Balancing Energy, Food, Natural Resources and Environment in (An Assessment of 6720 MW Multipurpose Project)

Dilli Bahadur Singh (Project Director) Pancheshwar Multipurpose Project Department of Electricity Development Ministry of Energy, Government of Nepal Anam Nagar, G.P.O.Box-7220, Kathmandu, Nepal [email protected] 15.02.2010

Key Words: Pancheshwar, Hydropower, PMP

Summary

Nepal, could harness less than 1% of its’ 83000 MW hydropower potential. Pancheshwar Multipurpose Project (6720 MW) is a bi-national project on Mahakali River bordering between Nepal and . The earnings from: electricity (NRs. 34.55 billion/year; irrigation (NRs. 5.55 billion/year), fish farming (NRs. 8.65 billion/year), carbon trading (NRs. 4.42 billion/year) and many billions from other sources e.g. eco-tourism, industry, horticulture, herbiculture, floriculture, sericulture, rafting & water sports, educational & vocational training and other industrial/commercial activities can catapult the socioeconomic horizon of Nepal. Hence, PMP should be jointly developed in the earliest and build confidence for the further hydropower development.

1.0 Introduction

Apart from water resources, Nepal has very few types of natural resources which are commercially viable. Therefore, it is the dire necessity for the nation to develop its hydropower resources for the socio-economic upliftment of the society and the nation. As people are the focal point of any development work, Environmental Impact Assessment (EIA) is the most effective tool to include them in the process of project development right from the project identification stage through to implementation and operation & maintenance stage of the project. EIA also mandates the project to implement the local development & environment conservation programmes, provide compensation & rehabilitation packages, training & employment emphasising to the seriously project affected people. This helps maintain social equity, environmental justice and incorporation of the stakeholders in the decision making process too.

This paper aims at enunciating the findings of EIA and Detailed Project Report (DPR) done in Nepal side for 6720 MW Pancheshwar Multipurpose Project (PMP); focusing on balancing energy, food, water & other natural resources and the environment in Nepal. PMP is a bi-national project to be developed in Mahakali River bordering between Nepal and India. It is envisaged that similar sort of plans and programs are formulated during the preparation of EIA and DPR report in the Indian side of the Mahakali river. Both the EIA and DPR reports will be unified and comprehensive reports will be made during the finalisation process by the Pancheshwar Development Authority (PDA), a bi-national entity, formed by the government of Nepal and India with the sole purpose of developing PMP i.e. conducting studies, arranging finance for the project, contract & construction management and finally operation & management of the project.

1 This paper also aims at depicting the prudent utilisation of natural & other resources, vision for the local area development and the ways and means for economic upliftment of the nation as a whole.

2.0 The Nation

The multicultural and multiethnic country Nepal is inhabited with approximately 28 million people in an area of 147,181 Sq. Km. The Himalayan kingdom Nepal is surrounded by China in the north and India in the east, west and south. Of the total land area, about 59 percent has steep or very steep slopes, 22 percent has moderate steep slope and the remaining 19 percent are the plain fertile land. Of the total population, approximately 30% lie below the poverty line. The per capita income is approximately US$ 470 per annum for the year 2007/8. Nearly 80% of the population depend upon agriculture. The contribution of the agriculture sector is nearly 40% to the total GDP followed by services (40%) and industry (20%). The adult literacy rate is nearly 45% and the life expectancy at birth is 59 years. The Human Development Index score is 0.509 and Nepal was situated at last quarter in the global context.

The total hydropower potential is estimated at 83000 MW by utilising water from 6000 rivers and rivulets flowing from steep mountains and hills in north to the plains in the south of the country. At present, approximately 689 MW of installed capacity is prevalent in Nepal of which nearly 631 MW has been contributed by hydropower projects, which is not even one percent of the total potential. Approximately, 40% of the total population have access to the electricity and per capita electricity consumption is only 60 KWh. per annum.

3.0 Billion Dollar Questions

Will “Status-Quo” situation, forever, be acceptable to Nepal? What is there which could trigger the socio-economic condition of the Nepalese people? What are the ways and means to upgrade the Human development Index from the present level to more than 0.811 i.e. from the present ranking to within the top 50 ranking in the world? Is it necessary to drastically change our thinking and vision towards the hydropower development, the main highway for all-round sustainable development of the nation?

4.0 The Right Answer

The “Status-Quo situation is not acceptable and affordable to Nepal anymore. It has to utilise and develop all natural resources prudently and enhance the industrial and economic base of the country. The fruit of development thus received has to be shared with all the inhabitants in an equitable manner so that socio-economic transformation occurs in the positive way. The water resources being one of the major resources, Nepal ought to emphasise on the development of it, emphasizing on hydropower sector. Development of hydropower to cater the energy demand of the nation at the first instance and meeting the energy demand of the south Asian region as a whole, in the long run, should be the vision. In the similar manner, harnessing water resources for drinking purpose, irrigation, navigation, recreation and also for the flood control and equitably sharing the benefits among the participating districts, development regions and countries, in the case of bi-national projects, are the prime factors to make the development sustainable.

