CHAPTER III

Indo-Nepal Transboundary Waters: Disputes And

Cooperative Efforts

Nepal is a landlocked country in South Asia, bordered by China to North

and India to the south, east and west. It is located between latitudes

26°22'N-30°27'N and longitudes 80°4'E-88°12'E. Nepal extends 885 km

along the east west with an average width of 193 kilometers along the

north south. The country, covering a total area of 147,480 square

kilometers, has very diverse physical characteristics in its topography,

climate, geology and land use system.

Nepal is predominantly mountainous, with three broad ecological zones

i.e. the Terai plains, Churia hills and High mountains (Middle and

Greater Himalaya), covering respectively about 18, 58 and 24 per cent of

the total land area.

The Terai region is an extension of the Indo Gangetic plain, which is

underlain by fertile soil mantle. Adjacent to the Terai in its north, rising

abruptly, lies the Churia hill ranges. Its average elevation ranges between /

300 m to 500 m. North of Churia lies Mahabharat range (part of middle

Himalaya) with rugged terrain, deep valleys and incised rivers. On the

North lies the Himalayan range whose elevation rises above 4000 mts.

Each region has distinct characteristics, which influences the availability

of water resources.

Drainage System of Nepal

Nepal's dra~nage system consists of four major river basins seven smaller

basins and several smaller sub basins. The first group of rivers has their

sources in the snow and glaciers, in the dry season. The Mahakali, the

Karnali, the Gandaki and the Sapt Kosi are four rivers in the first

category. The second group of rivers originates in the middle mountains,

which are mostly rainfed and have low dry season. Bagmati, West Rapti,

80

Mechi, Kankai, Kamala and Babai are the rivers in the second category.

Rivers in the third category originate in Churia, southern face of the

Mahabharat, or in the Terai. These rivers have small catchment areas.

Tilawe, Sirsia Hardinath, Sunsari and Banganga are some of the rivers in

this group.

The major river basins of Nepal are transboundary in nature and form

the upper catchment of Ganges system.

(1) Mahakali River Basin: The Mahakali River is the maJor nver of this

basin. It forms the western international border of Nepal with India.

Starting from Api-himal the river flows in a gorge section in the upper

region. The Mahakali after it flows into India is known as Sharda,

which meets the Karnali (Ghaghra) in Indian territory. The river basin

has a total drainage area of 15,640 km2, about 34per cent of which

lies in Nepal.

(2) Karnali River Basin: The Karnali river basin drains Nepal's western

region. The Seti and Bheri are the two major tributaries, contributing

to its water resources. The total catchment area within Nepal is

estimated to be 41550km2.

(3) Gandaki Rive~asin: The Gandaki basin also known as Sapt Gandaki

basin has a catchment area of 36000km2 with an additional area of

approximately 4600km2 of Tibet being drained by tributaries of Kali

Gandaki, Burhi Gandaki and Trishuli rivers. The basin is located

along with central alignment of the Himalayas with intrusions into

Indus-Tsangpo Plateau to north and extending to the Ganges

Brahmaputra plain to the South.l

(4) Kosi River Basin: The Sapt Kosi is the biggest river of Nepal. It drains

the region lying east of Gosainsthan and west of Kanchanjunga. The

Kamal Rijal, "Role of Nepalese Water Resources for Meeting Energy Needs in South Asia," in Sridhar K. Khatri [ed.] Energy Policy: National and Regional Implications, NEFAS Publication, Kathmandu, 2002, p. 95.

Ql

total drainage area of the nver basin is 60,400 km2 of which 4 7

percent lies in the Nepal's territory. Sun Kosi, Arun, Indrawati, Dudh

Kosi are the major rivers of the basin.

All these large and small rivers give rise to about 6,000 rivers to totaling

about 45,000 km in length. The drainage density of 0.3 km/km2 of

lateral drainage reflects the closeness of the drainage channels. Surface

water is estimated to occupy 2.7 per cent of the country's area of which

97 per cent is occupied by large rivers.2

The entire area of Nepal lies within the Ganges drainage basins. A

dominant feature of Nepals water resource, however, is that even though

Nepal occupies 13 percent of the total drainage of the Ganges basin its

contribution to the flow of Ganges river is much more significant,

amounting to about 45 percent to its average annual flow at Farakka

barrage. In the dry seasons, Nepals contribution to the total run off is as

much as 70 percent.

Water Resources: Nepal's Critical Resources

The water resource is the most important natural resources of Nepal,

which can form the base of its sustainable economic development and

prosperity. These resources are plentiful, annually renewable and

environmentally safe to be exploited. The development of water resources

can be harnessed for the benefit of people primarily to meet the steadily

growing demands of agricultural and industrial growth, domestic water

supply and energy. The beneficial effects also concern waterway

transportation, recreation, mitigation of damage caused by floods etc.

Water resources projects are often considered as playing vital role in

ensuring social a~d economic development of the country. Increasing

populations demand for more water, food and energy will inevitably lead

2 Bhekh B. Thapa and Bharat B. Pradhan , Water Resources Development: Nepalese Perspective, Konark Publishers, New Delhi, 1995, p. 18-22.

82

to an accelerated development and extensive utilisation of water resource

in the future.

Though the water resources are m abundance, Nepal is seriously

handicapped in their utilisation and management through indigenous

efforts. Nepal's major problem has been lack of capital and technological

resources. Large scale water resource development projects require huge

capital investments and sophisticated technologies. The Nepalese

government has given high priority to the water sector in its investments

plans. During the Eighth Plan period, the government expected to spend

37 percent of the total public development expenditure in the water

sector; 10.5 percent in irrigation, 21 per cent in hydropower, 5.5 percent

in drinking water. But the government was able to find money for only 73

percent of the targeted expenditure in the power sector. The resources

required to launch even a medium sized hydroelectric project are so large

that Nepal has not been able to meet it from its present available

resources. Therefore Nepal has to seek external assistance for this

purpose. Nepal has not been able to effectively utilise its domestic

resource inputs like labour, materials and management expertise in its

water projects.

Further, most of the attractive water resources development sites are not

easily accessible. For the development of these sites, the additional costs

of access roads need to be incurred to connect them with existing

transportation network. Because of lack of accessibility, numerous ideal

sites for water resources development cannot be tapped.

Nepal Water Resource Development: India's Role

Within the Ganga- Brahmaputra basin, Nepal and North Ganges plain lie

geographically juxtaposed. The sinews of numerous transboundary river

courses interweave the boundaries of Nepal and India, tying up their

destiny.

83

The Ganges basin of India compnsmg of Uttar Pradesh, North Bihar,

Uttaranchal and parts of West Bengal has almost all the rivers not only

originating in Nepal but also having considerable catchment areas lying

in Nepal. The region is characterized by low agricultural productivity,

poverty, energy deficit, flood hazards, frequent droughts, water logging

etc., even though there is ample fertile land, groundwater, surface water

and large manpower. This paradox can be resolved and regional

imbalance can be removed by effective management of water resource. 3

Interdependence and complimentarity: There 1s relation of

geographical interdependences and economic complementarities between

the water resources development aspects of India and Nepal.

Nepal has large hydroelectricity generation potential. The demand for and

consumption of electricity in Nepal is likely to grow at a rate much slower

than what its hydropower potential implies.4 Nepal therefore prefers to

view its water resources more as a source of export earnings. On the

other hand India has been suffering from power shortage for quite some

time with constraint of energy becoming acute every year.

The excess hydroelectricity power generated in Nepal may be sold to

India. The availability of power in India would enhance the use of ground

water for irrigation. The development of water and power resources in

Nepal would meet the growing power and irrigation water needs in Nepal

and would also bring in revenues from power sales to India. While Nepal

can exploit a number of medium and mini schemes to meet its domestic

power requirements the more exciting projects that could deliver huge

blocks of energy at low cost must find a market in India or through it too

Bangladesh. Hydropower represents a renewable source of wealth for

Nepal, for it could export this power to India and invest the proceeds in

3 T. Prasad "Water Resources as a Factor in India Nepal Relations" Indian Journal of Nepal Studies, Vol. V and Vol. VI, 1995-96, pp. 76-77.

4 The Rising Nepal, 13 May 1983, p. 2.

84

its own further development and prosperity.s Further, bound by the

mighty Himalaya on its north, Nepal is a landlocked country with access

to world only through its long southern boundary with India. Nepal can

develop inland navigation to approach the waterways of India finally

having access to seaports of Indian Ocean for development of trade and

commerce.

For India, dependence on Nepal in the matter of water resources

management and utilisation emanates primarily from hydrology. As

Nepal is the upstream country optimum and efficient measures of water

resource development can in many cases be taken only in Nepal. The

construction of reservoirs/dams in Nepal would help controlling flooding

and sedimentation in Bihar, West Bengal. Heavy siltation caused by

rivers tumbling down from hills to Ganges basin causes ecological

damage and reduce the effective life of irrigation projects downstream.

Afforestation in upper catchment areas of Nepal is essential for

watershed management measures in common basins of India and Nepal.

Expansion and management of irrigation facilities in the Ganges basin in

India requires cooperation from Nepal. The in-country options that India

may adopt or have adopted in past such as embankments for flood

controls, surface irrigation through barrages, dredging for increasing

channel depth will prove and have proved, grossly inadequate and even

counter productive in some cases. Soil conservation and reforestation in

the upper catchment could help check erosion, assure fuel, fodder and

food security, deter out migration and provide ecological storage by

encouraging infiltration and moderating runoff thus evening out stream

flows year around.

Thus there is complete interdependence between India and Nepal in the

matter of water resources. The relation is highly prospective because of

both immensity and complimentarity of benefits, and can provide the

5 B.G. Verghese "Learning to Say Open Sesame" in David J. Eaton [ed.] The Ganges Brahmaputra Basin: Water resource Cooperation between Nepal, India and Bangladesh, Lyndon B. Johnson School of Public Affairs Publication, Austin, 1992, p. 100.

85

basis for more coherence and cooperation in all other spheres such as in

political, social and economic interactions.

Policy Planning in Retrospect

Although the potential for water resources development between India

and Nepal is considerable, the cooperation between these two countries

on the issues related to water has not been easy and forthcoming, in

particular because of the extreme sensitivities and divergent interests

and approaches of the political parties. The two neighbours, in spite of

this mutual interest, have found it difficult to cooperate with each other

in developing the Himalaya water resources. Their bilateral relations have

been heavily influenced by politics; marked by emphasis on historical

wrongs (real and perceived), failure in understanding each other

sensitivities and interest, aggressive posture, negative approach, inward

looking dynamics of the faction of the political actors in both countries.

To appreciate the ramification of the problems with water resources

between two countries, it is imperative to acknowledge the political

underpinnings of their bilateral relations.

India and Nepal have a long historical, cultural and political relations.

The political relation was formally regularized in the form of Peace Treaty

m 1815, between British India and Nepal. After India gained

independence, the two countries signed a new Treaty of Peace and

Friendship m July 1950. The India Nepal Treaty of Friendship was

predicated m the idea that India and Nepal shared permanently

intertwined destinies. With this in mind Pandit Nehru, facilitated the

process of modernization and development of Nepal very early, offering

advice on social programmes and helping draft a democratic constitution.

