Kept in the dark
When you strip away all of the baggage, it doesn’t look like much. Forget about the anonymous-looking offices in dusty Kathmandu with fingerprint-recognition security devices installed on every door. And the drive out to the airport, where pigeons flutter around the blue-washed walls and bags are weighed on old red Avery scales. Even the smooth blanket of steel and concrete draped dramatically over the nearby hillsides when you arrive is merely a distraction; transmission lines shooting out through the valley, coiled transformers glinting softly in the sun.
At the heart of it all, down the vast, mile-long tunnel bored brazenly into the rock face, into the soft hum of machinery and the distant, muffled roar of the river, there at the hub of everything is a round valve, small enough for me to put my arms around. And pumping through it every second are 10,750 litres of liquid gold.
It seems an unlikely centrepiece for a debate that’s shaking Nepal, the world’s youngest republic and currently one of its poorest nations. But the valve matters because the water gushing through it has the potential to transform the fortunes of this small mountain state, not to mention those of its sprawling, energy-hungry neighbours, India and China. Long consigned to the more distant reaches of the international radar, flickering only sporadically with news of Maoist insurgencies and royal massacres, the home of Mount Everest is back in the limelight – this time not because of a civil war or violent elections or corrupt politicians, but because of its rivers.
The landlocked country’s watery veins, which snake down from the Himalaya in their thousands, are at the frontline of what could be an energy revolution in southern Asia; by some estimates, all of this water could generate enough electricity to power the whole of Britain twice over. Only Brazil is capable of producing more hydropower. And apart from a handful of Asian and African states, no other country is currently less capable of delivering enough electricity to its people.
It’s that gross disparity between the energy resources available in Nepal and the extent to which they’ve been exploited that’s attracting the interest of everyone from foreign governments to international NGOs, from multinational corporations to the World Bank. It’s also laying bare some bitter internal divisions and pitting local communities against the government, foreign companies, well-meaning donors and even each other.
Balance of power
Most Nepalese live in the hills, but only 27 per cent 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; even in hooked-up areas such as Kathmandu, power cuts of up to 16 hours a day aren’t uncommon.
Using a river’s flow to drive turbines is nothing new here; the country’s oldest working hydro plant is about to celebrate its centenary, and more than 90 per cent of the national power supply comes from water. But since the Maoist insurgents laid down their arms three years ago and joined the government, heralding the start of a fragile peace and a more stable investment environment, something has changed.
At present, a grand total of 600 megawatts of hydropower is been produced in Nepal; now, in the Bhote Koshi river basin alone, new developments capable of generating more than 1,200 megawatts are being planned. The biggest of them, known as Tamakoshi III, will double at a stroke the country’s entire electricity output. It’s all part of the government’s commitment to developing a mammoth ten gigawatts of fresh, green power over the next decade.
Not only could this be used to fuel economic development in Nepal itself, argue supporters, but it could even be exported to India and possibly China, both rapidly industrialising nations under intense pressure to find new sources of energy without increasing their carbon footprint. The pace and scale of growth is dizzying; little surprise, then, that despite the many darkened homes across the country and the scourge of daily blackouts, a streak of optimism is pulsing through the political and business elite.
For a hint of what this brave new world might look like, jump in a helicopter and head out to the Khimti I plant, home of that little valve through which all of that water passes. As hydro projects go, Khimti I boasts an impressive history: built by a 4,000-strong workforce carrying construction materials for 13 kilometres on foot, it was the first fully private development in the country and Nepal’s first foreign hydro installation – 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 today, but it’s also a veteran of the civil war – the site of wartime shootouts between rebel militias and army troops, and twice a victim of explosives. ‘We began building here in 1996, the year the Maoist uprising began,’ says Nadia Sood, SN Power’s executive vice president for South Asia. ‘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.’
River grab
Developing other big projects is precisely what SN Power and dozens of its competitors now intend to do. When liberalisation of the hydro market really took off at the end of the civil war, survey licences were snapped up at breakneck speed. ‘2006–07 was the gold rush; people were trying to grab any stretch of the river they could,’ recalls Sood. ‘You had a situation where a person on the street with 1,000 rupees could buy a licence 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 18 months, we’ve seen the real long-term players emerge.’