2 5.0 The Way Forward

The mega hydropower/water resources projects should be designed to make capable of supporting the local development with regards to enhancing the local economy, industrial base irrigation, navigation, drinking water, flood control, water sports, health, sanitation, education, roads and other basic needs along with conserving the local environment and managing the watershed area prudently; then of course, such projects will get public acceptance. Therefore, it is of the utmost importance that the local community and direct stakeholders should be taken into confidence. The only means to do so is to involve them in decision making process right from the project identification stage to detailed study phase and up to the project construction and operation & maintenance phase. Environmental Impact Assessment (EIA) of such project mandates the processes which provide ample of opportunities for the people to know about the consequences and benefits of the project, raise their concerns and spell their aspirations. A good EIA also formulates plans and mandates for allocating budget during the construction as well as for the operation and maintenance phase of the project cycle addressing programmes for the community development, environmental conservation, proper compensation/rehabilitation package, training and job opportunities for the project affected people. This process help make the local inhabitants, one way or the other, become an integral part of the project and the feeling of ownership towards the project will automatically be developed. So, instead of opposing construction works and creating problems they will help in developing the project smoothly. One of the most promising multipurpose projects is 6720 MW Pancheshwar Multipurpose Project, which is a bi-national project of Nepal and India. So, it is of the utmost importance that the project be developed in the earliest possible time, making balance between energy, food, water, natural resources and at the same time conserving the environment.

6.0 The Project

Background

The Pancheshwar Multipurpose Project (PMP) is proposed as a Nepal-India bi-national scheme on the Mahakali River that forms the international border between Nepal and India. The Mahakali River basin upstream from the proposed Pancheshwar High Dam site covers an area of 12,100 km2. Pancheshwar Multipurpose Project (PMP) has been identified as a huge storage scheme to maximize power benefits of 6,720 MW peak power from Pancheshwar High Dam and Rupali Gad Re- regulating Dam with an annual average energy production of 12,333 GWh. The power generation potential of Poornagiri re-regulating dam is estimated to be 1000 MW (PACO report, Additional Service, section 3, June 1992.) Location and Accessibility

The project area lies between 290 07' 30" and 290 48' North latitude and 790 55' and 800 35' East longitude in the of the Far Western Development Region of Nepal covering some parts of Darchula, Baitadi and districts bordering India. Pancheshwar High Dam: Pancheshwar High Dam project has been conceived as a huge storage scheme with a 315 m high rock fill dam with a central earthen core, and the reservoir with the normal ‘maximum water level’ of 680 m elevation would extend up to 65 km upstream in Baitadi and

3 Darchula districts. The crest length and the crest elevation would be 860 m and 695 m respectively. The normal 'Maximum Water Level' would be at 680 m with live storage of 6.56 billion m3 of water and capable of generating 6,480 MW of peak power. Two identical underground powerhouses, one on each bank has been proposed. Main powerhouse cavern with 12 generating units of vertical Francis turbines having capacity of 540 MW each will be installed producing 10,671 KWH of energy altogether; of which half will be the share of Nepal. Rupali Gad Re-regulating Dam: The proposed Rupali Gad Re-regulating Dam near Samniya settlement, 83 m high concrete gravity dam on Mahakali River, is located at about 25 km downstream of Pancheshwar High Dam. This dam is the first alternative for re-regulating the flow of Pancheshwar high dam project. The dam site is located at about 1.75 km downstream from the confluence of Rupali Gad with Mahakali River in . The dam will create a live storage of 70 million m3 of water. The maximum water level in the reservoir will be up to 420 m; the average annual production of energy will be 1,662 GWh. The optimum installed capacity of the powerhouse will be 240 MW of which 120 MW will be installed in Nepalese side.

Poornagiri Re-regulating Dam and Poornagiri High Dam: Two different possibilities exist for construction at Poornagiri (i) Medium sized Re-regulating Dam and (ii) Poornagiri High Dam.

(i) Medium Sized Re-regulating dam at Poornagiri: Two types medium sized re-regulating dams are proposed (a) 117m high rock fill dam, and (b) 124 m high concrete gravity dam. Either of these dams would generate 1000 MW. (ii) High Dam at Poornagiri: Construction of a high dam at Poornagiri has been proposed as alternative to two medium sized re-regulating dams at Poornagiri and Rupali Gad. Poornagiri Re- regulating Dam and Poornagiri High Dam on Mahakali River are located at 37 km downstream of Rupali Gad re-regulating dam, about 10 km upstream from the existing Tanakpur barrage, and about 7 km downstream from the confluence of Rangoon Khola, in Dadeldhura District. The NMWL of the Poornagiri High Dam will be the tailrace water level of Pancheshwar High Dam.

7.0 The Legal Regime

The Electricity Act (1992), Electricity Regulation (1993), Hydropower Policy (2001) and Electricity Ordinance (2007) are the principal documents in the power sector. It is mandated that once the project gets commissioned and starts power generation it needs to pay (i) capacity royalty at the rate of Rs.100/- per kW. installed (1 US$ = NRs. 75) and (ii) 2% of the energy sales in kWh. for the 1st. fifteen years. From the 16th. year onwards the royalty amount increases to (iii) Rs. 1000/- per kW. installed and (iv) 10% on average energy sales in kWh. Then the government of Nepal shares 12% of the royalty received by the hydropower projects to the concerned District Development Committee (DDC) of which minimum of 1% is needed to be disbursed to the affected Village Development Committee (VDC). The benefit sharing mechanism is devised from the mutual agreement among the affected districts. In many cases, the percentage of benefit sharing is 50:50 but in case of 144 MW Kaligandaki Hydropower Project the four project affected districts share the royalty benefits in such a manner that: receives 48%, receives 27%, receives 15% and receives 10%.

4 With the motive of promoting the concept of self-governance, decentralisation in planning, programming & allocating budget for development or social sector projects, the respective DDCs are given full authority over the amount provided to them. The only guidance the DDCs receive from the central government through the Local Self-Governance Regulation (1999), rule 211 is “no amount to be received by District Development Committee from the revenue allocation shall be used for administrative functions”.

Promulgation of new Electricity Ordinance (2007) has made provision of sharing electricity royalty revenue with the concerned DDCs, Development Region (where normally 9 to 15 districts lie in) and the national exchequer at a ratio of 12%:38%:50%. This provision will also provide some benefits to the adjoining districts situated in the same development region so that they are not left out totally. Hence, this new provision is believed to bring about dramatic change in maintaining social equity and environmental justice with regards to the benefit sharing.