The approach was sincere and well intentioned, with an underlying

assumption that Nepal's interests were in unbreakable harmony with

India.6

6 Jagat S. Mehta, "Opportunity Costs of Delay in Water Resource Management between Nepal India and Bangladesh," in David J. Eaton (ed.] The Ganges Brahmaputra Basin, Lyndon. B. Johnson School of Public Affairs, Austin, 1992, p. 5.

86

Pundit Nehru had a vision to jointly utilise water of some of Himalayan

Rivers. In a joint communique issued at the end of his visit to Nepal on

14 June, 1959, it was pointed out that the "geographical contiguity of the

two countries, however makes it inevitable that certain development

projects can be best planned and executed by the joint endeavors of the

two countries". Nehru ji apparently referred towards the cooperation

between the two countries for the development of river waters.

It will be a partial view to analyse the India's 1950 Treaty with Nepal and

development assistance only in the light of security considerations, which

became important in 1949 when China asserted its rights over Tibet and

Nepal emerged as crucial buffer state between China and India.

The effort towards the exploitation of Himalaya river water, to meet the

needs of irrigation, flood and sedimentation control, had begun even

before India's independence. The British Government of India had

exchanged letters with its Nepalese counter parts in 1920 for the

construction of a barrage in the river Mahakali at Banbassa bordering

the present Mahendra Nagar of Nepal and a power station at Khatima. To

help the construction, Nepal offered to give land of her territory in a

chunk (4093.88 acres) and got in return the pieces near different parts

of her territory.7 Nepal also received right of drawing the water, minimum

of 400 cusecs and a maximum of 1000 cusecs from the Sarda canal for

the purpose of irrigation. Some initiatives were taken in order to launch

other mutually beneficial water resources projects, but concrete

development took place only after Indian independence. In post 1950

situation, the Kosi project became the first development project on an

international river presented as mutually benefiting both India and

Nepal.B It is a multipurpose scheme that includes flood control,

hydropower generation and irrigation.

7 Ramesh Prasad Koirala, SAARC: Nepal's Role in Collective Utilization of its Water Resources, The Team Publications, Kathmandu, 1990, p. 60.

8 U.K. Verma, "Socia Economic Renaissance Through Dynamic Indo Nepal Cooperation on Water Resources Development", Water Nepal, Vol. 4, No. 1, 1994, p. 140.

87

The Kosi Project

The Kosi, Nepal's largest transboundary river originates in Tibet and has

drainage area of 92,538 km2 The Kosi basin is 270 km North-West,

South-East long and about 145 km North East & South West wide with a

catchment area of about 25,000 sq. km3. 9 Downstream it causes

devastating floods in north Bihar Plain of India, thus also called "the

Sorrow of Bihar". Historically, the idea of taping the waters of the Kosi

had been discussed in India as early as 1896.10 But because of the

absence of serious feasibility studies no immediate decision was made.

Though the problem of flood and shifting tendency of the river course has

been engaging the attention of engineers since long, work of surveys and

investigation for the purpose of preparing a project was taken up in the

year 1946. As a result of these surveys, a multipurpose scheme

envisaging construction of (i) a dam at Barakeshetra of a height of 235 mt

to impound 0.85 Mham in the reservoir, and (ii) a barrage at Chatra with

canals offtaking from both sides to annually irrigate 13.90 lakh hectare

in India and Nepal was prepared. However, after further investigations

and series of discussions among experts, the erstwhile Central Water and

Power Commission formulated a project in 1953, which envisaged

construction of (i) a barrage at Hanuman Nagar at a distance of 48 kms.

below Chatra to serve as a controlling structure and to provide gradient

control in the steep reach of the river below Chatra, (ii) flood

embankments on either side of the river to confine it in its existing

course, and (iii) canals on eastern side to provide irrigation in India and

Nepal. An agreement was signed between the Government of India and

HMG Nepal in April 1959 envisaging the construction of a barrage on

Kosi and other components of the Kosi project. 11

9 C.K. Sharma, Treatise on Water Resource of Nepal, Sangeeta Sharma Publication, Kathmandu 1997, p. 47. .

IO P.C. Rawat, India Nepal Economic Relations, National Publishing House, New Delhi, 1974, p. 205.

II Cooperative Development of India-Nepal Water Resources: Theme Paper For Two Day Work Shop 29-30, May 1992, Centre for Water Resources Studies, East Patna, 1992, p. 8.

88

Though, the Kosi project was envisaged as a multipurpose project, the

immediate emphasis was on flood control benefits and to reduce the

recurrent flood devastation in the two countries. For this purpose an

1150-meter barrage was built in Bhimnagar, 5 kms. upstream of

Hanuman Nagar (8 km inside Nepal). 12 The barrage over the Kosi

intended to serve as a gradient control measure for controlling the

meandering behaviour of the river, minimise the erosion of soil and

deposition of silt. The diversion was constructed to feed the two canals,

which took off from either side of the barrage. The canal system were

planned to irrigate lands in India and Nepal. The Eastern Main Canal lies

entirely in the Indian territory. It provides irrigation to 612,500 hectares

of agricultural land in India. A powerhouse with an installed capacity of 4

units of 5000 KW each is located along the canal at a distance of 11 km

from the barrage and generate power by making use of the head drop of

the canal. Nepal is entitled to use 50 per cent of the electricity generated

by any power house situated within a 10 mile radius of the Kosi barrage

but must pay for the right t? use this power at a price fixed by mutual

consent.13

The Western Main Canal passes through a distance of 35 km in Nepal

before entering the Indian territory. This canal provides, irrigation water

to 11,300 hectare of agricultural land in Nepal and 356,610 hectare of

agricultural land in India. Flood control works in Nepal consists of a

Western afflux bund about 12 km long and a 40 km. embankment along

the eastern bank of the river. Extensive embankments, about 220 km

long are constructed on either side of the river in the Indian territory to

confine river flow and protect land beyond from the flood disaster. The

Barrage and the Eastern Main Canal were completed in 1962.The

construction of Westem Main Canal was taken up in 1972 and was put

into use in 1982.

12 Aditya Man Shrestha, Bleeding Mountains of Nepal, Ekta Books, Kathmandu, 1999, p. 157.

13 n. 2, p. 201.

89

86"

··- 27"

-- 26''

0 25 50

86"

Map 3 The Kosi River Basin

88'·

KOSI RIVER BASIN

r

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Nepal's Contention Over the Project

Soon after the conclusion of Kosi Treaty, 1954, it was severely criticised

by the opposition political parties in Nepal. The critics assessed that the

project did not benefit Nepal. The conclusion of the Treaty was

specifically objected that it had given extraterritorial rights to India for an

indefinite period, without obtaining adequate compensation and benefits

from the project. It was also alleged that Nepal had to loose its fertile land

without equivalent gains in exchanges of it. 14 It was also voiced in certain

quarters that the scheme was actually designed for the furtherance of

India's own interest and the well-being of Nepalese does not given proper

attention. The Indian officials working on the project were criticised for

their interference in the internal affairs of Nepal and demands were

raised for their removal from the project work.

The opposition focused on two clauses that restricted the use of water

above the project site and the ownership of the acquired land. The loss of

control over the land was interpreted as a loss of Nepal's "sovereignty''.

Some political organization accused Matrika P. Koirala government of

buckling under India's pressure and trading the sovereignty of Nepal.

Others such as B.P. Koirala, leader of the Nepal Congress, commented on

the weakness of the Agreement. IS

Another frequently raised issue was the payment of compensation. India

had been accused for delaying the payment of compensation. The

Government of India was also criticised for delay in the implementation of

rehabilitation scheme and expediting work on those parts of the project,

which were designed to benefits India. It was not merely the India

government, which was criticised, but the Nepalese Government was also

made a target of criticism.

14 B.C. Uprety, Politics of Himalayan River Waters, Nirala Publication, Jaipur, 1993, p. 98.

IS Jagdish C. Pokharel, Environment Resources: Negotiation between Unequal Powers, Vikash Publishing House Pvt. Ltd., New Delhi, 1996, p. 42.

90

Matrika Koirala defended his agreement and justified the project on the

grounds that without the project some Nepali cities and villages in Kosi

would disappear within a few decades. He argued that the sovereignty

and territorial rights of Nepal had not been impaired by the Kosi

Agreement. He criticized the opposition as "politically motivated" and

responsible.

King Mahendra also had defended the project. In 1959, King Mahendra

formally inaugurated the Kosi project in the presence of Jawaharlal

Nehru, the then Prime Minister of India. In his speech, the King justified

the project on humanitarian grounds and highlighted the opportunity for

future cooperation between India and Nepal. Despite assurances by

government the feeling among the Nepali people was that they had not

received fair treatment in the Kosi Agreement.

Revision of The Kosi Agreement

Due to continued criticism of the Kosi Agreement in Nepal in post 1960's

situation and deterioration of political relationship between India and

Nepal, pressure was put on the Indian government to revise the

Agreement. The Indian Power and Irrigation Minister, Mr. K.L. Rao,

visited Nepal during 1962-63 and expressed India's readiness to amend

the Agreement in light to complaints lodged by Nepal. Not satisfied with

mere assurances, Nepal asked Indian authorities to suspend the work on

Western Canal system till further discussions for the revision of the

Agreement. In 1965, during Lal Bahadur Shastri's visit to Nepal further

assurance was given to the Nepalese government of India's readiness for

revision. The Agreement was amended with extensive modifications in

1966 where the spirit and scope of cooperation was broadened. The

Agreement replaced the 1954 Treaty and immediately entered into a

force. The modified aspects of the 1966 Treaty are -

( 1) Bilateral Consultation: The revised Treaty provided that any

construction and other undertaking by India in connection with the

91

project needed to be planned and carried out in consultation with the

Government of Nepal. (Article 1). 16

(2) Operational Aspect: When any survey or investigation m connection

with the Kosi project to be required, the Nepalese Government

provides necessary facilities to the concerned officers or persons

acting under their orders to undertake such surveys and

investigations (Article2). Investigations and surveys necessary for the

general maintenance and operation of the project, inside the project

area, may be done by India after due intimation to Nepal.

(3) Sovereignty Over Land: The land required for the purpose of the

Project was to be acquired by the Nepalese government and

compensation was to be paid by the Government of India.

Compensation in every case shall be tendered by the Union through

the Nepal government to the owners of said land, Art. 3 [111]. Nepal

government will permit India to quarry the construction materials

required for the project from various deposit in Nepal.

The 1954 agreement was severely criticized by Nepalese people

regarding its land ownership issues, as it conferred on India the

ownership of all lands acquired by Nepal and transferred to India for

Kosi project purposes. 1966 Revised Agreement changed ownership to

lease. The Article 5(i) stipulates all the lands acquired by Nepal was to

be leased to the Government of India for a period of 199 years from

the date of signing of amendment, at an annual nominal rate. The rent

and other terms and condition on of land biased will be fixed by

mutual agreement. Article 5(v) enunciates the sovereignty rights and

territorial jurisdiction of HMG (Nepal Government), including the

application and enforcement of the law of Nepal on the leased land will

continue unimpaired by such lease.

