‘Mafia’ dealings, HARNESSING HYDROPOWER by BikashThapa

That Nepal is a country with immense hydropower potential is well known. But what is also known is that despite this immense potential, approximately 40 percent of the country’s citizens do not have access to electricity. The remaining 60 percent continue to reel under power cuts that can stretch up to 18 hours a day. So what is stopping us from transforming our hydropower potential into real projects that generate electricity and boost economic growth?

As with all underdeveloped countries, the answer to such a crucial question is usually doled out in the form of a blame game. The private sector blames the government for incorrect and inadequate policies and the government blames this on political instability in the country, and so on. To a certain extent, this does contain an element of truth—but it does not unravel the real reason behind our inability to tap our hydropower resources.

It is in fact the Hydropower License Brokers of Nepal who are the main villains that compel us to live in darkness, under constant power cuts. Most Nepalis can identify them as a collective group of ‘Jal mafia’ or hydropower mafia—the term media has often used to describe them in Nepal. But while we hear about this collective group from time to time, its modus operandi is to work silently and under the guise of ‘real hydropower developers’. They buy licenses by influencing various government officers, join different private sector power associations to prove their ‘developer’ status and sell those licenses around to investors.

The case of Nepal’s biggest hydropower license brokerage company—Nepal Water and Energy Development Company (NWEDC)—holding the Upper Trisuli 1 license was much publicized by the local media recently. As per the prevailing Electricity Act, a company can only hold a survey license for a maximum of five years, and can only apply for the next license called the ‘generation license’ after fulfilling the minimum criteria set by the government; the minimum criteria being completing the feasibility study of the project, completing the Environmental Impact Assessment Study, arranging for power evacuation and tying up the finances for the project.

NWEDC held the survey license for five years and did not fulfill any of these criteria. The general manager of NWEDC has publicly admitted to journalists of not having completed the feasibility study of this project. The director general of the department of electricity development has also publicly stated that without completion of the drilling work, the feasibility study is incomplete.

The ministry of energy gave 35 days of due notice to this company to furnish evidence of the criteria it should have met in order to be granted a generation license—and when it did not do so, the authorities cancelled the license as per the prevailing law.

Now, it is downright alarming that Prime Minister Baburam Bhattari (who is also the current energy minister) is planning to issue this license back to NWEDC via a cabinet decision, going against government policies and even after his own ministry had officially cancelled the license held by the body. Most officials at the department of electricity development and the ministry of energy have also gone on record to say that if the PM does this, it will leave them with no authority to monitor the hydropower sector.

Interestingly, it is learnt that some of the shareholders of NWEDC that entered this company only six months prior to the expiry of this license have used coercion on the PM. The Korean companies involved have apparently got their ambassador to warn that if the license was not re-issued to them, Korea would stop its aid to Nepal and reduce the quotas of Nepali laborers going to Korea. The IFC has also warned that this would be disastrous for the country. And the PM has used these as his reasons to issue this license back to NWEDC.

But the question to be asked here is whether it is alright for the PM to wilt under such pressure. Are powerful foreign embassies and multilateral agencies like the IFC above the law of Nepal? And what about the other license holders whose licenses have also been cancelled by the energy ministry—what if they go to the prime minister and ask him to reissue their licenses as well?

A very dangerous precedent is about to be set if the cabinet does decide to re-issue this license to parties already blacklisted by the concerned authorities. If the PM approves of this, then the rule of a maximum period of five years to hold a survey license as stipulated by the Electricity Act will no longer be valid. It would mean those companies that have licenses expiring in five years can now go to future cabinets and get their expired licenses re-issued by influencing future prime ministers. The key issue here is that Nepal will never be able to develop its hydropower projects as hydropower license brokers like NWEDC will use their influence to routinely subvert the law in one way or another.

The PM needs to understand that the pressures created from the hydropower mafia in this case are just the beginning. What will happen to the Nepali citizen who is living under 18 hours of power cuts when more such NWEDC’s are born and the sector is full of such lobbyists?

We are left wondering if the ‘New Nepal’ Bhattarai promised to create is one where the laws of the country are openly flouted and its precious natural resource handed over to license brokers. The collective conscience of the citizens is keenly watching the prime minister to see if he does indeed misuse his authority to decide in favor of the license brokers, who are in fact the ones responsible for our 18 hour power cuts. From Republica

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