Is handing over of Arun-III (900 MW hydro-power project) to India detrimental for Nepal??

Saroj Chalise
Kathmandu Nepal
chalisesaroj639@gmail.com, 9846285132

Off-late, many people are condemning PM KP Sharma  Oli because of  having an  undue inclination toward India .Oli is accused of  selling  the river Arun to India without any consideration of national interest.

 However, I am pretty sure that these blamer either doesn't  have or have very superficial understanding about the reality .I am writing this post to clear about those things

What is Arun-III?

Arun-III is a 900 MW Run-of-River hydro-power project with diurnal peaking capacity.The project is located in Arun River, a principal tributary of Saptakoshi near Num village of Sankhuwasabha district.Project Development Agreement (PDA) was signed between Government of Nepal, represented by Investment Board of the Government of Nepal and SJVN-Arun 3 Power Development Company Limited on 25th November 2014. Sushil Koiral was the then Prime Minister of Nepal.

The SJVN was selected as the developer of the Arun-III project through the international competitive bidding as done by government of Nepal.

What is inside PDA?

As per the PDA signed between Investment Board of Nepal (IBN) and SJVN-Arun 3 Power Development Company Limited on 25th November 2014, 

1.  The Government of Nepal has selected SJVN to develop and execute the project in Build-Operate-Own and Transfer (BOOT) model.The company will own and operate the hydro property for the terms of 25 years and shall transfer the hydro property and project assets to the Government of Nepal on the good operating condition free of charge
2. The Government of Nepal will  support SJVN in development of the project, this includes approvals,licensing ,land acquisitions, security and different other things to support the company in smooth development of the project
3.  Government of Nepal will receive 21.9% of total capacity  (i.e. 197.1 MW) of the electricity produced free of the cost from SJVN.
4.  Royalty charge will be paid by SJVN to Nepal  on using  natural resources (river). The details of the royalty  charge is as follows.
   
   
   

5.  SJVN will complies with all the applicable tax laws of Nepal

6. SJVN will allot Rs 1.6 billion worth shares to the locals. Of which, fifty percent will be allotted within two years of commencement of project construction and  rest will be allotted by charging a premium

Is the PDA detrimental for Nepal?

PDA is not  detrimental as perceived  by general public or as explained by so-called-intelligent over social networking.It is not something like selling  the river  to India. I will justify my logic with some background information as follows:

Nepal Electricity Authority has identified 43000 MW as the total potential of hydro-power in Nepal which can be feasibly extracted.However, in the last century,   the progress of  hydro power development is snail-paced. Starting from the  Pharping Hydropower Project (450 KW), a century ago, we are able to develop only 1000 MW in this long period

So can't we say we have wasted our river till now? I think we can.We have potential of 43000 MW and we are just stuck on 1000 MW generation till now. We have lost 42000 MW which could have been developed from our natural resources. This is a huge loss we faced till now. To avoid this loss in future, we should plan and act as soon as possible, for tapping energy from   every stream of our flowing rivers wherever feasible. But can we do this solely by  using  our money and expertise?  The answer may be 'yes' , but we have to waste few other coming centuries to utilize our rivers to their full potential. This will probably not be the wise decision. Hence for maximum  and timely exploitation of our rivers ,it will be wise wise decision to do PDA of some large projects like Arun-III to some foreign companies. Besides these things, the benefits of such PDA agreement will be:

1.  We will get the project and all it's assets after 25 years  with zero investment. 
2. While the project is being developed by foreign company, we can do  parallel  investment in other sectors thus speeding the development of country
3.  We will get 197 MW power free of cost immediately when the project comes in operation 
4.  We will be benefited by the taxes and royalty amount .
5.  It will greatly helps in transfer of technology to our country .

Some might still argue that , why to let foreigner to use our river and evacuate power to their country.For them, I would like to remind the history that  we missed the chance of Arun-III to be developed by World Bank in 1992  just because of  same feeling. It is necessary to understand our limitation in budget and expertise

Patriotism and jingoism are completely different things. We should think of national interest in a pragmatic way, not from the view of  extremism. Otherwise our nationality will be foolish-nationality and it  will not let us go forward in the path of prosperity.

The detail of PDA agreement can be found the link given below:

PDA Agreement between Government of Nepal and SJVN India