16 Text of Amended Agreement between his Majesty's Government of Nepal and Government of India Concerning the Kosi Project, 1966 in C.K. Sharma, Water and Energy Resources of the Himalayan Block, Sangeeta Sharma Publication, 1983, pp. 439-444.

92

[4] Right over of power and water: The Revised Agreement gave more

rights to Nepal over water and power. According to Article 4 (i), the

Nepal government will have every right to withdraw for irrigation and

for any other purpose in Nepal water from Kosi river and Sunkosi

river or any other tributaries of the Kosi river as may be required from

time to time. Indian government will be free to regulate all the balance

of supplies in the Kosi River at the barrage site available from time to

time and to generate power in the Eastern Canal. Article 4 (ii) further

entitled Nepal government to obtain for use in Nepal any portion upto

50 percent of the total hydroelectricity generated by any power house

situated within 10 mile radius from the barrage site, constructed by

or on behalf of India, as Nepal government will from time to time

determine and communicate to India.

[5] Royalty: India's has to pay royalty to Nepal on power generated and

materials used in the project. Article 6 fixed that Nepal government

will receive royalty in lieu of power generated and utilised in the India

at rates to be settled by agreement, however, no royalty to be paid on

the power sold to Nepal. Nepal government is also entitled to receive

royalty from India for stone, gravel and ballast obtained from Nepal

territory. The use of timber from Nepal forests, required for

construction, is permitted on payment of compensation (Article 5 (iv)).

[6] Labour: India committed to give preference to the Nepalese labourers,

personnel and contractors.

[7] Civic Amenities: Subject to the prior approval of Nepal government,

India may in the project area, establish schools, hospitals, water

supply system drainage electric supply systems for the duration of the

construction of the project (Article 13).

[8] Navigation and Fishing Rights: All the fishing rights and navigation

rights in the Kosi River in Nepal rest with Nepal (Article 10 and 11).

Article 10 states that provision shall be made for suitable

arrangements at or around the site of the barrage for free and

93

unrestricted navigation in the Kosi River, if technically feasible. This

article has important implication, as Nepal being a land locked

country, attached great strategic and commercial significances to

access to the see port. 17

[9] Institutional Arrangements for Conflict Resolution: The Revised Treaty

of 1966 made provision for the establishment of Indo Nepal Kosi

Project Commission, for the discussion of problems and for the

purposes of coordination and cooperation between the two

governments with regard to any matter covered in the agreement. The

rules for the composition, jurisdiction etc. of the said commission

shall be mutually agreed upon. The Commission consists of four

representatives from each country to be nominated by the respective

governments. The Commission was expected to consider matters of

common interest concerning the project as land acquisition by Nepal

government for lease to the Union, rehabilitation of displaced

population, maintenance of law and order (Article 15 (ii) c).

Any dispute or difference arising out of construction, meaning of the

1966 Agreement, respective rights/liabilities of the parties, if not settled

by discussion, would be determined by arbitration. Each of the two

parties shall nominate an arbitrator for jointly determining such dispute

or difference and award of the arbitrators would be binding on the

parties.

With the Revised Treaty many of complain of Nepal were taken care of.

Multiple factors were working in signing 1954 Treaty. Small and big

country syndrome was visible. The regional power, India argues that they

have been more than generous. While Nepal thinks that they have been

cheated or outsmarted. In post-colonial era India signed its first treaty

on water resources with Nepal in form of Kosi Treaty 1954. Nepal

negotiated with India without much homework, thus, mistakes were

17 A B. Thapa "Kosi Navigational Canal and the Hooghly River", Spotlight, January 9, Kathmandu, 2004, p.9.

94

unavoidable. India realized that any treaty with smaller neighbouring

states must be dealt with sensitivity towards sovereignty issues and

consensus building approach as well as understanding of their internal

political dynamics.

The Gandak Project

The second multipurpose mutual benefit project undertaken by India and

Nepal was the Gandak project. The Gandak River, also called by the

name of Kali, Krishna Gandaki, Narayani, originates in the Tibetan

plateau at an attitude of 7620 m. After draining the central mountains of

Nepal, the Gandak debouches into the plain of Champaran district of

Bihar at Tribeni. Gandak was a major source of trouble to both India and

Nepal. Every year it damaged crops, property and human lives in vast

areas due to flood in both sides.

A canal was planned on Gandak (Tribeni Canal) as early as 1871, to

harness the large irrigation potential of river Gandak. In 194 7, Dr.

Rajendra Prasad, the then Food and Agriculture Minister wrote to

Government of Bihar to explore the possibilities of constructing a Canal

system from the Gandak for irrigation. Finally an international agreement

was concluded between India and Nepal over Gandak Project on 4th

December 1959. Exchanges of letters were signed in the same day

spelling out some operational details and mentioning provision for the

establishment of a coordination committee.

A barrage has been constructed at the Gandak River near Bhaisalotan to

regulate the flow of water for irrigation and power purposes. Two canals

take off from either side of barrage. The main Eastern Canal lies in the

Indian territory but one of its branches called Don Branc;:h Canal reaches

Indo Nepal border and bifurcates into two canals. Nepal Eastern Canal

constitutes one of them and passes through Bara, Parsa and Rautahat

districts of Nepal respectively. The main Western Canal passes through a

95

Map 4 The Gandaki J{ivcr Basin

8}- 84'

GANDAKI RIVER BASIN

29" ---7.9'

CHINA

28''-

INDIA 27"-

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few kilometers in Nepal before entering the Indian territory.l8 The canal

provides irrigation water to 4, 7000 ha of land in Nepal and 9,30, 100 ha

of land in India. Another canal called Nepal Western Canal takes off from

the western side of the barrage. The command area of this irrigation

canal is 16,000 ha which is wholly in Nepal.

On the main Western Canal at Surajpura, m Nepalese territory, lies

powerhouse, which utilizes the head drop in the canal to generate 15,000

KW of power. This power house is in tended to handed over to Nepal after

a certain demand condition, as stipulated in the agreement is met. This

has since been done.

Benefits to India and Nepal: The annual irrigation from the Gandak

Canal was estimated to be 27.32 lacs acres. The total area to be irrigated

in Nepal was about 1.8 lac acres. Nepal was also to be benefited from the

compensation that India had agreed to pay to the Nepalese for the land

acquired for the construction works. The irrigation facilities provided by

the Gandak project were considered to be the cheapest. 19 Nepal was also

given rights to withdraw the supply of water from the Gandak or its

tributaries, if the requirement of the Gandak project would not be

affected by such withdrawals. Both the countries were also to be

protected from the floods and sedimentation after the construction of the

barrage. The Tirhut Main Canal was opened in 1969 to give irrigation in

the kharif season to 18 thousands hectares·20 The Gandak Agreement

also specified that project was being built by and the cost of the

Government of India.

Protest of Gandak Project

Like the Kosi project, the conclusion of Gandak Project als9 faced

protests from the political parties in Nepal. The construction of barrage in

18 n. 2,p. 208. 19 n. 14, p.104. 2o Surya Nath Bastola, Water Resources Development of the Mighty Himalayan Rivers,

Sunil Bastola Publishers, Kathmandu, 1994, p. 155.

the Nepalese territory was propagated as Indian encroachment on Nepal's

sovereignty and territorial integrity. It was also stated that the Agreement

had undermined the interests of the Nepalese people in general and that

they were unfairly treated. The Gandak agreement came under severe

criticism from those opposed to the B.P. Koirala government and made

an anti Indian tirade to gain public sympathy.21 The opposition parties

raised the issue of the Nepal government's lack of authority to conclude

the Agreement. Late K.I. Singh a former Nepalese Prime Minister during

whose regime discussion on the scheme had actually began issued a

statement on 9 December 1959 "violating the rules of the house of

representative and the sentiments of the entire people of Nepal, the

Koirala government has handed over the Gandak project to the Nehru

government and hurt the sovereignty of the country more than under the

Kosi project. This is highly condemnable and traitorous act, which the

Nepali people will never accept".22

It seems that the protest against the Gandak agreement was politically

motivated, as those political leaders who had been responsible for the

conclusion of a similar Kosi Agreement and had initiated a discussion

over the Gandak Agreement, opposed it. B.P. Koirala defended the project

and argued that criticisms were based on ignorance and was politically

motivated, unrealistic and baseless. King Mahendra also defended the

project and endorsed its viability.

Some aspects of the Gandak Treaty need a close examination.

(a) Land Acquisition: The Agreement provided that the Nepalese

government would acquire all such lands as are required by the

Government of India for the project i.e. for the purpose of investigation

construction and maintenance of the project. The Government of India

was to pay reasonable compensation for such lands acquired or

21 Sangeta Thapliyal ,"Water and Conflict: the South Asian Scenario", Strategic Analysis, October 1996, p. 1044.

22 n.4, p. 106.

97

requisitioned (Article 3). As the Kosi project was protested or the issue

of sovereignty and territorial integrity, Gandak agreement contained

special article on the subject. Article 11, stipulates that nothing in the

agreement was deemed to derogate from the sovereignty and the

territorial jurisdiction of the Nepalese Government in respect of lands

it had acquired and made available to the government of India for

investigation execution and maintenance of project. 23

(b) Irrigation: India was supposed to construct the two canals; Western

Nepal canal and Eastern Nepal canal, at their own cost Article (7). The

canal systems, including the service roads in the Nepalese territory

(except the main Western Canal) were to be handed over to the

government of Nepal for operation and maintenance. According to the

Article 9, Nepalese Government continues to have the right to

withdraw for irrigation or any other purpose from the river or its

tributaries in Nepal such supplies of water as may be required from

time to time.

(c) Power: Under the Gandak Agreement, India agreed to construct one

powerhouse with an installed capacity of 15,000 KW in the territory of

Nepal on the Western Canal. It also agreed to construct a

transmission line from the powerhouse in Nepal to the Bihar border

near Bhaisalotan and from Sugauli to Raxaul in Bihar in order to

facilitate supply of power on any point in the Bihar Grid (Article 8).

(d) Conflict Resolution: Like in the Kosi agreement any dispute or

difference arising out of Agreement/Project, if not settled by

discussion, is to be determined through arbitration.

23 Text of Agreement between his Majesty's Government of Nepal and the Govemment of India on the Gandak Irrigation and Power Project in C.K. Sharma, Water and Energy Resources of the Himalayan Block , Sangeeta Sharma, Kathmandu, 1983, pp. 430-434.

98

Nepal's View on Kosi and Gandak Project

In the case of Kosi and Gandak project, in Nepal there in general feeling

that it failed to get her due share of benefits. 24 Both Kosi and Gandak

projects were planned and implemented entirely by India. Nepals share

lay in facilitating the projects in all possible ways (making available land,

construction material, waiving taxes and duties) on payment of nominal

royalty and compensation. Both agreements were perceived in Nepal as

unilateral initiative, independents, rather than a joint development and a

narrow perspective with little regard to Nepal's legitimate interests for a

reasonable and equitable share in the use of resource.