The implication, of course, is that these long-term players are of a different calibre than the cowboys of a few years ago, boasting a caring corporate agenda. SN Power’s managers marched me proudly around their local school and clinic, both funded by company money and catering for villagers who live in the hills surrounding the plant; other developers are equally keen to showcase their community credentials.
And those developers are descending from every corner of the globe; alongside the Tamakoshi III behemoth, which is being built by the Norwegians, there are also mega-hydro plants being developed by Indian, Brazilian and Australian firms. Chinese corporations are also heavily involved in financially backing and providing technical support to many of these projects, and often at least part of the funding comes from pan-national institutions such as the Asian Development Bank. And with dams such as these costing at least US$1.5billion at the bottom end of the scale, Nepal, say the big-hydro cheerleaders, desperately needs these corporate do-gooders.
‘Hydro is very capital intensive, and we don’t have the money here,’ argues Sandip Shah, SN Power’s Nepalese country director. ‘Nepal has very few 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 coalition government obviously agrees, signing complex agreements with foreign developers that force the latter to pay royalties of up to 15 per cent on the profits they make, and to hand the power plants over to the state after 35 years.
However, what’s at stake here is something much larger than mere electricity provision; hydro, particularly mega hydro, lies at the heart of the political class’s vision of a ‘new Nepal’, and the investors are being invited to help build it. ‘Nepal stands at a historical juncture,’ said the Maoist former prime minister Prachanda last year, ‘between the past – characterised by a feudal structure, oppression, conflict, poverty and stagnation – and a future that is filled with optimism.’
He left potential investors in no doubt as to 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.’
Dam busters
With the establishment all basking in the warm glow of a hydro-powered future, you have to search between the cracks to find the dissenters. But they’re there, wedged quietly into the ‘news in brief’ columns of daily newspapers: ‘Villagers in the remote district of Dailekh have forced GMR to halt work on their 300-megawatt Upper Karnali project’; ‘The residents of 13 village development committees have threatened to demolish 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 9,000 lower-caste villagers are fighting a forced resettlement programme to make way for a new dam. And they’re even bunked down in the capital, at the bottom end of a tiny alley in one of the eastern neighbourhoods, on the fourth floor of a crumbling building. This is the home of the Water and Energy Users’ Federation of Nepal (WAFED), the focal point for a quietly growing fightback against the big-hydro hegemony.
WAFED emerged in the 1990s from the high-profile struggle against Arun III, a planned mega dam backed by the World Bank that was eventually stopped in its tracks by activists. ‘We are not anti-dam or anti-hydropower,’ insists Gopal Chintan, one of WAFED’s organisers. ‘We’re anti destructive development projects; there are big projects that can be done well and small ones that are disastrous for the community.’
WAFED’s campaigning may be 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 utilise 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 of these opportunities, from our own future.’
Micro hydro
Hydropower sits at the heart of a debate about Nepal’s future because it involves questions of moral ownership: who has the right to lay claim over something natural such as a river? Is it a minister in Kathmandu, or an aid agency, or a European multinational? Or is it those who live and work on the river’s banks? ‘People are losing their trust in central government more and more,’ claims Chintan. ‘They have allowed the state to exploit their forests, rivers and other ecological resources for half a century and received nothing in return.
‘We have a very large population on a very small area of land,’ Chintan continues. ‘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 lives. Where do these hundreds of thousands, potentially millions of people go?’
Herein lies Nepal’s conundrum: can this immense national resource, a staggering and almost unending supply of potentially very cheap, very green energy, be channelled in a way that actually benefits the country? And if so, are mega projects the way forward? An alternative model, based on village cooperatives owning and operating local ‘micro hydro’ projects, has long been touted as an effective, low-impact way to promote rural electrification in remote areas.
‘Water is a common property, and micro hydro is all about making it a common project,’ says Kiran Singh of the Rural Energy Development Programme (REDP), a collaboration between the government, the UN and the World Bank, all of whom help fund and facilitate the building of small turbines that generate up to 100 kilowatts. So far, it has 145 schemes underway, all managed by the users of the electricity themselves, and another 100 in the pipeline.
