepali experts, using local technology and resources.

On 12 February 1993, a public hearing was organised by Himal Associates, LEADERS Nepal, Nepal Forum of Environmental Journalists (NEFEJ), the Nepal Water Conservation Foundation and some other environmental groups. INHURED International, as part of the Arun Concerned Group, worked together with the Alliance for Energy to build on this public hearing and launched a campaign that encompassed the technical and economic concerns regarding the project as well as the social, environmental, and human rights aspects.

Potential for you

________________________________________ What is needed?

The monitoring of water-related projects all over Nepal has become the core activity of INHURED International as well as the Rastriya Sarokar Samaj (National Concerns Society-RSS), which is the network born out of ACG. Over the last five years, INHURED International and RSS have been in contact with local interest groups on a regular basis. Story-telling sessions, sharing of ideas, field visits and training in litigation activities, have been conducted each year. Various concerned groups have been formed at the local level, at sites where projects are planned; campaigns, similar to the one against Arun III, have begun to occur. As a result, many of Nepal's water-related groups and activists met in February 2001 in Kathmandu to discuss the Final Report of the World Commission on Dams and to agree on principles and actions for the future. From this national consultation, they also have formed a Water Users' Federation-Nepal (WAFED) with the adoption of Kathmandu Declaration and Plan of Action on Water, Energy and Development in Nepal. The campaign of INHURED International has become a model of its kind to monitor bad projects and to promote good alternatives. Other important factors that play a role in campaigning are:

• the success and effectiveness of a campaign depends on the collection and dissemination of basic information about the project in the local languages. In addition, the availability of experts in the different branches of the project and a series of field visits, to examine the ground reality, are important factors to establish the credibility of criticism;

• living with the local people and working in consultation with them on an equal basis, with commonly identified issues and interests the development of an institutional capacity to obtain complete and reliable information about the subject matter has been a powerful tool with which to challenge the state and the financial powers;

• knowledge of the legal rights and legislative skill to use them is as important as the other activities in a campaign; and

• accurate reporting of events through the media and informing the people about alternative choices that are available made the state and the rest of the pro-dam lobby defensive. In the case of challenging international financial institutions and multinational corporations, it has proved advisable to work with regional as well as international networks to mobilise every available forum and opportunity.

Methods

The various methods employed by INHURED International and ACG to achieve their aims are enumerated below:

• the formation of a coalition of activists, advocacy groups and experts in the fields of research, campaign and litigation;

• the filing of formal applications to the concerned authorities for the request of documents related to the project;

• the filing of a public interest litigation before the Supreme Court when the documents related to the project were denied; article 16 of the Constitution of Nepal was here referred to;

• the dissemination of all available information to the public through a booklet highlighting the issues of local and national concerns, the reasons for opposing the dam and availability of alternatives;

• conducting regular meetings with the stakeholders as well as experts in the various aspects of the project;

• organising frequent press releases and/or press conferences;

• making regular field visits, organising local level meetings, street conferences, distributing pamphlets, leaflets and posters in local languages;

• meetings with the concerned project officials at the World Bank and the members of the Board of Directors, including co-financiers of the project in Washington; the initiatives were undertaken at the invitation of the Bank's Management;

• submissions of statements before the UN human rights mechanisms responsible for monitoring civil, political, economic, social and cultural rights of the people; one such submission was made to the UN Sub-Commission on Human Rights;

• lobbying with the leaders of the major political parties and the Members of Parliament;

• making a major campaign issue of Arun III during the mid-term elections in 1994;

• organising public hearings and video shows in Kathmandu and in the Arun Valley about the project;

• organising letter-writing campaigns to the leaders of major political parties in Nepal and also to the parliamentarians of other countries;

• filing of the first-ever claim before the newly established Inspection Panel of the World Bank; this was followed by series of fact-finding missions by the Members of the Panel in Nepal and that led to a critical report in favour of the claimants;

• questioning the Government of Nepal, the Bank officials and the other donors at public occasions, such as the Fifty Years Anniversary of the World Bank and the International Monetary Fund in 1994, held in Madrid; and

• linking dams-related problems to the issues of human and environmental rights, especially the right to information, meaningful public participation, mandatory Environmental Impact Assessment, adequate mitigation plans, adequate plans for compensation and resettlement of the affected people, sharing of benefits, opposition to destructive lending conditionalities etc. The protection of the rights and interests of the local people, particularly ethnic groups and indigenous communities, are linked to this theme.