Nepalese water Resources expert feel that necessary consultations could

not take place between the two sides at different levels during the project­

planning phase. Analysis of various alternatives, their impact on the local·

community and the environment as well as, taking due note to the

benefits to both countries, were ignored. Optimization of the benefits was

not the guiding factor in the design of the project. No joint institutional

mechanism was evolved to look into the matter. Regionally optimum

design may have resulted in the barrages being located further upstream,

near Chatra in the case of Kosi and near Narayanghat in the case of

Gandak. The present scheme conceived and implemented by India

produced marginal benefits to Nepal. Nepalese author feel that it is

possible that India wanted to have barrage located as near to its border

as possible to maintain its control over the operation of the barrage.25

Nepal complains that there was lack of conscientious effort to generate

consensus on both sides, through mass awareness programmes

especially at the local level. The absence of the process helped to fuel

suspicion on both sides, which in turn, has resulted in mistrust.

Moreover, Institutional arrangements provided under the treaty were not

24 S.K. Malia, Nepal Country Report- Three Country Study on Water Resources Development of the Ganga Brahmaputra Barak River Basins, liDS Publication, Kathmandu, 1992, p. 6.

2s n. 2, p. 213.

99

effective. Joint Coordination Committee, the main instrument of project

management, did not function in a manner prescribed in the agreement.

The composition of the Committee did not provide for adequate coverage

for representation. Nepal feels that consultation with it on matters related

to the construction of the project, as spelled out in the agreement, was

restrictive in nature. There was lack of regular sharing of information.

Regular meetings which could have helped to dispel several anxieties and

misgivings on both sides not only failed to score anything on this account

but through the deliberations, unintentionally perhaps augmented them.

Asymmetrical benefits and costs

The general feeling in Nepal is that both the Kosi and the Gandak

projects have yielded considerable benefits to India but the benefit to

Nepal has not been consummarate with social and economic cost it had

to incur. Water resources experts point out the social cost of

submergence of the land behind the barrage and the rehabilitation of the

displaced population coupled with economic cost of the natural resource

including the use of construction materials. Nepal contention is that the

projects involved substantial submergence of scarce agricultural land.

Kosi Agreement makes no mention about the irrigation benefits that

Nepal and India are to get from the project. Gandak project agreement

specifies the irrigation benefit to Nepal but remains silent on the benefit

to India. Lack of precise information relating to the sharing of the

benefits and costs of the project during the time of signing of the

agreements can be considered to be one of the important factors for

creation of misunderstanding.

Nepal's Disenchantment

The feeling of being cheated or outsmarted or getting asymmetrical

benefits from these projects led to a disenchantment in Nepal which

engendered the feeling that until it could marshal its own capabilities

wherever possible, it should avoid turning to India for support and

advice. Indeed for a while more nationalist decision makers m

100

Kathmandu confidentially asserted that Nepal should go slow in any

further riparian cooperation with India. Thus for example Nepal turned to

IDA to renovate the Chatra Canal Project [which was originally the part of

the Kosi project] and politely excluded India's participation in its

construction.

Chandra K.Sharma, noted expert on water resources, from Nepal said

"some Nepalese feel that had Nepal been economically strong, it would

have constructed the entire system and sold the benefit at a fair price to

India by utilising her terrain as a resource site". He adds "it is felt that at

present the entire watershed of Nepal is working to tap water for the

benefit of the lower riparians. Any lean towards extra benefit to Nepal at

the time of the Kosi and Gandak agreement would have helped to solve

all the prevailing misunderstanding which unfortunately have permeated

down to the people.Now the situation is such that no politician or

bureaucrat will ever dare to stake his earlier career and fame in dealing

with the sensitive issue of water resource which resolves the question of

sharing between and among the coriparians.26

India's Perspective

Indian water resources expert feel that Nepal's contention about Kosi and

Gandak siting the barrage near the border resulted in some loss of land

to Nepal while the bulk of irrigation and flood control benefits going to

India, is true upto some extent in case of Kosi project. Subsequent Indian

maintenance of certain project canals providing irrigation to Nepal has

not been entirely satisfactory, resulting in irregular supplies during

certain years. They also feel. that irrigation and flood benefits to Nepal

from the Kosi project in particular would have been greater had the

barrage site been located further upstream.

26 B.G. Verghese, Waters Of Hope, Konark Publishers, New Delhi, 1990,p.340.

101

The Indian response 1s, however, that no injury to Nepal was ever

intended.27 The Kosi barrage was part of a phased programme, a

subsequent stage of which was to be a High Dam at Barakhsetra, which

would provide irrigation, flood control and energy to both the countries in

considerable measure. In any event, even the inception embankments

were constructed both upstream and downstream of the Kosi barrage to

anchor the river and provide a confined floodway. The upstream

embankments in Nepal have saved large area from inundation and

brought it under cultivation. The Chatra inundation canal, subsequently

excavated, also provides a measure of irrigation though it still faces

certain problems relating to canal intake and siltation. Both Kosi and

Gandak agreements leave Nepal free to use and divert waters from these

rivers in the upper catchment. They provided a valuable East-West road

link over the two barrages and entire canal networks either constructed

or funded by India.

Moreover, India has assured Nepal that it can use beneficially the water it

requires within the territory. The problem of the small transboundary

rivers can be taken care of by storages and inter -basin transfers or by

groundwater lift. Suitable transitional arrangements can be worked out

to ensure that local farmers on either side of the border are not put to

avoidable hardships. Indian assistance was assured to be forthcoming for

such programmes.

Nepal's contention that the maJor area benefited under the Kosi and

Gandak agreements lie in India must be seen in the context of geography.

Nepal being mountainous has only a limited irrigable area mostly in the

narrow Terai belt below, which the rivers open into vast Ganga plain.

Nevertheless, the point is well taken that, precisely because of the limited

irrigable area within its territory, Nepal should be enabled to irrigate all

of it as soon as possible to meet its growing requirements of farm produce

21 B.G. Verghese et al. [eds.] Converting Water Into Wealth: Regional Cooperation in Harnessing Eastern Himalayan Rivers, Konark Publishers Private Limit~d, New Delhi, 1994,pp. 31-33.

102

and to generate employment and income. A number of medium and mega

projects are on the anvil and as when any of these are taken up, they will

extend the area under irrigation and provide flood protection over a wider

treat.

Further, Indian water resources experts feel that Nepal could justifiably

be compensated for storages within its territory. It can also be assured

some return for measurable downstream benefits in terms of flood

protection and regulated release of water supplied from supplied from its

downs that supplied from supplied from its dams that stabilise or

augment irrigation and power generation in India. There are precedents

for this in Indian and international experience. No uniform rule may

apply, but reasonable agreements can no doubt be negotiated in respect

of each project.

However, India water resources expert agree to the Nepalese complain

about inadequate consultative machinery. The mechanism available in

the Kosi Coordination Committee, set up under earlier Kosi Agreement

was functioning fitfully while the corresponding Gandak Committee had

virtually became defunct. India did not take enough interest in the Kosi

catchment treatment programme earlier agreed upon.

Geopolitical Context of Riparian Politics

Geography is considered as the most important among vanous

determinants of International relations and rightly been called as the

corner stone of international politics. In the context of India's foreign

policy towards Nepal, geography plays a significant role. Nepal is located

in an important strategic position in the Himalayas.28 Lying along the

southern slopes of the central Himalayas it separates the arid Tibetan

plateau from the Indian plains.29

28 Ramakant, "Indo Nepal Relations: Geopolitical Compulsions", South Asian Studies, Vol. VI, No. 1, January, 1971, p. 51.

29 Olaf Caroe, "The Geography and _Ethics of India's Northern Frontiers," The Geographical Journal, Vol. 126, 1960, p. 229.

I 03

The international relations of a country are based on the paradigm of

continuity and change. It has to be based on a realistic appreciation of

the contemporary problems as well as the historical background.

The Britishers considered Nepal and Tibet and the main defence line in

the Himalaya zone. After the establishment of Rana Rule in 1846, the

British succeeded in maintaining peaceful relations with Nepal. But its

foreign affairs continued to be conducted within the broad framework of

the British interests in the region. 30 With Britain's Imperial policy of

exclusive control and influence over landlocked Nepal, the kingdom

assiduously insulated it self from the world at large. When India

concluded the Treaty of Friendship in 1950 with the Rana regime, it gave

proof of its respect for Nepal's international personality and its desire to

continue a special relationship predicated on the economic, ethnic

cultural and scrutiny interdependence of the two countries. After the

overthrow of the Rana regime in 1951, India assisted Nepal to establish

modern communications, enlarging its international horizons and

encouraging it to embark on all round economic development.3 1

In the early 1950's India was the biggest source of economic aid in Nepal.

India recognised that its ecological interests were to tied to Nepal. Thus,

linkages were started in ecological sphere besides political and economic

spheres. Lacking other resources of economic importance, Nepal had to

use its water to generate revenue for development. With increasing

consciousness of resources, conflicts over the fairness with which these

resources were shared also increased. The agreements began to appear

unfair to Nepal.

After the death of King Tribhuban in 1955 his son Mahendra became the

king of Nepal. Mahendra believed in balancing his country's relation with

30 B. C. Uprety, Uneasy Friends: Readings on Indo Nepal Relations, Kalinga Publication, Delhi, 2001, p. 7.

H B.G. Verghese and Ramaswamy R. Iyer, Hamess.ing the Eastern Himalayan Rivers: Regional Cooperation in South Asia, Konark Publishers, New Delhi, 1993, p. 164.

104

India. 32 He began openmg up relations with China. The king has two

objectives in mind: to develop a countervailing force and to develop an

alternative source of economic support for his country and thus decrease

Nepal's dependency on India. In 1956 he appointed a pro Chinese

politician and immediately sent him to China. India criticized Nepal's

move.33 It thought that opening to China would hurt India's national

security.

The relations with China continued to become stronger, even after the

elected government of B.P. Koirala came to power in 1959, but ties with

India did not deteriorate. Immediately after his election B.P. Koirala paid

an official visit to China, signed several agreements or economic and

technical cooperation. The relations with China further expanded when

the Chinese Prime Minister Chou En Lai visited Nepal the same year.

India considered Nepal's ties with China as a breach m the

understanding between the two countries. The determination to

demonstrate that Nepal was not satellite of India came to the surface

more dramatically when Sino India relations deteriorated in 1959. The

democratically elected government led by B.P. Koirala took a neutral

position between Nepal's two neighbours.

A different kind of irritant arose, when India criticized the abrogation of

Nepal's democratic constitution and the dismissal of the Koirala

Government by the King Mahendra in December 1960. India reacted to

the Kings move as a "set back to democracy".34 Thereafter a while Nepal

congress members and sympathisers embarked on raids into Nepal from

the adjoining Indian states. This compounded the fear among some

Nepalese that when it came to Nepal, India was not quite scrupulous in

adhering to the principle of non-interference. The differences continued

32 n.15, p. 45. 33 S.K. Chaturvedi, Indo Nepal Relations in Linkage Perspective, B.R. Publishing

Corporation, New Delhi, 1990, pp. 36-37.

34 Dhurba Kumar "National Security and Foreign Policy of Nepal", in Kamal P. Malla (ed.). Nepal Perspectives on Continuity and Change, CNAS, Kirtipur, 1989, p. 378.