The entire DDCs and VDCs get annual budget for their projects and the energy revenue sharing would be on top of government budget allocation. This arrangement will help bridge the gap between the need and financial (resource) capability of the local government. Hence it will ultimately help make bonding strong amongst local people, stakeholders, project developers, local government and the central government.

In the similar manner, Environment Protection Act (1997), Environment Protection Rule (1997) & first amendment (1999) and National Environmental Impact Assessment Guidelines (1993) are the main guiding documents in the environment sector. These legal documents mandate to formulate projects socio-culturally acceptable, economically viable and environmentally benign.

Along with the National requirement, international requirements such as World Bank Operational Directives and Asian Development Bank Guidelines were also fulfilled during the process of conducting EIA.

The outcome of the Draft EIA report was presented to the local inhabitants through a massive Public Hearing program in six places at the projected affected VDCs/DDCs. Such programs were also conducted in the capital, Kathmandu, in three different forums. So, also the same information was put forward in various government departments, ministries and also to the Cabinet of Nepal headed by the Prime Minister, including all party legislatures. Dissemination of information was also done through print media, radio and television in many occasions. A national level Workshop is planned for the near future so as to get detailed technical input/comments/suggestions from the respective experts before finalising the EIA report. The EIA report will be scrutinised by the Department of Electricity Development and forwards to the Ministry of Energy. Then Ministry of Energy forwards the document to the Ministry of Environment and Science & Technology for getting final approval.

8.0 The Treaty

• The Government of India identified Pancheshwar Hydro Electric P project site in 1956 and initiated the in 1962 and a report was prepared in 1971. • Joint Group of Experts (JGE) of India and Nepal was established in 1978 which facilitated field investigation.

5 • Pancheshwar Multipurpose Project (PMP) office was established under Ministry of Water Resources (MoWR) in 1988. • Field investigations in Nepal were carried out with International Development Agency (IDA) assistance between 1988 and 1994; which produced field investigation reports of various kinds. • Nepal prepared Detailed Project Report (DPR) in November 1995 and Mahakali Treaty was signed in February 1996. • Joint Group of Experts (JGE) meeting held on 21 occasions between 1978 and 2000. • Scoping Report and TOR for Environmental Impact Assessment (EIA) within Nepalese territory was prepared in 2001. • EIA work commenced in August 2005 by the Pancheshwar Multipurpose Project under the Department of Electricity Development and it is planned to finalise the EIA Report in July 2010.

Milestones

™ 12 Feb. 1996 : Signing of the Mahakali Treaty.

™ 20 Sep. 1996 : Ratification of the Treaty by the Parliament (Nepal).

™ 1 Nov. 1996 : Formation of Parliamentary Monitoring Committee.

™ 5 Jun. 1997 : Treaty entered into force.

™ 10 Dec. 1999 : Joint Project Office (JPO)was established in Kathmandu.

™ June 2002 : JPO office closed without finalizing the DPR.

™ 24 Nov. 2010 : Joint Committee on Water Resources, jointly headed by the Secretary to the Ministry of Energy, Government of Nepal, and Secretary to the Ministry of Water Resources, Government of India signed an agreement to establish Pancheshwar Development Authority (PDA) which will finalise the DPR and do all necessary works with regards to developing and operating PMP. The Headquarters has been decided to be established shortly in Mahendranagar, Nepal. The agreement has been endorsed by the Government of Nepal.

The Mahakali Treaty clearly states that the water and electricity shall be shared in the ratio 50:50 to both the countries.

Treaty Provisions for PMP Design Art.3b-LE ...the Treaty precludes the claim, in any form, by either Party on the unutilized portion of the shares of the waters of the Mahakali River of that Party without affecting the provision of the withdrawal of the respective shares of the waters of the Mahakali River by each Party under this Treaty. PMP to be designed and implemented on the basis of the following principles: • To produce the maximum total net benefit with respect to power, irrigation, flood control etc.

• Cost of the Project shall be borne by the Parties in proportion to the benefits accruing to them.

6 • A portion of Nepal's share of energy shall be sold to India and price to be mutually agreed upon between the parties.

9.0 The Impacts

The major impact identified during the field visit and the preparation of the EIA report has been the inundation of land and property duo to the formation of large dam. By which annual loss of food grains and other agricultural products occurs. The detailed analyses has been done and calculated the production foregone annually due to the implementation of PMP with regards to food grain, vegetables, cash corps, fruits and other agricultural products and translated into monetary terms which is presented below: (a) Loss of Agricultural Production due to the Implementation of PMP Production in Metric Ton; Cost in Million NRs. (1 US$ = NRs. 75)

Pancheshwar Rupaligad Re- Poornagiri Pancheshwar Pancheshwar High Dam regulating RR Dam HD+ Rupaligad HD + Dam RRD Poornagiri RRD Crop Produc- Cost Produc- Cost Produc- Cost Produc- Cost Produc Cost tion tion tion tion -tion Paddy 991.73 389.6 38.96 1.000 3034 61.0 1030.69 390.6 4025.73 450.6 Maize 1708.9 25.0 8.06 0.088 76.70 1.2 1716.96 25.088 1785.60 26.2 Wheat 627.68 12.5 26.58 0.570 866.80 22.2 654.26 13.07 1494.48 34.7 Millet 16.48 2.1 0.04 16.52 2.1 16.48 2.1 Barley 9.46 0.33 9.79 9.46

Potato 240.51 4.0 1.25 0.015 298.80 4.8 241.76 4.015 539.31 8.8 Oil Seed 40.25 3.8 1.53 0.170 187.50 3.8 41.78 3.970 227.75 7.6 Sugar- 95.42 10.6 7.25 0.910 72.20 9.0 102.67 11.51 167.62 19.6 cane Pulses 55 5.1 1.29 72 1.5 56.29 5.1 127 6.6 *Others 142.65 2.1 190 2.9 142.65 2.1 332.65 5.0 Total 4013.37 457.553 8726.08 561.2

Note: * Vegetables and Fruits are included in Others category.