How? ________________________________________ Success and strategies

Several factors were important in making the campaign against Arun III a success. The filing of the PIL, which focused on the citizens right to information, delayed the final agreements between the World Bank and the construction companies, leading to the withdrawal of the Bank from the project. Other important strategies employed by INHURED International and ACG were:

• the continuous research and promotion of alternative sources of energy

• The presentation of alternatives to hydropower development in Nepal challenged the economic viability of the project;

• the support of the international network and the filing of a claim before the Inspection Panel to re-examine whether the Bank's own internal policies and procedures have been followed in the implementation of the project;

• the support received from international human rights, environmental and anti-dam network as well as the publicity in the western media;

• the successful co-ordination between experts in hydropower, engineers, human rights and environmental activists, in order to counter the dam. The issue opened a larger debate on hydropower policies and alternatives in Nepal, rather than focusing on a single project;

• the Arun III was a milestone in the debate on water and energy within Nepal; it also questioned the transparency of the decision-making process in Kathmandu and at the World Bank. Furthermore, it stressed the need for accountability and responsibility for the project, especially if it fails to achieve the original goals and "dreams" of development; and;

• the use of the national media as well as public forums and meetings in and out of Kathmandu, including project-affected areas and small towns. The ability to provide more detailed information about the project to the media, even before the government had knowledge of it, was a strategy used against the government-controlled propaganda.

Obstacles and reactions

A severe handicap of the campaign against Arun III was an atmosphere that made the donors immune to any criticism or public opposition; this situation prevailed until the cancellation of the project by the World Bank in 1995. A simultaneous suppression of alternative views, imposed by the government-controlled media, along with only negative stories about the activists, were publicised on a regular basis. Since Arun III was promoted as the best designed project for the total development of the country, its criticism was taken as an attempt to destabilise democracy and discourage foreign investment in Nepal. It was a big political risk to criticise or stand against Arun III; the threat of physical violence was also present.

However, the campaign received a great deal of visible and invisible support from the public; the private media and some officials from the government sector also supported the campaign. The Arun III was a crucial instance when, for the first time, the big "development mafia" was being challenged by a small, but well informed and well-organised group of activists concerned with human rights, the environment and sustainable energy. In addition, the campaign against the Arun III also instigated a serious debate within the World Bank, about the social repercussions of the project, also questioning the Bank's role in financing the construction of large dams.

Stakeholders

The main stakeholders in the Arun III project are the people of the Arun Valley who remained in the background. The threat of physical violence or political ostracism kept the common people from speaking against the project. Even then, several people participated in the campaign for the proper implementation of RAP, aimed at the actual development of the Valley. The people questioned the legitimacy of the entire project and are presently organising themselves to counter the return of Arun III in its original shape by suggesting suitable alternatives.

The Government of Nepal, for which Arun III had become a prestige issue. As it faced public opposition to a development project for the first time, it was difficult to establish adequate legal and institutional mechanisms to deal with the problem.

The World Bank, which was financially responsible for the project; when the Bank recognised the gravity of the problem it accepted that Arun III was not the best option. Based on the findings of its own Inspection Panel, it proposed to the Government of Nepal that the alternatives should be considered and offered to establish a fund for the development of hydropower. Although the government realises it was a failed project, it has not given up the construction of Arun III.

The construction company and the private sector involved in the project, which need to comply with all the prescribed environmental guidelines and the mitigation plans; and;

The advocacy groups, the NGOs and the media, which have been continuously involved in investigating, monitoring and exposing the varied aspects of water resource management and energy development.