105

to escalate. In April 1962 the King went to China and endorsed the

previously rejected road construction proposal to connect Kathmandu

with Lhasa. India reacted adversely to his decision to allow the road but

the king justified it on the grounds of its economic importance. Indian

policy makers thought the King had opened a crack in India's traditional

security system.

In October 1962, the Indo- China war changed the political power

equation in South Asia. Nepal, officially, remained neutral throughout the

conflict and offered to mediate. The Nepalese experts feel that the event

benefited Nepal as it increased the bargaining power of the kingdom. The

war created a new urgency on the part of India in the political sphere.

The revised Gandak and Kosi agreement bears the testimony of Nepal's

enhanced negotiating power because of the linkage Nepal made between

India's support of the Nepali Congress insurgency and Indo China

relations. 35

In 1963, Indian Home Minister Lal. B.Shastri arrived at Kathmandu to

"redefine the relationship". In a Joint Communique, the visiting Indian

minister emphasized the need of renewed economic and political

cooperation. The visit assuaged the fears of Indian interference, which

had been fostering since 1960. Later, an Indian delegation led by the

Secretary of Irrigation and Power arrived in Nepal to discuss the proposed

hydroelectric and irrigation projects in Nepal. The two countries agreed to

exchange information and data necessary for comprehensive development

of Nepal's water resources.

Trishuli and Devighat Projects

In addition to the Sarda, Kosi and Gandak Projects, India and Nepal have

also cooperated on the development of other water and power projects.

The Trishuli Hydel is one of the major hydroelectric projects built with

Indian cooperation. Though the idea of tapping the river Trishuli for HEP

Js n.l5,p. 61.

106

is as old as 1930, the agreement for the Trishuli project was concluded

between the two countries on 20th November 1958. Diverting the

Trishuli River to a power channel, the project has an installed capacity of

21MW. The project was completed in 1971 and the power was supplied to

Kathmandu and other parts of Nepal.36 The project casted approximately

Rs. 3.5 crores. The Trishuli project undoubtedly played a significant role

in Nepal's development and provides electricity to hill as well as the Terai

region of the Kingdom.

Devighat Hydropower project utilising the tailrace water of Trishuli

project was the second major Indian assisted hydropower project, which

was completed in 1984. The Devighat project, with estimated cost of Rs.

30.00 crores and total capacity of 10,400 KW, was undertaken by

National Hydro Electric Power Corporation of India. The 1,000 KW

hydropower project in Pokhra is another project built with Indian

assistance. The project was built to improve the power situation in the

Central Grid and was completed in 1966.

Apart from these three hydro power projects India had also provided aid

for the installation of some small hydroelectric plants. Surajpur power

house (15 MW) completed in 1981 Kalariya Power house (4.8 MW)

completed in 1977, and Ph ursa Khola power house ( 1 MW) completed in

1983. In addition to these, India has assisted Nepal in the development of

transmission lines also. The 33 KW transmission line from Kataiya

station in Kosi Canal to Rajbiraj and Biratnagar in Nepal has been

constructed as per the agreement.

Lost Decades

Despite development of some small projects, Indo Nepale.se relations in

more meaningful cooperation over water resources remained a virtual

standstill during the period of 1960 to 1990. Nepal was virtually observed

36 Pitamber D. Kaushik, "Water Resources of Nepal: Key to Indo Nepalese Relations", Water Nepal, Vol. 3, NO. 3-4, 1994, p. 277.

107

with a feeling that it has been a looser in the grievous joint ventures.

Nepal began to follow a continuous approach in the case of other

multipurpose in water development projects, which the two countries had

agreed to in principle to undertake. Nepal had become conscious about

its water resource and wanted to ensure maximum benefits from the

utilization of it. While India frequently showed eagerness to undertake

transboundary water resource projects for HEP, flood management, etc.,

Nepal deliberately adopted a low profile in the negotiation to secure more

concessions from India. The Karnali project is the classic example of

tortuous path of trans boundary water resource negotiation between India

and Nepal.

The Karnali Project

The Karnali multipurpose project is primarily a hydroelectric power

generation project on Karnali (called Ghaghra in India), aimed at

exporting power to India for energy starved North Ganga Plain region. The

Karnali project will be located in the Karnali Gorge of Western Nepal

immediately upstream from the point where the Karnali River leaves the

Siwalik foothills. The project also envisages flood control and navigation

benefits for both countries.37 The Karnali project will have comparative

advantages due to large reservoir capacity, high degree of flow regulation,

low incremental generating cost and its relative proximity to major load

centers in northern India.

The much-vaunted Karnali project still remains unimplemented inspite of

four favourable feasibility reports by internationally reputed consulting

agencies over a period of three decades.38

Early investigations for the .Karnali project were conducted in 1962-63 by

the Nippon Koei Co., a Japanese Consulting firm which proposed

37 Arjun P. Shrestha, Hydropower in Nepal: Issues and concepts of Development, Resources Nepal Publication, Kathmandu, 1991, p. 21.

38 Rishikesh Saha, "Politics of Water Power in Nepal", Water Nepal, Vol. 14, No. 1, 1994, p. 286.

108

concrete gravity dam, reservoir at elevation of 370m and a surface power

plant with generating capacity of 1,800 MW at the base of dam. The

Nippon Koei study was reviewed by the Snowy Mountains Hydro electric

Authority in 1968, which recommended another site investigation in

parallel with a study of an embankment dam at downstream site.

Norconsult/Electrowatt in 1975-77 made additional investigations,

primarily at the downstream sites. As the benefits of the project would

accrue to both India and Nepal, there was continuing interest by the two

governments in the development of this project.

India has always been eager to take a Karnali project in the wake of

rising demand of energy in the Ganga plain. 1967, the then Deputy Prime

Minister, Mr. Morarji Desai offered a technical appraisal of the Karnali

project to determine India's interest in it. In 1968, President Zakir

Hussain stated India's willingness with this project m a joint

communique issued at the conclusion of a visit to Nepal.

In July 1977, Mr. Atal Behari Vajpayee the then Foreign Minister visited

Nepal and joint communique issued on this occasion expressed the

agreement about expeditious execution of the Karnali project.

Discussion on the Karnali project continued in stop and go fashion with

one side or other drawing back when the other appeared willing to move

forward.39 Nepal's mistrust after the raw deal it feels it got on the Kosi

and Gandak barrage, particularly the former, have led it to keep out

Indian consultancy and insisted on engaging international consultants.

India was sceptical about international consultants as they may be

favourably disposed towards the smaller country.

Growing demands of energy again led the two countries to. pick the

threads in 1980's. The Karnali Coordination co"mmitted was established

in 1983, comprising representatives from both the countries, for

rev1ewmg and coordinating the technical aspects associated with the

39 n. 30, p. 204.

109

execution of study. The international Development Association (IDA)

provided financing of the study.

Among a number of international consultants and in consultation with

India, Nepal finally chose four Canadian- US firms who formed a

consortium called Himalayan Power Consultants. In their 1989 feasibility

study report, a 270 high gravel fill embankment dam with a total

installed capacity of 10,800 MW was proposed. The capital cost was

estimated at$ 4.89 billion at 1988 price.

However, the stalemate that developed over and the lapsing of the Indo

Nepalese trade and transit programme during 1988-89 interrupted the

discussions. By the time this issue was resolved Nepal was caught up in

it democratic revolution, the formation of an interim government, the

framing of a new constitution and general elections. The general elections

and formation of new government also influenced the negotiations.

1991: A Fresh Beginning on Transboundary Water Resource

Development

An interim government was formed in Nepal, which assumed charge_ on

19th April 1990, with Mr. K.P. Bhattarai as Prime Minister. The new

popular government was keen on pushing forward the Indo Nepal water

resource development. The Indian and Nepalese Prime Minister met in

Kathmandu (Feb. 15, 1991) and agreed upon a comprehensive

programme of economic cooperation. Mr. G.P. Koirala, the Nepalese

Prime Minister of Nepal carried the matter forward when he visited India

in December 1991. During this period both the countries agreed upon

cooperation over water resource development in different sectors. Like ( 1)

Activation of Karnali and Pancpeswhar Committees (2) Considering the

possibility of undertaking several attractive hydro projects on the Burhi

Gandaki, Kali Gandaki and Seti rivers and a joint survey for flood control,

especially on a number of smaller rivers responsible for flash floods. (2)

Considering the idea of high dam for flood storage on the Kamala and 90

MW run of the river hydel project on the Kali Gandaki. (3) Agreement on

110

the preparation of a joint project report on the Pancheswhar (4) Joint

studies and investigations for the Kosi High Dam, a joint field survey of

the Burhi Gandak Project (5) Agreement on expansion of the existing Indo

Nepal power exchange arrangements from 50 MW to about 200 MW to

meet Nepal's growing demands. (6) Schemes for flood protection

embankments along the rivers Kamala, Bagmati, Lal Bakaiya and

Khandu. Nepal also promised to expedite the flood forecasting and

warning scheme proposed four years earlier. Phase I involved the setting

up of 15 stations for which India supplied the equipment and trained

Nepalese technicians.

The Nepalese Prime Minister, K.P. Bhattarai proposed the concept of

"common rivers" from which he meant shared water resources of India

and Nepal. The use of term "common rivers" aroused storm of protest in

certain quarters in Nepal and Mr. Bhattarai government was accused of

selling out Nepal's river to India. The term transboundary or successive

or Himalayan rivers could have been used but Mr. Bhattarai strongly

maintained that the nothing, adverse in the phrase was intended or

implied, which affects the territorial integrity of Nepal.

Article 126 of Nepalese Constitution

A new geopolitical variable was added m the course of Indo Nepalese

relations on water resource development and management. According to

Article 126 of the newly promulgated constitution of Nepal, any

treaty/ agreement of Nepal dealing with security, natural resources

distribution and the utilization; with another country requires

"ratification by a majority of the two thirds of the members present at a

joint sitting of both House of Parliament". However, if any treaty or

agreement is of an ordinary nature, which does not affect the nation

extensively, seriously or in the long term the ratification of, accession of,

or approval of such treaty or agreement may be done at a meeting of the

House of Representatives by a simple majority of the members present.

Further, the Clause 4 reads, "Notwithstanding any thing mentioned in

111

other clauses, no treaty or agreement shall be made which compromises

the territorial integrity of Nepal".

Perhaps the constitutional provision is manifestation of a long harboured

grudge of Nepalese people against India. It is deeply rooted in their

consciousness and is based on the general impression that Nepal had

not had a fair deal from India in water sharing arrangements in the Kosi

and Gandak Agreements.40 The water resources experts from India feel

that the Article 126 is so widely cast as to include any kind of

arrangement concerning water resources, power distribution and

transmission and environmental impacts that any critic might seek to

question because of its pervasively grave or long term implication. Even

the lease or acquisition of lands for appurtenant works on boundary river

or _the risk of bank erosion can be interpreted as compromising the

territorial integrity of Nepal, compelling the government of the day to seek

ratification by a two thirds majority which is not always available.

Therefore, specific objection was taken to the Tanakpur Hydel barrage,

which India has constructed on the Mahakali (Sharda). This is a

boundary river quite some distance, but makes a westward loop into

India which is where the project is located, before turning east again to

resume its border alignment.