Unlike bigger projects, which almost always transfer their hydroelectricity straight onto the national grid, micro projects serve the local area. All of the REDP’s micro-hydro projects so far amount to a grand total of three megawatts, an insignificant dot on the mega-hydro landscape, but one that has a direct impact on thousands of households and – if its aim of reaching 15 megawatts by 2012 is achieved – one that will eventually bring electricity to more than a million people.
‘You can’t measure what we’re doing in watts, only in sustainability,’ argues Singh. ‘Micro hydro can be an engine of rural development; small industry, higher education levels, agro-processing mach-inery that takes the drudgery out of the lives of women. The benefits are huge.’
But even as new micro-hydro projects are being commissioned, existing ones are gathering dust. Back on the Bhote Koshi river, a dramatic hanging bridge straight out of an Indiana Jones film leads you 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 around the padlock on the door. Locals claim that it stopped generating electricity six years ago; repairs would cost US$4,000, but despite government promises, no funds have been forthcoming.
‘We’ve had multi-party democracy now for the best part of two decades, and all the decision-makers in government during that time have been totally neoliberal,’ says Chintan. ‘So, inevitably, alternative models of development, such as micro hydro, that don’t fit with the mega-dam vision aren’t receiving enough support; 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 US$12.2million to micro-hydro schemes, would dispute that analysis, but it’s difficult to deny Chintan’s basic point – that set alongside the billions being pumped into big dams, the money set aside for micro hydro looks pretty pitiful.
Centre stage
Prithvi Narayan Shah, the architect of the Nepali nation, once called his country ‘a yam between two boulders’. The waterways of Nepal, a nation long hidden in India’s and China’s shadows, have thrust it centre stage, at least on the global energy market.
The history of unsettled countries that find themselves unexpectedly blessed with an insanely profitable natural resource isn’t promising. The development of water into hydropower could be the key to Nepal’s long climb out of poverty, but with a political elite hardly renowned for its solid decision-making, 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.’
As the fresh-faced republic grapples with the dilemmas thrown up by hydropower, its very identity is at stake.
Nepal’s Ministry of Energy was invited to comment on this article, but declined to respond.
November 2010
At the heart of it all, down the vast, mile-long tunnel bored brazenly into the rock face, into the soft hum of machinery and the distant, muffled roar of the river, there at the hub of everything is a round valve, small enough for me to put my arms around. And pumping through it every second are 10,750 litres of liquid gold.
It seems an unlikely centrepiece for a debate that’s shaking Nepal, the world’s youngest republic and currently one of its poorest nations. But the valve matters because the water gushing through it has the potential to transform the fortunes of this small mountain state, not to mention those of its sprawling, energy-hungry neighbours, India and China. Long consigned to the more distant reaches of the international radar, flickering only sporadically with news of Maoist insurgencies and royal massacres, the home of Mount Everest is back in the limelight – this time not because of a civil war or violent elections or corrupt politicians, but because of its rivers.
The landlocked country’s watery veins, which snake down from the Himalaya in their thousands, are at the frontline of what could be an energy revolution in southern Asia; by some estimates, all of this water could generate enough electricity to power the whole of Britain twice over. Only Brazil is capable of producing more hydropower. And apart from a handful of Asian and African states, no other country is currently less capable of delivering enough electricity to its people.
It’s that gross disparity between the energy resources available in Nepal and the extent to which they’ve been exploited that’s attracting the interest of everyone from foreign governments to international NGOs, from multinational corporations to the World Bank. It’s also laying bare some bitter internal divisions and pitting local communities against the government, foreign companies, well-meaning donors and even each other.
Balance of power
Most Nepalese live in the hills, but only 27 per cent 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; even in hooked-up areas such as Kathmandu, power cuts of up to 16 hours a day aren’t uncommon.
Using a river’s flow to drive turbines is nothing new here; the country’s oldest working hydro plant is about to celebrate its centenary, and more than 90 per cent of the national power supply comes from water. But since the Maoist insurgents laid down their arms three years ago and joined the government, heralding the start of a fragile peace and a more stable investment environment, something has changed.