(b) Displacement With the implementation of PMP the number of households and persons to be displaced are as follows: Pancheshwar High Dam: 21,621 persons from 2,786 households. Rupaligad Reregulating Dam: 1,144 persons from 140 households. Poornagiri Reregulating Dam: 18,565 persons from 2,401 households.

As far as possible, it was tried to avoid the ousting of the local inhabitants from their place of birth. But once it is inevitable then great care has been taken and the theory of “pareto optimality” has been followed so that no person is made “worse off” to make the other person “better off”. Hence, the

7 displacees would be provided with the better dwelling than what they originally possessed. It is also envisaged that as far as possible the displacees will be relocated in the same VDC/DDC where they originally belonged to; or otherwise they will be relocated to the adjacent VDCs/DDCs. As the project cost is extremely cheap, it is viable to provide them better housing facilities and the area of resettlement/rehabilitation and other project areas be developed as a modern hill station. The detailed plans and programs will be worked out by the study Detailed Resettlement and Rehabilitation Plan to be initiated in 2010. Moreover, house for house or pecuniary compensation package will also be formulated in case of any displacee who wants to take money as a compensation for his property.

(c) Pollution during construction There will be some cases of air, noise, dust, water pollution basically during the construction phase for this appropriate measures for mitigation will be taken to reduce them to the tolerable level.

(d) Law and order situation Due to the influx of a great number of officials, workers, labourers and other project related or induced people, there may be some problem in law and order situation but it will be handled with great care providing sufficient security personnel in and around the project area. Gambling, prostitution, alcoholism and other sort of anti social activities will be controlled as much as possible.

(e) Pressure on natural resources, forest and public utilities The workers may tend to utilize resources from the local forest and sometimes they might be involved in hunting/poaching activities also. These activities will be controlled. Public utilities and other facilities such as drinking water, school, hospital and other necessary items will be provided not only to the project staff but also to the local inhabitants. Due to the mandatory provision of the need to plant 25 plants for one tree fell down, thousands of trees will be planted in the watershed area. Emphasis will be given to plant endogenous species or trees of high timber value. The fell- down trees will be handed over to the local Forest Office or the User Committees free of cost.

(f) Microclimatic change in the region Due to the formation of the man made reservoir there will be a possibility to occur microclimatic change in the region. But it is envisaged that the change would be for the betterment so that it could negate the bad impacts of rise in ambient temperature caused by greenhouse gas emission and global warming. Nevertheless, in the near future, a precise study shall be conducted by PDA in this issue.

(g) Change in landscape and land use Due to the implementation of massive civil structures the landscape would be changed to a great extent. There will be possibility of mass wasting and landslides also. These impacts, if happen, would be taken care of by the bioengineering measures to be implemented beforehand. In some cases retaining wall or other civil structures will also be constructed to avoid devastating incidence. Moreover, really marvelous landscape would be designed in the whole project area introducing sufficient greenery and floriculture, so that, the area would become a perfect place to live in and tour around. Aesthetically and with the introduction of other facilities, the project area will be not less than ultramodern hill station. This work will be done by the team conducting Detailed Resettlement and Rehabilitation Plan to be initiated in 2010.

(h) Negative impacts on the Riverine Ecology, Aquatic Lives and Habitat

8 Due to the construction of two large dams, migration of the aquatic animals will be obstructed and their habitat will be affected negatively. But in the downstream of these dams there are already many dams which have obstructed the free movement of aquatic animals. Therefore, substantial additional impacts are not envisaged. Nevertheless, during the construction of the dams the provision of fish ladder will be thought of and if found appropriate it will be constructed. So, also fish hatchery will be developed in the project area and the fish lings will be left towards the upstream of both the dams on an annual basis. For the maintenance of the Riverine ecology at least 10 % of the dry season flow shall be released to the river all the time. It will also help fulfill the drinking water, irrigation requirements and all other social needs of the inhabitants of the downstream areas.

10.0 The Benefits

The benefits due to the implementation of the PMP are calculated to be enormous. The first and the foremost benefits are by the (A) Sale of electricity. The table below shows the benefits accrued to the nation and the share to be disbursed to the respective districts affected by the project and also to other seven districts lying within the Far Western Development Region of Nepal. It is assumed that the development partner, India also gets the benefit from power sale at the same quantum.

(A) Annual Income from the Sale of Electricity (In Billion NRs.) Project Energy Prod. Energy income Total Baitadi Rev. Dadel- Other 7 in Gwh (Bill. NRs.) Royalty (12%+ dhura Dist. dist. of the Revenue 1/9*38 Rev. region

10,671/2=553 Pancheshwar 5 29.88 2.93 0.475 0.124 0.124 Rupaligad 1,650/2=825 4.62 0.32 0.052 0.052 0.013

Poornagiri 5,716/2=2858 16.00 1.14 0.048 0.184 0.048 Pancheshwar+Rupalig 12,321/2=616 ad 0 34.50 3.25 0.488 0.175 0.137 Pancheshwar+Poorna 16,387/2=819 giri 3 45.88 4.06 0.523 0.308 0.172

Note: 1US$ = NRs. 75

B. Fish Farming

9 B. Total estimated economic benefits from fish production from the reservoirs to be created by damming at Pancheshwar, Rupali Gad and Poornagiri by PMP. B. 1. Open Reservoir Production (1 US$=NRs.75)

Pancheshwar Rupaligad Poornagiri Total Total HD RRD RRD (Pa+Ru) (Pa+Po) AB C(A+B) (A+C)

Area (ha) 4,440 258.0 5,090.0 4,698.0 9,530

Productivity 0.28 0.28 0.35 (Mt/ha) Annual 1,243.2 75.0 1,780.0 1,318.2 3,023.2 Production (Mt) Value at NRs. 186.5 11.3 267 197.8 453.5 150/Kg (Million NRs.)