The Tanakpur Controversy

The efforts toward utilisation of the Mahaka]i River waters began during

the British Raj. In 1920 British government successfully concluded a

treaty with its Nepalese counterpart, in form of the exchange of letters.

Despite the conclusion of the Sharda Treaty, Nepal was not entirely

satisfied with the quantum of water it obtained under this treaty.

To enhance the cooperation within the Mahakali (Sharda) River area, the

Government of India and Nepal entered into a Memorandum of

Understanding (MOU), commonly referred to as Tanakpur Agreement on

40 n. 36, p. 283.

112

Dec. 6, 1991.41 The Agreement provided for the construction of the left

afflux bund (577 meters long) on Nepalese territory for which Nepal

Government provided 2. 9 hectares of land. This arrangement, unlike

Sharda Treaty of 1920, did not provide for an exchange of land between

Nepal and India.42 The afflux bund is in Nepal and remains under

Nepalese sovereignty. The Tanakpur barrage is located, except the afflux

band, entirely within the Indian territory 2 kms below Tanakpur on

Mahakali River. The Tanakpur Agreement also provided that India would

give Nepal 150 cusec of water from 1,000 cusecs capacity.

Tanakpur head regulator was to be constructed in order to irrigate some

4,000 to 5,000 hectare of land in Nepal. According to the Agreement,

India was supposed to provide Nepal with 20 million units of energy

annually free of charge and to construct a road link from the barrage to

connect with Nepal's East West Highway at Mahendra Nagar. The

Agreement also stated that when there was an increase in the water

supply at the Pancheswar Reservoir, the supply of water to Nepal would

also be increased. The provision of water and electricity by India to Nepal

was seen as the qui pro quo to Nepal for providing India with 2.9 hectares

of land needed to construct the afflux bund. 43

The Tanakpur agreement was beneficial both to India and Nepal and was

made possible by the cordiality shown by both sides. Welcoming the

agreement the Times of India reported "Nepal has adopted a more

positive attitude on sharing water resources than would have seemed

possible a year ago. Hydel power can be sold only to India and will bind

Nepal even closer to India. Fundamental political objections to this seem

to have been overcome.44

41 Memorandum of understanding on The Tanakpur Barrage Project, Dec. 6, 1991, signed by Maheshwar Prasad Singh, Nepalese Minister of Law and Justice, and Madhav Singh Solanki, Indian Foreign Minister.

42 Dipak Gyawali "Interstate Sharing of Water Rights: An Alps Himalaya Comparison, Water Nepal, Vol. 4, No. 1, 1994, p. 233.

43 A.T.S. Ahmed "Challenge of Governance in Nepal: Politics Economic and Ethno Religious Dimensions," Journal ofContemporary Asia, No. 24, 1994, p. 360.

44 The Times of India, Dec. 11, 1991.

113

However in Nepal, the deal, which relinquished 2.9 hectares of Nepalese

land to India, was immediately criticised by most of Nepal's opposition

political parties.45 They opposed the Agreement as an infringement of

Nepal's sovereignty and a denial of equal benefits to Nepal. 46

The left parties condemned the Agreement and tried to pressurize the

government to renegotiate it with India. They argued that Mahakali River

is boundary river between India and Nepal. Therefore both the countries

have equal rights on that river with regard to its water, power to be

generated and other benefits. The Communists made the issue as

political weapon to attack both Nepali Congress and India. Street

agitations and protest were launched against the Tanakpur understating.

Certain Nepalese critics took the matter to the Supreme Court in January

1992, contending that though the government was calling Tanakpur

Agreement an "understanding", it was actually a treaty between the two

countries and therefore, most be ratified by Parliament by a two third

majority under Article 126 of the constitution.

The issue was assigned to a Joint Select Committee (under chairmanship

of Professor Lok Raj Baral) for evaluation. The Baral committee concluded

that Tanakpur Agreement had no major consequences for the water

resources of Nepal, and that Tanakpur Agreement was "simple in nature"

automatically qualifying it under the provisions of the Nepali constitution

for ratification in Parliament by a simple majority. The report recognized

that the Mahakali River is a border river only at few places and "The

place where the Tanakpur barrage is constructed the Mahakali River

flows from the Indian land" and the amount of water received by Nepal

and India is not affected." Even before the construction of the Tanakpur

barrage, Nepalese land used to sink in flood during rainy season.

45 Govind D. Shrestha "Himalayan Waters: Need for a positive Indo Nepal Cooperation" in Water Nepal,Vol.4,No.l, 1994,pp.268-269.

46 The Telegraph, Dec.25, 1991.

114

In order to alleviate Nepalese criticism, when Prime Minister P.V.

Narsimha Rao visited Nepal in October 1992; the Joint Communique

stated the clarification agreed upon regarding the accord on Tanakpur

barrage, first that the Nepalese land to west of the site bund up to the

border "remains under the continued sovereignty and control of Nepal

and Nepal is free to exercise all attendant rights thereto." Secondly, the

barrage project "does not make any consumptive use of water". Neither

side was deprived of its share in the storage products.47

On 15th December 1992 the Nepalese Supreme Court decided that the

Tanakpur agreement was a treaty and it was necessary to present it to

the Parliament for ratification but left it to the Nepali Congress

government to decide whether it needed ratification by a simple majority

or two third majorities. However, despite the conciliatory Supreme Court

judgment, the Nepalese opposition parties continued to condemn

Tanakpur Agreement as a "sell out to India". In December 1993, India's

Water Resources Minister V.C. Shukla visited Nepal to discuss an action

plan on Tanakpur Agreement. But the Nepali Congress government failed

in preventing politicization of Tanakpur project before it fell in July

1994.48

On the water resources issues, the political parties in Nepal hold sharply

contrasting views. The Tanakpur Agreement controversy has had a

snowball effect on the political climate in Nepal and continued to polarize

the political parties on the issue of nationalism. The issue has acquired

emotional overtones and reflects the kinds of problem that Indo Nepalese

water resources cooperation may encounter in the future. Here, the

Nepalese feeling of being outsmarted or cheated by India also needs a

scrutiny. Pashupati Shamsher J.B. Rana, former Nepalese Minister of

47 P.D. Kaushik "Interdependence of India and Nepal in Water Resources Development" in Ramakant and B.C. Uprety (eds.] India and Nepal: Aspects of Interdependent Relations, Kalinga Prakashan, New Delhi. Pp. 272-275.

48 B.C. Uprety ,Uneasy Friends: Readings on Indo Nepal Relations, Kalinga Publication, Delhi, 2001, p. 92.

115

Water Resources reportedly admits "both (Kosi and Gandak) agreements

were revised in the mid sixties providing Nepal with compensatory

benefits. But by the time the compensatory benefits were provided the

Kosi and Gandaki "sell out" had already entered the political lexicon of

Nepal, and has been the basis of several popular movements. 4 9 Many

Nepalese scholars recognize that Tanakpur agreements is favourable to

Nepal but "the higher sensitivities of the Nepalese public opinion of this

legacy (of Kosi and Gandak) is nowhere reflected than on the issue of

Tanakpur project which is a normal situation would have passed off

without generating much controversy.

Role of Media

In water resources development planning, geography, politics and

technology play major role. However, due to the nature of the resource

and development projects, public opinions and interests are not only

formed but also get deeply entrenched. Public perception, thus formed

can be defined as the fourth dimension in water resource development

and management. Information, communication and dissemination, the

elements of the fourth dimension - thus become important in the

development process. But these rarely figure during project planning

stages. Only when a debate and the resulting conflict reach a deed end is

the need for information and communication felt. In many ways disregard

of the role of media has impeded development of water resource for

cooperative bilateral and regional development. Media coverage on water

resources in Nepal is generally replete with sentimentality and concerns.

Many times such sentiments are genuine, but often alarmist too. They

result from popular perceptions of national and bilateral decision making

on water resources projects. so

49 n. 46,p.74. so Binod Bhattarai and Rajendra Dahal "Media: the Missing Fourth Dimension of

Water Resource Development", Water Nepal, Vol. 4, No. 1, 1994,pp 290-293.

116

Senior journalists in Nepal, Binod Bhattarai and Rajendra Dahal writes

"with its technical and political ramifications, the debate on Tanakpur

has careened into an impasse beyond hydro dynamics and socio political

sensitivities. The impasse has been created by a poor sense of social

responsibility among professionals, inadequate information, ill-defined

priorities of the media and political manipulations. The reporting on

Tanakpur in some of the newspapers, which are backed by opposition

political parties, had little to do with water resources. Instead, they read

like campaigns aimed at creating a climate for political vendetta. The

politicisation of the Tanakpur issue, reflexing to what the opposition in

Nepal has changed - "sell out" has masked the basic issues in water

resource development. The politicians have been concerned more with

political overtones of the debate and less with scientific truth. The media

on its parts seem to be grappling with whatever information has been

available". They further add "in Nepal water resource information is also

regarded as a prized commodity. The press on rare occasions has even

been forced to rely on "unofficial sources", though access to information

is a right guaranteed by Nepalese constitution. An established procedure

for dissemination (making documents public etc.) has not been instituted

and transmission occurs mainly though other channels. On the

Tanakpur project, for example, despite increasing public concerns, the

government was reluctant to provide the details of the agreement until

the Supreme Court, while hearing the petition on the validity of

agreement, decreed that the details be made available.

Information management has emerged as one of the pre-requisite m

transboundary water resource development and management in the

Ganga-Brahmaputra basin, for more objective information dissemination.

The impact of information on issues, which have cross border

implications, till now, has been poorly understood. The setting up of

national and regional water resources centers, even one at the

international level could help build trust specially in sharing scientific

information between experts and the media. Such an institution should

117

encourage participation of professionals from the private and NGO sector

in a more productive manner. Further breakthrough may be possible

through increased interaction among the media representatives across

the border. Journalist from Nepal should be encouraged to write and

present their views in Indian papers and vice-versa.

The Mahakali Treaty

It took five years of negotiation and prolonged discussion after the

Tanakpur agreement (1991), to conclude a Treaty between India and

Nepal for the integrated development of water resources on the Mahakali

River. A new chapter in the Indo Nepal relations was opened when the

Mahakali Treaty was signed by then Prime Minister of India Mr. P.V.

Narsimha Rao, and the then Prime Minister of Nepal, Mr. Sher B. Deuba,

in February 1996. The signing of Treaty was preceded not merely by

negotiations between the two governments but also by extensive informal

consultations covering all parties in Nepal so as to facilitate the process

of Parliamentary ratification.

Content of the Treaty

The Mahakali treaty subsumes all other Indo Nepalese agreements

relating to downstream projects on the river, thus, it absorbed the regime

established by the Sharda Treaty, validated the Tanakpur Agreement,

and endorsed the idea of multipurpose Pancheswar Multipurpose Project.

The scope of the preamble of Mahakali Treaty is quite comprehensive.

The treaty aims at "integrated development of the Mahakali River". It

emphasises the determination of India and Nepal to promote and

strengthen their relations of friendship and close neighbourliness for the

cooperation in the development of water resources (Appendix). The

preamble recognises the river as a boundary river on major stretches

between in the two countries to enter into Treaty on the basis of equal

partnership to define their obligations and corresponding rights and

duties with regard to utilisation of water of Mahakali River.