At present, a grand total of 600 megawatts of hydropower is been produced in Nepal; now, in the Bhote Koshi river basin alone, new developments capable of generating more than 1,200 megawatts are being planned. The biggest of them, known as Tamakoshi III, will double at a stroke the country’s entire electricity output. It’s all part of the government’s commitment to developing a mammoth ten gigawatts of fresh, green power over the next decade.
Not only could this be used to fuel economic development in Nepal itself, argue supporters, but it could even be exported to India and possibly China, both rapidly industrialising nations under intense pressure to find new sources of energy without increasing their carbon footprint. The pace and scale of growth is dizzying; little surprise, then, that despite the many darkened homes across the country and the scourge of daily blackouts, a streak of optimism is pulsing through the political and business elite.
For a hint of what this brave new world might look like, jump in a helicopter and head out to the Khimti I plant, home of that little valve through which all of that water passes. As hydro projects go, Khimti I boasts an impressive history: built by a 4,000-strong workforce carrying construction materials for 13 kilometres on foot, it was the first fully private development in the country and Nepal’s first foreign hydro installation – 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 today, but it’s also a veteran of the civil war – the site of wartime shootouts between rebel militias and army troops, and twice a victim of explosives. ‘We began building here in 1996, the year the Maoist uprising began,’ says Nadia Sood, SN Power’s executive vice president for South Asia. ‘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.’
River grab
Developing other big projects is precisely what SN Power and dozens of its competitors now intend to do. When liberalisation of the hydro market really took off at the end of the civil war, survey licences were snapped up at breakneck speed. ‘2006–07 was the gold rush; people were trying to grab any stretch of the river they could,’ recalls Sood. ‘You had a situation where a person on the street with 1,000 rupees could buy a licence 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 18 months, we’ve seen the real long-term players emerge.’
The implication, of course, is that these long-term players are of a different calibre than the cowboys of a few years ago, boasting a caring corporate agenda. SN Power’s managers marched me proudly around their local school and clinic, both funded by company money and catering for villagers who live in the hills surrounding the plant; other developers are equally keen to showcase their community credentials.
And those developers are descending from every corner of the globe; alongside the Tamakoshi III behemoth, which is being built by the Norwegians, there are also mega-hydro plants being developed by Indian, Brazilian and Australian firms. Chinese corporations are also heavily involved in financially backing and providing technical support to many of these projects, and often at least part of the funding comes from pan-national institutions such as the Asian Development Bank. And with dams such as these costing at least US$1.5billion at the bottom end of the scale, Nepal, say the big-hydro cheerleaders, desperately needs these corporate do-gooders.
‘Hydro is very capital intensive, and we don’t have the money here,’ argues Sandip Shah, SN Power’s Nepalese country director. ‘Nepal has very few 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 coalition government obviously agrees, signing complex agreements with foreign developers that force the latter to pay royalties of up to 15 per cent on the profits they make, and to hand the power plants over to the state after 35 years.
However, what’s at stake here is something much larger than mere electricity provision; hydro, particularly mega hydro, lies at the heart of the political class’s vision of a ‘new Nepal’, and the investors are being invited to help build it. ‘Nepal stands at a historical juncture,’ said the Maoist former prime minister Prachanda last year, ‘between the past – characterised by a feudal structure, oppression, conflict, poverty and stagnation – and a future that is filled with optimism.’
He left potential investors in no doubt as to 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.’
Dam busters
With the establishment all basking in the warm glow of a hydro-powered future, you have to search between the cracks to find the dissenters. But they’re there, wedged quietly into the ‘news in brief’ columns of daily newspapers: ‘Villagers in the remote district of Dailekh have forced GMR to halt work on their 300-megawatt Upper Karnali project’; ‘The residents of 13 village development committees have threatened to demolish 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 9,000 lower-caste villagers are fighting a forced resettlement programme to make way for a new dam. And they’re even bunked down in the capital, at the bottom end of a tiny alley in one of the eastern neighbourhoods, on the fourth floor of a crumbling building. This is the home of the Water and Energy Users’ Federation of Nepal (WAFED), the focal point for a quietly growing fightback against the big-hydro hegemony.