B.2. Production from Cage Fisheries Panche- Rupali Poorna- Total Total shwar Gad Giri (Pa+Ru) (Pa+Po) HD RRD RRD (A+B) (A+C) AB C

Volume 8880000 516000 10180000 9396000 19060000 (uc.m.) Productivity 6.0 6.0 6.0 (Kg/cu.m.) Annual 53280 3096 61080 56376 114360 Production (Mt) Value at Rs. 7992 464.4 9162 8456.4 17154 150/Kg. (Million NRs.)

Note: 10% of the total surface area of the reservoir in Nepal is estimated to be used for Cage Fish Culture. The figure presented here is only preliminary estimation. Detailed figure will be obtained after the detailed study and preparation of Detailed EnvironmentalManagement Plan being initiated in 2010.

10 B.3. Total Economic Benefit from Fisheries Pancheshwar Rupali Poorna Total Total HD Gad -giri (Pa+Ru) (Pa+Po) RRD RRD

ABC(A+B) (A+C)

Total benefit 186.5 11.3 267 197.8 453.5 from Open Reservoir Fish production (In Million NRs.) Total benefit 7992 464.4 9162 8456.4 17154 from Cage Fish Culture (In Million NRs.) Total 8178.5 475.7 9429 8654.2 17607.5 (In Million NRs.)

Analysis of Agricultural production Vs Reservoir Fisheries (1 US$=NRs.75) Loss/Benefit from Panche- Rupali Poorna- Total Total Agricultural and shwar Gad giri (Pa+Ru) (Pa+Po) Fish Production High RRD RRD Dam (A+B) (A+C) ABC

Total Agricultural 35.1 4.1 106.1 39.2 141.2 loss (Million NRs.) Total benefit from 8178.5 475.7 9429 8654.2 17607.5 Fisheries development in reservoir (Million NRs.) Difference betwn. +8143.4 +471.6 +9322.9 +8615 +17466.3 Agri. production & Fisheries (Million NRs.)

Note: 1. Based on Agricultural Statistics, 2006, MOAC, Agricultural Marketing Bulletin, ABPSD/DOA, 2006. & Household Survey, 2006. 2. Price of the products based on field visit November 2008.

11 (C) Irrigation

It is estimated that in Kailali and Kanchanpur districts, nearly 93,000 ha. of land would be irrigated, all round the year by which: Agricultural intensity would reach to 240% and increase in agricultural yield would be 174,000 million tonnes/year by which Nepal would be earning approximately NRs. 5.55 million/year (74 million US$/year).

(D) Carbon Trading

Due to the global warming and receding of glaciers it has become urgent that adaptation measures ought to be developed simply for being able to leave in this environmentally decaying planet. One of the measures is the development of storage projects. It would be more beneficial if Pumped Storage Projects are developed but for this geological condition and sites need to be appropriate. If such sites are found regardless of the investment cost it needs to be developed, without fail. Fortunately, PMP possess appropriate site for developing Pumped Storage Plant. But till today serious thoughts have not been given in this regards. Nevertheless, with the production of clean, green energy by utilising renewal resource (water) PMP should gain the facility to get Carbon Trading but till today it has not been realised for the mega hydropower projects. With the alarming rate of global warming and probability to occur catastrophes induced by greenhouse gas emissions, the world urgently need to take a serious thought/action into this matter. However, it is envisaged that till the operation of PMP, it will surely get facility for Carbon Trading and it would be earning approximately NRs. 4.42 billion (US$ 59 million) per annum but it needs to be confirmed in the later stage.

(E) Eco-Tourism and other Miscellaneous Development/Commercial/Industrial Activities

PMP, fortunately is situated is such an area that lots of development, eco-tourism, trekking, hiking, rafting & other water sports, horticulture, herbiculture, floriculture, sericulture, vocational training & other educational activities along with various other industrial & commercial activities could be sustainably done. Currently, proper assessment has not been done with these regards but it will be initiated in 2010 while preparing Detailed Environmental Management Plan. It is inevitable to gain substantial amount once the above mentioned activities are realised.

(F) Various Positive Aspects of PMP

- Vocational Training: Nearly 20 different areas/subjects of vocational training are identified so as to produce skill & semi-skill labourers who could work for PMP. It will be done free of cost at the preconstruction stage and emphasis would be given to the project affected people.

- Emplayment: Directly nearly 8000 and indirectly approximately double of that would be the quantum of job creation would be done by the realization of PMP.

- Creation of 65+25 Km. long reservoir enabling navigation, fish farming, recreation, water sports and various opportunities.

- 200+100 Km. approx. ring road would provide ample of commercial, industrial activities,

- Industrial Ropeways will be developed for the transportation of construction materials, tools and plants during the project development stage which will be handed over to the local

12 authority after the completion of the project. Those Ropeways could be remodelled into Cable Car simply by adding cabins and run for commuting local inhabitants and tourists along with transporting local products.

- Management of about 3,000 Km2 of Watershed area,

- Development of Forest & other herbarium in 9000 ha.

- Opportunities to develop model hill-station and may be the Headquarters of the Federal State of Far Western Development Region of Nepal.