118

Map 5 The Mahakali River Basin

JO•

MAHAKALI RIVER BASIN

AI mora 0

0 Naini Tal

29'

INDIA

80

0 1 0 20 30 40 Kilometers

80'

I \

0Baitodi

81"

CHINA

NEPAL

o SELECTED CITIES

0 Dhangarhi

81" I

JO•

29'

Sharda Barrage: The first part of the Mahakali treaty deals with Sharda

Barrage. Its points out, Nepal shall have the right to supply of 1,000

cusecs of water from the Sharda Barrage in the wet season (May 15 to

October 15), and 150 cusecs in the dry season (Oct. 16 to May 14).

Moreover, India is required to maintain a flow of not less than 350 cusecs

downstream of Sharda Barrage in the Mahakali River to maintain and

preserve the river ecosystem. 51

Tanakpur Barrage: According to the Treaty, Nepal continues to exercise

sovereignty over the land (2.9 hectare) needed for building the eastern

afflux bund, as well as a hectare of the pondage area, The Treaty

provided an enhanced package to Nepal, of 1,000 cusecs of water in the

wet season and 300 cusecs in the dry season, and 70 million Kwhrs of

electricity (as against the earlier agreed figure of 20 million Kwhrs) free of

charge from the Tanakpur power station, with transmission line to its

border. Half the incremental power generated at Tanakpur following

augmentation of river flows with the commissioning of the Pancheswar

dam will also be supplied to Nepal which will however required to bear

half the operational and any additional cost. India will also construct an

all weather road connecting the Tanakpur barrage to the Kingdom's East­

West Highway, including several bridges en route. There is provision for

the supply of 350 cusecs of water for the irrigation of Dodhara Chandni

area.

Pancheswar Project

The Mahakali agreement, together with letters exchanged in relation

thereto, provide for a joint Indo Nepal project on the basis of a 50:50 cost

benefit split. The dam will straddle the border, which lies along the

median point of the river. Two power stations are projected, one on either

bank, with an overall installed peaking capacity, between 5,500 and

s1 The World Bank, Salman. A. Salman and Kishor Uprety, Conflict and Cooperation on South Asia's International Rivers: A Legal Perspective, The World Bank Law Justice and Development Series, Washington, D.C., 2002, p. 105.

119

6,480 MW at 20 per cent load factor. A re-regulating dam could be built

either at Poornagiri or further upstream at Rupali Gad to hold the waters

passing through the Pancheswar turbines and provide regulated back

season release to irrigate designated commands in Nepal and India. They

have also agreed to have "equal entitlement in the utilisation of the

waters of the Mahakali river "without prejudice to their respective

existing consumptive uses". Besides, they agreed to implement the

project in all such sectors as power, irrigation, flood control, etc. as per

the Detailed Project Report [DPR] to be prepared jointly by them.s2 The

Pancheswar dam will also provide a modest flood cushion. As

Pancheswar project is a joint project located on boundary, some general

principles applicable to border rivers are laid down, which are further

elaborated in a side letter exchanged by two Prime Ministers. The

principles commit both sides to design and operate the project as a

single, integrated scheme to yield, "the maximum total net benefits

accruing to them". The power benefit is to be assessed on the basis of

saving in costs as compared with the relevant alternatives available.

The treaty envisages basin development under the aegis of a binational

Mahakali Commission, which shall be guided by the principles of

equality, mutual benefit and no harm to either party.

The Pancheswar project is to be implemented by a joint Pancheswar

Development Authority to be set up under an agreed time schedule from

the date of the treaty's entry into forces to develop, execute and operate

the Pancheswar project.

The treaty has a life of 75 years. There are provisions for review after 10

years and independent arbitration of disputes, with the chairperson

being named, if necessary, by the Secretary General of the permanent

Court o·f Arbitration at The Hague. 53

52 Hari Bans Jha, "Mahakali Treaty and Its Implications" in Hari Bans Jha (ed.) Mahakali Treaty: Implications for Nepal Development, FESC Publications, Lalitpur 1996, p. 29.

53 B.G. Verghese Water of Hope: From Vision to Reality in the Himalaya- Ganga Development cooperation, Oxford & IBH Publishing CO.Pvt. Limited, 1999 p. 406.

120

The treaty has been welcomed by large number of people on both sides of

border. Many Nepalese experts view the Treaty has successfully broken

the impasse created by a legacy of entrenched views on national lines on

both sides and finds both sides as winners. Nepal is considered to be

winner on many accounts:

1. Augmented supply of water for irrigation.

2. Sharing of additional power generated as a result of construction of

left afflux bund on Nepali's territory.

3. Additional water to meet the needs of people of Doodhara Chandni.

4. Provision of an institutional mechanism.

5. Additional water supply from Tanakpur, besides the amount of water

Nepal is entitled in Sharda Agreement 1920.54

The treaty is a first in many ways, primarily in laying down the principles

that as a boundary river on large stretches. The principles will influence

inevitably to all future water resource agreements between India and

Nepal. The Mahakali treaty entered into force on June 5, 1997, the date

the instruments of ratification were exchanged by both parties. Although

there are still several unclear provisions and incomplete arrangements,

the Mahakali Treaty has provided in mechanism for reinforced legal

collaboration between India and Nepal on the Mahakali River.

Though the treaty is formally in operation now, but the implementation of

provision has been very slow due to difficulties of some technical and

political nature. The differences that has emerged in the post Treaty

period are:

1. The protection of existing consumptive uses - There is a difference

of opinion among Indian and Nepalese water resource experts about

54 Govind Das Shrestha "Rocky Road to Water Resource Development" in Hari Bans Jha [ed.] Mahakali Treaty: Implications for Nepal's Development, FESC Publications, Lalitpur, 1996, pp. 26-37.

1?1

defining the "existing uses" that must be deemed to be protected by

the Treaty.

The Nepalese experts complain that in the Treaty only the Nepal's

existing consumptive uses have been quantified, without quantifying

India's usage.55 According to the Treaty, the sharing of the capital costs

of the Pancheshwar project would be in he proportion of the relative

incremental benefits, have to be reckoned after protecting existing

consumptive uses of the waters of the Mahakali. Nepal's water demands

present no problem and are to be met in full. India's Upper Sharda

command of 1.6 mha supplied from Banbassa is also protected. Nepal,

however, argues that the 2 mha irrigated from the Lower Sharda Barrage,

160 kms. further downstream, is outside the scope of the "Mahakali"

agreement and not a protected existing use. This system primarily

depends on water diverted from the Karnali (Ghaghra) at Girjapur

through the Sharda Sahayak link for over eight months in the year. But

it indents on Sharda supplies during the monsoon between July and

October when the Karnali carries a lot of silt.

Nepal, however, claims a half share in the incoming river flows between

Pancheswar and Banbassa on the "equal entitlement" principle within

the common boundary segment of the Mahakali. Indian water resource

expert B.G. Verghese feels that Nepal is vaguely asserting the right to

ownership of the natural flows of the river, or the discarded Harmon

Doctrine, which is untenable principle in emerging international water

law. Nepalese water resources experts view that Lower Sarda command

area is well below the common border and treaty covers only the

Mahakali River as a border river. Secondly, this matter was never in the

agenda during the conclusion of the Treaty and was brought before

HMG/N notice only during informal and formal discussion with the

officials in Nepal. Nepalese experts also disagree with India's selective

reference of Helsinki Rules and now new UN convention for the rights of

farmers in the Lower Sarda Canal region, in a situation when India

abstained from the voting. Further, they argue that "Prior Appropriation"

ss S.B. Pun "Sharing the Ganges Waters- The Writings on the Wall", WECS Bulletin, Vol. 10, No. 1&2, April 1999, p. 33.

122

principle has never been advocated in Kosi and Gandak (revised) Treaties

earlier. The absence of quantification of existing water uses of India or

even methodology of assessment in the Treaty are extended as arguments

for rejection of Prior Appropriation principle in case of Mahakali River. 56

These are the reasons why Nepal did not accept India's claim.

However, experts in Nepal like Pashupati S. Rana while explaining why

existing consumptive use of water in India been approved of point out

"according to generally accepted principle of water consumption having

followed for year, the prior right of any country is ipso facto established in

the consumption of such water. Hence the prior right of India has in

principle been established over the water of the Mahakali River that the

country has been consuming from time immemorial. 57

The recognition of existing consumptive use would have implications for

the calculation of irrigation benefit and the "real issue" of sharing the

cost of the Pancheswar Project on the basis of the benefits accruing to

the either party .If India uses more than its half share of

Pancheswar/Mahakali waters it should be prepared to pay a

proportionately larger part of irrigation/water component of the project.

Regarding the apportioning of the cost of Pancheswar project the DPR

report prepared by Nepal indicates about 60 percent of the cost of the

project was to go to hydropower and the remaining 40 per cent to

irrigation and flood control. The corresponding figures prepared by Indian

technical personnel and brought for discussions at the meeting of Joint

Group of Experts (JGEs) are 85 percent and 15 percent respectively,

which has remained a point of difference between the two countries.

There is strong feeling in Nepal that such apportioning is guided by

India's stand on the prior use of water in the command area of the lower

Sarda. 58

56 Anand Bahadur Thapa "The Mahakali Treaty and Existing Water Uses Issue", WECS Bulletin, Vol. 10, No. 1&2,April 1999, p. 37.

57 Pashupati S. Rana "Mahakali Treaty Benefits to Nepal" in Dr. Hari Bans Jha (ed.), Mahakali Treaty Implication for Nepals Development, FESC publication, Lalitpur, 1996, p. 5.

58 Dwarika Dhungel, "Nepal-India Water Resources Relationship: Looking Ahead," Jalsrot, Magh-Faghun, 2060 (2004), pp. 11-17.

123

2 Equal Sharing: In the regard to the Treaty itself there is difference

between the Indian and Nepalese views on what the "equal sharing"

implies. From the fact that Mahakali is a boundary river, the Nepalese

draw the inference that it belongs equally to the two countries, and

therefore that half of the waters of the river belong to Nepal. Treaty

recognises in principle, Nepalese experts argue, that "Each country

own 50 per cent of water", citing the (1) wordings of preamble i.e.

equal partnership to define their obligations and corresponding rights

and duties (2) Article 3 on Pancheswar project, i.e. parties will have

equal entitlement in utilisation of water of Mahakali (3) Article 5, i.e.

water requirement of Nepal shall be given prime consideration in the

utilization of waters of Mahakali. (4) cost sharing formula of project. 59

Indian water resources expert Ramaswamy. R. Iyer argues that (1) "there

is no warrant for drawing this kind of in inference. The river can be used

by the two countries but does not belong to either; (2) any doctrine of

ownership of flowing water and the implied right of the upper riparian to

'sell' the water so owned to the lower riparian (who would in any case

receive that water naturally by gravity flow) seems non maintainable. (3)

Equal sharing really applies to the incremental benefits and costs

attached with Pancheswar project.6o

These divergence of interpretations need to be sorted out through

amicable discussions.