WAFED emerged in the 1990s from the high-profile struggle against Arun III, a planned mega dam backed by the World Bank that was eventually stopped in its tracks by activists. ‘We are not anti-dam or anti-hydropower,’ insists Gopal Chintan, one of WAFED’s organisers. ‘We’re anti destructive development projects; there are big projects that can be done well and small ones that are disastrous for the community.’
WAFED’s campaigning may be 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 utilise 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 of these opportunities, from our own future.’
Micro hydro
Hydropower sits at the heart of a debate about Nepal’s future because it involves questions of moral ownership: who has the right to lay claim over something natural such as a river? Is it a minister in Kathmandu, or an aid agency, or a European multinational? Or is it those who live and work on the river’s banks? ‘People are losing their trust in central government more and more,’ claims Chintan. ‘They have allowed the state to exploit their forests, rivers and other ecological resources for half a century and received nothing in return.
‘We have a very large population on a very small area of land,’ Chintan continues. ‘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 lives. Where do these hundreds of thousands, potentially millions of people go?’
Herein lies Nepal’s conundrum: can this immense national resource, a staggering and almost unending supply of potentially very cheap, very green energy, be channelled in a way that actually benefits the country? And if so, are mega projects the way forward? An alternative model, based on village cooperatives owning and operating local ‘micro hydro’ projects, has long been touted as an effective, low-impact way to promote rural electrification in remote areas.
‘Water is a common property, and micro hydro is all about making it a common project,’ says Kiran Singh of the Rural Energy Development Programme (REDP), a collaboration between the government, the UN and the World Bank, all of whom help fund and facilitate the building of small turbines that generate up to 100 kilowatts. So far, it has 145 schemes underway, all managed by the users of the electricity themselves, and another 100 in the pipeline.
Unlike bigger projects, which almost always transfer their hydroelectricity straight onto the national grid, micro projects serve the local area. All of the REDP’s micro-hydro projects so far amount to a grand total of three megawatts, an insignificant dot on the mega-hydro landscape, but one that has a direct impact on thousands of households and – if its aim of reaching 15 megawatts by 2012 is achieved – one that will eventually bring electricity to more than a million people.
‘You can’t measure what we’re doing in watts, only in sustainability,’ argues Singh. ‘Micro hydro can be an engine of rural development; small industry, higher education levels, agro-processing mach-inery that takes the drudgery out of the lives of women. The benefits are huge.’
But even as new micro-hydro projects are being commissioned, existing ones are gathering dust. Back on the Bhote Koshi river, a dramatic hanging bridge straight out of an Indiana Jones film leads you 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 around the padlock on the door. Locals claim that it stopped generating electricity six years ago; repairs would cost US$4,000, but despite government promises, no funds have been forthcoming.
‘We’ve had multi-party democracy now for the best part of two decades, and all the decision-makers in government during that time have been totally neoliberal,’ says Chintan. ‘So, inevitably, alternative models of development, such as micro hydro, that don’t fit with the mega-dam vision aren’t receiving enough support; 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 US$12.2million to micro-hydro schemes, would dispute that analysis, but it’s difficult to deny Chintan’s basic point – that set alongside the billions being pumped into big dams, the money set aside for micro hydro looks pretty pitiful.
Centre stage
Prithvi Narayan Shah, the architect of the Nepali nation, once called his country ‘a yam between two boulders’. The waterways of Nepal, a nation long hidden in India’s and China’s shadows, have thrust it centre stage, at least on the global energy market.
The history of unsettled countries that find themselves unexpectedly blessed with an insanely profitable natural resource isn’t promising. The development of water into hydropower could be the key to Nepal’s long climb out of poverty, but with a political elite hardly renowned for its solid decision-making, 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.’
As the fresh-faced republic grapples with the dilemmas thrown up by hydropower, its very identity is at stake.
Nepal’s Ministry of Energy was invited to comment on this article, but declined to respond.
November 2010
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