11.0 The Cost

(As of 1995) Project Cost (1 US$=NRs. 75) Project

Cost in Million US$ Cost in Billion NRs.

Pancheshwar Multipurpose Project 2620 197

Rupaligad Reregulating Dam 363 27

Poornagiri Reregulating Dam 1167 88 2983 Pancheshwar + Rupaligad RRD 224

Project Cost including 25% price escalation 3728 280

Pancheshwar + Poornagiri RRD 3787 284

Project Cost including 25% price escalation 4734 355

12.0 SWOT Analysis

STRENGTH: The Strength of PMP are categorised as: abundance of water resources, high head, favourable geological condition, possibility of (Pumped) Storage Plant, readily available energy market, unemployed human resources and attractive economics of the project depicted as follows:

Total Project Cost = 2983 million US$ (NRs. 224 Billion); (as of 1995)

Installation Cost = 445 US$/KW

Energy Production Cost = 3.4 US Cent/KWH (NRs. 2.55)

B/C Ratio = 2.52

13 EIRR = 25.4%

Revenue: NRs. 34.50 Billion/year from energy sales NRs. 8.65 Billion/year from fisheries (to be confirmed during EMP preparation) NRs. 5.55 Billion/year from Irrigation NRs. 4.42 Billion/year from Carbon Trading: (to be confirmed in later stage) NRs. …….. Billion/year from tourism, industry, horticulture, herbiculture, floriculture, sericulture, rafting & water sports, educational & vocational training and other industrial/commercial activities.

WEAKNESS: Confusion about the project (wait and see approach) and hence lacking in making timely decision. Lack of: – Analytical, visionful, tactful (possessing negotiating capability in a WIN-WIN approach) technical brain in power sector who could pursue the policy makers (upon whose recommendation politicians could make correct & timely decisions about PMP)

– Right man on the right place

– Committed/trained/experienced manpower

– Financial resources

– Construction material/equipment

OPPORTUNITY: By the Pancheshwar Multipurpose Project: Of the energy sales amount of NRs. 34.55 Billion/Year; NRs. 4.55 Billion/Year will be disbursed for salary, operation & maintenance of the project and for the loan repayment. The remaining NRs. 30 Billion/Year can be utilized as equity for investment in hydropower or other projects. With this amount as equity NRs. 120 Billion could be received as loan. Therefore, 30+120 = NRs. 150 Billion per annum could be invested for the development projects.

By the Karnali Chisapani Multipurpose Project (10,800 MW) Cost of KCMP: 6.8 Billion US$ (2003 estimate) * = NRs. 510 Billion * 1.5 = NRs. 765 Billion.

The investing capability due to the revenue and loan amount of NRs. 150 Billion/year received from PMP could be used for the development of Karnali Chisapani Multipurpose Project (KCMP). Altogether, 5.1 years’ accumulated amount of PMP would be sufficient for financing the KCMP.

Revenue of KCMP: Annually 20.8 TWH of electricity production * Rs. 5.60/unit = NRs. 116.48 Billion/Year is the estimated revenue of KCMP. Of the NRs. 116.48 Billion/Year: NRs. 1.48 Billion is apportioned annually for the operation & maintenance of the project and salary. NRs. 15 Billion is apportioned annually for the repayment of the bank loan. So, NRs. 100 Billion could be utilized as equity for investment in hydropower or other projects. With this amount as equity NRs. 400 Billion could be received as loan.

Therefore, from Karnali Chisapani Multipurpose Project:

14 100 + 400 = NRs. 500 Billion per annum could be investing capability for development projects.

Altogether, KCMP & PMP could invest 500 + 150 = NRs. 650 Billion per annum. In 20 years it will be NRs. 650 Billion * 20 = NRs. 13,000 Billion investing capability of Nepal. (US$ 173.33 Billion @ 1 US$ = NRs.75) This is really huge amount for the investment in a small country like Nepal. It would be sufficient to develop approximately 90,000 to 1,00,000 MW of Hydropower projects.

THREAT:

The experienced and perceived threats are as follows: – Few International/national rivals/mafia

– Few INGO/NGO

– Antidam lobbyist

– Opportunists

– Few countries/bankers/financiers

– Status-co mentalists,

– Technical advancement (fuel cell, solar, nuclear, wind)

13.0 Conclusion and Recommendation

Developing technically feasible, economically viable, environmentally sound, socially and culturally acceptable hydropower project has been the present thrust of PMP, which help gain the public acceptance in a greater extent and for this EIA has been the most effective tool. The project affected people would be given a good compensation for their land and property at the replacement cost, house for house as far as possible, compensation for their standing crops, hardship allowance, training and job opportunity and other intangible benefits depending upon the seriousness of the problem. The PMP has adopted the motto of “Pareto Optimality” which means making one person better off without making any other worse off. The fruit of development would be equitably shared with the local inhabitants and the affected people. The EIA study guided by a good legislative framework has taken care of all these issues and provides good and implementable socio-environmental management plan incorporating local development activities and ways and means of benefit sharing during construction as well as in operation and maintenance phase of the project cycle.

Recent, promulgation of new ordinance has made provision of sharing electricity royalty revenue with the concerned DDCs, development region where the district lies in and the national exchequer at a ratio of 12%:38%:50%. This provision will also provide some benefits to the adjoining districts of the development region so that they are not left out totally. Hence, this new provision is believed to bring about dramatic change in maintaining social equity and environmental justice with regards to the benefit sharing. With this provision all the nine districts of Far Western Development Region would be receiving their share from the PMP.

15 Nevertheless, monitoring should be done constantly for quite some time so as to oversee the effectiveness of benefit sharing mechanism and attainment of social equity and environmental justice.