3. The Kalapani Issue: This is a territorial dispute. The Nepalese object

to the Indian military presence in the area called Kalapani. Either the

area in question is part of Indian territory or it is not. Indian experts

feel that "if the area lies in Indian territory the Indian military

presence there is a matter of no consequence to Nepal; if it is a

Nepalese territory, India has no business to be there. This is a matter

59 n. 56, p. 37. 60 Ramaswamy: R. Iyer, "Conflict Resolution: Three River Treaties", Economic and

Political Weekly, June 12, 1999, pp. 1510-1512.

124

to be resolved with reference to old records, documents, maps, survey

reports, etc. The dispute needs to be settled quickly in spirit of good

will and not allowed to fester. 61 Nepalese experts complain that

Indians have misunderstood the Nepali sensitivity on the issue. Nepal

wants India to adhere to status quo position principle, which it

demonstrated on border disputes with Bangladesh and Pakistan.

Nepal seeks return of Indian army to the pre 1968 position.62 Indian

experts argue that nothing is gained by arousing emotion over

Kalapani issue and this has nothing to do with implementation of the

Mahakali Treaty.

4. Phasing of the Project and Site of the Re-regulating structure: A

more technical difference relate to phasing of the project and

preference of site for the re-regulating structure. India initially

conceived of an installed capacity of 2000 MW, rising in one or two

further stages to anywhere between 5000 to 6000 MW. This was

related to need to investigate and construct a re-regulating dam below

the main dam to store and make controlled release of water passing

through the Pancheswar turbines to meet the irrigation schedules of

commands below. Nepal prefers, maximising the estimated 6480 MW

potential in one go to secure "maximum total net benefit".

Two possible sites are being discussed for the re-regulating structure.

The first, at Rupali Gad, would generate 240 MW and have limited

storage on account of its lower height (60 m) and proximity to

Pancheswar. The Indian view is that storage this site offers will not meet

the irrigation demand. Indian experts prefer the further downstream site

at Poornagiri for re-regulating structure as this would permit

construction of a 180m high dam, provide adequate storage and support

a power plant with an installed capacity of 1000 MW. Nepal fears that

dam at Poornagiri would inundate 250,000 hectares of fertile land and

61 Ramaswamy R. Iyer "Delay and Drift On the Mahakali" Himal, 14/6, June 2001, p. 41-42.

62 S.B. Pun, "Some Musings On the Mahakali Treaty", Himal, 14/7, July 2001, pp. 48-94.

125

Map 6 Mahakali River and Nepal's Western Boundary

Area shown in Map

Pancheswar High Dam Height= 315m Capacity = 6480 MW

9 Live Storage = 7 x10 m3

India

Sarada Canal

Limpiya Dhura Pass

·...__ China ., India '

Nepal-India-China trijunction (undefined)

Kalapani Camping Ground of Indian Troops

Lipu Khola

Byas Rishi Himal

-Reservoir --._,· International border =River

Nepal -- East West highway -Canal

displace !)b,UUU people trom Nepal hills.oJ A perceptiOn has emerged m

Kathmandu while Nepal is keen on energy export to India, New Delhi look

Pancheswar project structure basically to irrigate vast tracts of land in

Indian political heartland of Uttar Pradesh.

For the Nepalese, Rupali Gad was the preferred site during the

negotiation of the Treaty. The re-regulating dam sites can be investigated,

detailed project reports prepared and work completed within the eight

years it will take to complete the Pancheswar Dam.

5. Power tariff: The side letter to the Mahakali Treaty says that the

power benefit is to be assessed on the basis of saving is cost as

compared with relevant alternatives available. Nepalese infer it as an

'avoided cost principle' i.e. India has to pay the price according to the

cost of generating the power through alternative means. Dr. Prakash

Chandra Lohani, Nepalese diplomat writes "Nepal sells 3,000 MW

power from Pancheshwar that will be a saving for India. In the

absence of this option, India ought to have generated 3,000 MW of

power from coal, which might be costing four rupees for generating

one kilowatt of power.64

Indians argue that the alternative means can be other HEPs, gas based

projects, thermal projects and not necessarily the thermal source only.

Further, if in fact the generation cost at Pancheswar is lower, the gain

would surely have to be shared between the two countries.

Instead of hypothetical considerations the price of power should be based

on mutual negotiation. The price of power is an economic proposition,

and it will have to be attractive enough to Nepal to warrant the

undertaking of a big project. and affordable enough to India to warrant

purchase from this source.

63 The Himalayan Times, Kathmandu, Feb. 6th, 2004. 64 Dr. Prakash Chandra Lohani "Mahakali Treaty: A Vision for 21st Century" in Dr.

Hari Bans Jha [ed.] The Mahakali Treaty, Implications for Nepal's Development, FESC Publications, Lalitpur, 1996, p. 23.

126

These differences in opinion and interpretation of Mahakali Treaty are

not insurmountable if both countries cooperate in good faith to carry out

the Treaty benefits. Despite several unclear provisions and incomplete

arrangements, the Mahakali Treaty has provided a mechanism for a

reinforced legal collaboration. The Mahakali Treaty has a provision for

the establishment of a joint Indo Nepalese Commission called the

Mahakali River Commission (MRC). The commission is guided by

principle of equality, mutual benefit and no harm to either countries and

has been assigned a broad mandate. Beyond commission the dispute

resolution mechanism envisaged by the Mahakali Treaty is relative

elaborate and advanced.

Unfortunately MRC has not been constituted yet. Once MRC is

constituted we can expect greater standard of efficiency over

implementation of the Treaty, at raising funds, identifying and

recommending solutions to the outstanding issues. 65

Intensive Track II level interaction have been going on between India and

Nepal to supplement the government level interactions and assist in the

resolution of pending issues. Water resources experts from both sides

have been working with great perseverance to urge both government to

take purposeful steps of early implementation of the Mahakali Treaty by

setting a target date for completion of the DPR, including an integrated

Environmental Impact Assessment (EIA) component and siting of the re­

regulating dam. An early establishment of the Mahakali Commission will

greatly assist in resolving difference over Treaty implementation. There

is a felt need to build awareness about project benefits and the

opportunity cost of delay at both political and people's level. The political

consensus which led to the signing and ratification of the Mahakali

Treaty, needs to be frequently motivated and strengthened by

institutionalizing a mechanism for regular political contact at both

national and regional levels between the two countries.66 Even in the

65 The Kathmandu Post, Feb. 2, 2003. 66 The Himalayan Times, Feb. 7, 2004.

127

situation of delay in implementation of Treaty, an opportunities lies for

both governments to develop necessary pre investment infrastructure

(like road, communications, townships and the mobilization of equipment

etc.). An early implementation of the Mahakali Treaty offers significant

multipurpose benefits to people of both countries, as it can contribute

immensely towards achievement of common objective of Nepal and India

to alleviate poverty and improve the quality of life of the people living in

one of the most backward regions in either country.67

From Kosi to Mahakali: An overview

Despite huge potentialities and commonalities of objectives, water

resource development has faced many set backs due to technical,

economic and technical factors that acted against the interests of the two

countries. In the past, coordinated actions between the two countries

have not been forthcoming and trust and understanding have been

eroded. The existing water sharing agreements lack specificity, leaving

room for ambiguity and controversy m the interpretation and

enforcement of their provisions. Further, the history of negotiations

regarding water projects on Indo Nepal transboundary waters has been

dominated by controversies primarily due to perceptional difference. The

Nepalese believe that India is draining Nepal's watershed for its own

benefit. The influence of politics in Indo Nepal water resource

development has been disproportionate and troublesome. While Nepalese

have long viewed India as a hegemonic power that arm-twists neighbours

for unfair agreements. India in turn blame Nepal as suffering from small

country syndrome, imaging non existent conspiracies and ignoring

India's contribution in different sector of economy of Nepal. Further,

fragile and unstable political uncertainties in Nepal also played a role in

fueling anti-Indian sentiments.

67 Common Meeting Ground Resolution, IIDS/CPR Workshop on Nepal India Cooperation on Water Resources, Feb. 6-7, 2004, Kathmandu, Nepal.

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Nepalese also blame that Indian water resources bureaucracy has shown

business as usual approach combined with arrogance of power and a

secretive attitude. However, realisation of water resource projects require

mutual trust, bargaining skill, diplomacy and as astute vision for trade

off on both sides. Instead of putting general and vague view points of

mutual cooperation, clear ideas, explicit methods and tactical approaches

will serve more purpose in the long run. 68

The Mahakali Treaty has shown that water resources technician,

bureaucrats, policy planners have grown more mature m their

understanding of the water issues as well as in the negotiation of legal

instruments. The Kosi and Gandak Treaty should also be seen in an

evolutionary perspective, vis-a-vis the Mahakali Treaty. At a time when

international water rights were essentially based on customary law for

which the importance of river related mainly to consumptive use it was

laudable to have attempted to tackle issues pertaining to non­

consumptive uses of water. Further, now we have international

conventions and laws as reference frameworks for negotiation on the

matters of water rights, allocations, management, planned operational

measures and dispute resolution.

A great deal of time and energy has already been wasted in the process of

evolving a framework of cooperation in water resources.

It is high time to take concrete steps to move forward rather than

continue with tired arguments. Besides Mahakali Treaty, India and Nepal

have agreed for joint preparation of a detailed project report on the Sapta

Kosi high dam and Sun Kosi hydro diversions into the Kamala Basin

which is to be financed by India. According to Kosi Study Agreement

1997, India will also bear entire cost of studying feasibility of Kosi

Navigational Canal Project.69

68 A. Ram Chandra Rao and T. Prasad "Water Resource Development of Indo Nepal Region," Water Resources Development, Vol. 10, No. 2, 1994, pp. 169-170.

69 Spotlight, Kathmandu, January 9, 2004.

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Nepal has opened the door of water resource development for private

parties. American corporations have shown interests in Karnali project

(10,800 MW} and Arun -3 (404 MW}. The Australian Snowy Mountain

Electricity Corporation (SMEC} has come to an agreement with the Nepal

government on building a 750 MW hydro project on the West Seti, a

tributary of Karnali. The regulated flow from west Seti will augment lean

season flows in Karnali, which could be used by India. It can also come

as a package against adverse impacts of downstream in water flows due

to proposed Babai and Kankai projectJO Implementation of West Seti will

also require settling down the differences over the alignment of Saryu

Canal. The Saryu Canal runs about 220 km, close to Indo Nepal border,

which after operation may causes inundation problem in Indian territory

also. 71

In future India and Nepal will require genuine understanding on each

other concern, dialogue with an open mindset, to have meaningful and

fruitful cooperation. Trust and transparency not only help to get rid off

the existing irritants but also facilitates the implementation of agreed

projects or those, which are under study stage. The cooperative and

optimal utilisation of transboundary water of India and Nepal provides

immense possibilities to improve the quality of life of people in both

countries. Further, the water resource development and management can

become the nucleus of wider cooperation in the social economic and

political arena.

70 Verghese B.G. "From Dispute to Dialogue To Doing", in Asit K. Biswas and Juha I. Uitto [eds.] Sustainable development of the Ganges Brahmaputra Meghna Basins, United Nations University Press, Tokyo, 2000,ppl81-183.

71 Spotlight, Kathmandu , March 26, 2004, p. 9.

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