Achievements

The campaign against Arun III was a unique process that took place over several years, which highlighted various aspects regarding hydropower projects, sustainable energy, human rights, international financial institutions and the implications of development projects. The case against Arun III was a landmark in Nepal and established the jurisdiction of the Supreme Court to investigate the legality of a development project. The case provided the Court a unique opportunity to interpret Article16 of the Constitution of Nepal, which pertains to the right to information. The principles and procedures established by the Court in the case of Arun III now stand as the most comprehensive legal framework on the right to information in the country in the absence of a separate law on this subject. At present, the government is preparing a new legislation on the right to information, mainly on the basis of this judgement.

Some specific achievements of INHURED and ACG related to the campaign are that:

• for the first time in Nepal, people with diverse interests came together to question the Arun III project on economic, social, human rights and environmental grounds. The spectrum of people included experts in hydropower, engineers, activists concerned with human rights, the environment and development, local interest groups and the media;

• the Government of Nepal was forced to recognise the value of transparent decision-making and the power of public pressure;

• a strong relationship between human rights, environmental principles and the objectives of development was established, which will serve as an example for future projects;

• the society has been motivated to take an interest in water resource management and development projects that benefits local communities;

• the campaign has been instrumental in bringing forth various alternatives to hydropower development and water management; some of these strategies were identified and a series of small and medium-size hydropower projects have been pursued in different parts of the country;

• the campaign challenged the attitude of the World Bank and other donors to large dams and established that they can be at fault; INHURED International and ACG stressed that the donors be held responsible for the consequences of the project;

• the unilateral cancellation of Arun III by the World Bank in 1995 has led to the public scrutiny of every single water resource development project in Nepal;

• the campaign against Arun III has empowered the local people all over the country to form local action groups; which has helped identify their roles in harnessing water resources and in monitoring development projects that are in their interests; and;

• energy, environment and development from the perspective of human rights.



Where to start?

________________________________________ Essential reading

Staff Appraisal Report, Nepal, Arun III Hydroelectric Project, Report No. 12643-NEP, Document of the World Bank, Energy and Infrastructure Division, Country Department I, South Asia Region, Washington, 1994.

Public Hearing of the Arun III Hydro Project, Environmental Camps for Conservation Awareness, Kathmandu, February 12, 1993.

The World Bank & Nepal's Arun III Hydro Project: A Case of Anti-Social Development, Urgent Action Appeal !, compiled & edited by Gopal Siwakoti 'Chintan' & Adam Ma'anit, INHURED International, June 1995, Kathmandu .(This publication includes all major documents, court judgement, correspondence and the text of the claim before the Inspection Panel and its preliminary findings).

Inspection Panel Investigation Report, Nepal: Arun III Proposed Hydroelectric Project & Restructuring of IDA Credit-2029, The Inspection Panel, Washington, 1995.

The Inspection Panel Report, 1 August, 1994 to 31 July, 1996, Washington, DC, pp. 14-18.

Power Struggle, Arun III is Like Digging a Well When What You Urgently Need is a Glass of Water!, Down To Earth, New Delhi, May 1995.

Gyawali, Dipak, An Autopsy of Arun-3; and Arun-3 Impasse: Is There an Escape from This Blind Alley?, WATER IN NEPAL, Himal Books, Kathmandu (2001).

Essential browsing

www.wafed-nepal.org
Essential contacts
Water and Energy Users' Federation-Nepal (WAFED)
Ratan Bhandari, Campaign Co-ordinator
GPO Box 2125
Kathmandu
Nepal
Phone: 0977-1-4429741
Fax: 0977-1-4419610
E-mail: wafed@ntc.net.np/
ratanji@gmail.com


Himalayan and Peninsular Hydro-Ecological Network (HYPHEN)
Gopal Siwakoti Chintan, Co-ordinator
Address as above.
E-mails:secretariat@hyphenasia.org/
hyphenasia@btinternet.org / gchintan@gmail.com
Website: hyphenasia.org


Source: www.bothends.org, click Integrated River Basin Management under Encyclopedia of Sustainability