As it is evident that even though possession of 83000 MW of hydropower potential cannot do any good to the nation and the people, as long as they are not prudently utilised. So, without any further delay all possible hydropower projects ought to be developed. In this regards the PMP is in the forefront and lots of studies have been already commenced. More importantly, being bi- national project, with the development of this project, the working relationship with neighbouring country, India, will be enhanced and the level of confidence will be soared. It is necessary because India is the nearest market for the hydropower development in Nepal and joining hands with India would benefit both the nations.

The earnings from the sale of electricity (NRs. 34.55 billion), irrigation benefit (NRs. 5.55 billion), fish farming (NRs. 8.65 billion/year), probability from carbon trading (NRs. 4.42 billion/year) and many billions from other sources such as: tourism, industry, horticulture, herbiculture, floriculture, sericulture, rafting & water sports, educational & vocational training and other industrial/commercial activities can be utilised for the national development endeavours. Moreover, as shown earlier after the successful implementation of PMP and KCMP Nepal’s Capability of Financial Investment could be in the order of NRs. 650 Billion/year. It would be sufficient to develop approx. 90,000 to 1,00,000 MW of Hydropower projects. Therefore, starting with PMP, Nepal needs to march ahead with heart and soul for the all round development of the nation, without losing any second.

References

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16 • DDC 2001. District Development Plan. District Development Committee, Darchula. • DDC b, 2058, District Profile, District Development Committee, Baitadi, Nepal • DDC Baitadi (2001). Periodic District development Plan 2058/59-2063/064 BS (2001-2006). District development Committee, Baitadi, falgun 2058 (2001). • DDC c, 2058, District Profile, District Development Committee, Dadeldhura, Nepal • DDC Darchula (2002). District Development Plan, 2061/062 BS. District Development Committee, Darchula, Chaitra 2059 BS (2002). • DDP 2004. District Development Profile of Nepal. Information Sector Research and Study Centre, Kathmandu, Nepal. • EPA 1997. Environmental Protection Act. • His Majesty’s Government of Nepal (1992 and 2001), Hydropower Development Policy (2049 and 2058), Ministry of Water Resources, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1992), Electricity Act, 1992, Ministry of Water Resources, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1992), Water Resources Act, 2049, Ministry of Water Resources, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1992), Water Resources Regulation, 2050, Ministry of Water Resources, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1993), Electricity Regulation, 2050, Ministry of Water Resources, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1997 and 1999), Environment Protection Regulation, 2053 and first amendment (2055), Ministry of Population and Environment, Kathmandu, Nepal. • His Majesty’s Government of Nepal (1997), Environment Protection Act, 2053, Ministry of Population and Environment, • His Majesty’s Government of Nepal (1999), Local Self -Governance Act, 2055, Ministry of Local Development, Kathmandu, Nepal. • HMG 1995. Project Definition Study Report of PMP. • HMG/EPC 1993. Nepal Environmental Policy and Action Plan. His Majesty’s Government of Nepal/Environment Protection Council. • HMGN. 1991. Pancheshwar Multipurpose Project: Field investigation within Nepal territory. Final report I. Kathmandu, Nepal. • HMGN. 1991. Pancheshwar Multipurpose Project: Field investigation within Nepal territory. Final report IX. Kathmandu, Nepal. • HMGN. 1994. EIA of the Pancheshwar Multipurpose Project of Nepal Territory. C-CON & COWEL Kathmandu, Nepal. • ICIMOD/ADB (2006). Environment Assessment of Nepal-Emerging Issues and Challenges. Asian Development Bank, International Centre for Integrated Mountain Development, Kathmandu, Nepal 2006, pp 33-35. • Interim Constitution of Nepal 2007. • ITECO 2002. Study of infrastructure facilities for PMP – Final Report vol I Iteco, Nepal, June 2002 • IUCN 1980. World Conservation Strategy. International Union for Conservation of Nature and Natural Resources. UNEP/WWF. • Kathmandu, Nepal. • Khadka, RB et al. 1988. Study on integrated resource development and management in Mahakali River basin. CCEDA, Kathmandu.

17 • Lahmeyer International & New ERA 1997. Middle Marshyangdi Hydropower Project Annex Report on the Environmental and Socio-economic Impact Assessment. Nepal Electricity Authority. • Mahakali Treaty 1996. • METCON 2002. Scoping and TOR Report of PMP. • METCON and East Consult 2001. Preparation of Scoping Document and TOR for conducting Environmental Impact Assessment (EIA) of Pancheshwar Multipurpose Project. His Majesty’s Government of Nepal. Ministry of Water Resources. • Mishra SB (1998). Soil Erosion. In A Compendium of Environment Statistics 1998 Nepal. HMG Central Bureau of Statistics, Kathmandu, Nepal, May 1998, pp 353 • MOWR, 1995, Pancheshwar Multipurpose Project-Detailed Project Report, Volume 3 section 5 to 14, HMG/N Ministry of Water Resources, Nepal • National EIA Guidelines 1993. • National Planning Commission and IUCN (1993), National Environmental Impact Assessment Guidelines 1993, Kathmandu, Nepal. • NEA 2007. Nepal Electricity Authority: Fiscal Year 2008/09 -A Year in Review. • Nepal Electricity Authority (2003), Environmental Impact Assessment Study of Middle Marsyangdi Hydroelectric Project, • NEPAP (1993). Nepal Environmental Policy and Action Plan. HMG of Nepal, Environment Protection Council, August 1993, pp 19. • P.M.P,1991. Field Investigation within Nepal Territory, Final Vol. IX “Appendix K, Environmental Impact Data. • P.M.P. 1994, Detailed Project Report, Pancheshwar Multipurpose Project -1994. • PACO 1990-1992. Project Definition Study Final Report, Volumes 1-3 & 9, • PACO 1991. Field Investigation Final Report, Pancheshwar Consortium. • PACO 1992. Field Investigations within Nepal Territory, Additional Services. Pancheshwar Consortium. • PACO 1995. Detailed Project Report, Vol. 1, 2 and 3. DPR 1995. 3. EPR 1997. Environmental Protection Regulation. • Pancheshwar Consortium. • Pancheshwar Consortium 1991. Pancheshwar Multipurpose Project. Field Investigations within Nepal Territory. Volume III- Related Investigations. His Majesty’s Government of Nepal. Ministry of Water Resources. • Pancheshwar Consortium 1991. Pancheshwar Multipurpose Project. Field Investigations within Nepal Territory. Volume III- Related Investigations. Ministry of Water Resources, His Majesty’s Government of Nepal. • Pancheshwar Multipurpose Project 2010, Environmental Impact Assessment of Pancheshwar Multipurpose Project (Draft Report), Volume I, II, III and IV, Ministry of Energy, Government of Nepal. • PDR 1992. Project Definition Report of PMP. • Pradhan, B.R. Annual Progress Report of Indrasarovar Reservoir, Inland Fishery Project, Dept of Agriculture, 1986. • Prater, S.H. 1971. The book of Indian animals. Bombay Natural History Society. Oxford University Press, Bombay. • Production Pocket Profile, Regional Agricultural Development Directorate, Far-western, Dipayal, 063/64. • Projected Population of Nepal, 2001-2021, CBS, Kathmandu, Nepal.

18 • Rai, A.K., Annual Progress Report of Indrasarovar Reservoir, Inland Fishery Project, Dept. of Agriculture, 1990. • Rajbhandari, KG and TB Gurung. 1994. Wetlands and Fisheries: Prospects and Constraints. In b Bhandari, TB Shrestha and J McEachern (eds). Safeguarding Wetlands of Nepal. Proc of workshop on wetlands management in Nepal. 1993. Kathmandu p 66-76. • Shrestha 1966. Cadastre of Hydropower of Resources. • Shrestha 1995. International Water Power and Dam Construction. • Shrestha, J 1994 : Fishes, Fishing Implements and Methods of Nepal. Smt. M.D. Gupta, Lalitpur Colony, Lashdar (Gwalior), India. • Shrestha, J. 1981: Fishes of Nepal, Curriculum Development Centre, T.U.- Kathmandu. • Shrestha, T.K. 1978: A New Report on Induced Spawning in Nepalese Hill-stream Trout Schizothorax plagiostomus (Heckel), J. Inst. Sc. Vol. 1, pp. 171-176. • Shrestha, T.K. 1986: Spawning Ecology and Behaviour of the Mahaseer Tor putitora (Hamilton) in the Himalayan Waters of Nepal, In J.L. Maclean, L.B. Dozon and L.V. Hosillos (ed). The First Asian Fisheries Forum, Asian Fisheries Society, Manila Philippines, pp. 689 – 692. • SMEC 1999. West Seti Hydroelectric Project Environmental Impact Assessment. Vol. 1-5. Snowy Mountain Engineering Corporation International Pty Ltd, Australia. • SMEC. 1999. West Seti Hydro Electric Project-Environment Impact Assessment: Ecological studies. Vol 5. SMEC International Pvt. Ltd. • Statistical Information on Nepalese Agriculture, Ministry of agriculture and Cooperatives, Kathmandu, 2006. • UNDP (2003): Human Development Report (2009) United Nations Development Program, New York, USA. • Upadhyaya, S. K. (2002), Hydropower Development in Nepal: Issues of Equity and Environmental Justice, Equitable Hydro, Working Paper-1, Winrock International, Nepal. • Upadhyaya, S. K. (Jan. 2003), How Can Hydropower Royalty Lead to Social Equity and Environmental Justice?, Equitable Hydro, Working Paper-2, Winrock International, Nepal. • Upadhyaya, S. K. (Nov, 2003), Maoists’ Strikes on Hydropower Plants: Any Policy Lessons? Equitable Hydro, Working Paper-3, Winrock International, Nepal. Vol. - I, II and III, Kathmandu, Nepal. • WAPCOS 1971. Water and Power Consultancy Services. • WECS 1995. Energy Resource Base of Nepal. Perspective Energy Plan, supporting document no. 2. Water and Energy Commission Secretariat, Singhadurbar, Kathmandu. • WECS 2004. National water Plan Draft Report. Water and Energy Commission Secretariat, Singhadurbar, Kathmandu. • World Bank (1991), Operational Directive 4.01: Environmental Assessment, Washington D.C., U.S.A.

19 The Author

Mr. Dilli Bahadur Singh graduated in Civil Engineering from MIT, India in 1981 and pursued Masters of Engineering and Technology Management from the University of Queensland, Australia in 1994. He worked for the Belhara, Muga and Hille Drinking Water Supply Projects under the Department of Water Supply and Sewerage, Marsyangdi Hydroelectric Project and the Ministry of Water Resources. He is presently working with the Department of Electricity Development, Ministry of Energy as a Project Director of 6720 MW Pancheshwar Multipurpose Project, a bi-national project between Nepal and India. He is responsible for conducting Feasibility Study, Environmental Impact Assessment, finalizing DPR & EIA reports conduct studies /constructing DEMP, DR&RP, 100 Km.+64 Km. Brahmadev – Pancheshwar Access road, Patan – Pancheshwar Access Road, negotiating with Indian counterparts, meeting local inhabitants/political leaders/media, managing finance for PMP and conducting all the managerial activities. Altogether, he accrued twenty nine years of experience in the field of water resources, hydropower development and environmental. Mr. Singh has presented technical papers in more than two dozen of international workshops and seminars. He writes articles for the technical journals and has published six literary books on his account.

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