India will proactively work on 5600MW Pancheswor Project


In a major push towards building trust in hydropower cooperation between Nepal and India, visiting Indian Prime Minister Narendra Modi on Sunday said the much-delayed Pancheswor Project will move ahead within a year.

“Although an agreement regarding Pancheswor could not move ahead, India will proactively work on Pancheswor. India and Nepal have authorities in place now. Pancheswor has electricity generation capacity of 5,600MW, which is five times more than the energy Nepal is producing at current,” said Modi, addressing the Nepali Parliament on Sunday.

Amid talks of power trade agreement (PTA) with India, and power development agreement (PDA) with India’s GMR during Modi’s visit, Nepali power experts had been saying India should take forward the stalled Pancheswor Project.

Energy was one of the major focus areas of Modi’s speech. Amid lack of trust between two neighbours in hydropower cooperation, Modi clarified the Indian interest. “Nepal’s hydropower potential can resolve India’s power shortage. Nepal can free India of its darkness. But we don’t want free electricity, we want to buy it,” said Modi.

The Pancheswor Multipurpose Project is expected to generate 6,480MW energy and irrigate 93,000 hectares of land in Nepal, and 1.6 million hectares on the Indian side.

The two countries on Sunday also exchanged notes on the terms of reference (TOR) of the Pancheshwor Development Authority. The ToR was prepared by the Joint Committee on Water Resources during its fifth meeting held in November 2009.

The notes were exchanged between Rajendra Kishore Kshetri, secretary at the Ministry of Energy and Indian Ambassador to Nepal Ranjit Rae amid the presence of Prime Minister Sushil Koirala and his Indian counterpart Modi at the Prime Minister’s Office in Singha Durbar, Kathmandu.

The Indian Prime Minister’s statement has raised optimism about the project’s implementation.

Nepali officials had long been complaining about India’s “unwillingness” to develop the project and a few hydropower experts had been questioning India’s intention.

“Modi’s remarks have energised the bureaucracy of the both sides. Pancheswor will be the top most priority of the Energy Ministry and we will try to form the Pancheshwor Development Authority at the earliest, and take ahead the initiative,” said Energy Secretary Kshetri.

He said it is the only project that can be worked out now as there are only a few issues, such as cost-to-benefit ratio, to be sorted out. The detailed project report (DPR) has also been prepared. The MoE is now considering forming the authority within 6-11 months, according to Kshetri.

Nepal and India signed an agreement for the development of the Pancheswor project 18 years ago in February 1996, during the signing of the Mahakli Treaty. The project lies in the Mahakali Zone, covering some parts of Darchula, Baitadi and Dadeldhura districts.

Energy experts welcomed Modi’s initiative on Pancheswor. They said chances of the commencement of Pancheswor are high also because of Modi’s announcement of providing soft loans worth $1 billion to Nepal for infrastructure, including energy.

Former Energy Secretaries Surya Nath Upadhyay and Sheetal Babu Regmi opined that the said amount can be used for the development of Pancheswor project. “Now there is no need of roaming around searching the capital as $ 1 billion can be utilized for the commencement of the project,” said Regmi. Experts say that the project at current scenario may cost at around $ 4 billion.

Former Energy Secretary Regmi said Pancheswor should be kept away from domestic politics and the project should be taken ahead at the possible earliest by incorporating water and energy experts.

“The project has not made any headway in these many years due to the lack of trust between the two countries. The two nations should trust each other and cash in on this positive notion,” said Regmi, adding if things go smoothly, the project might be completed within the next 6-7 years.

Another fact that around two-third of the inundation area lies on the Indian side means the Pancheswor project is in Nepal’s favour.

Due to differences over a few issues, Nepal and India are also willing to hold a fresh DPR on the project. Upadhyay said the differences on downstream benefits of the project should be shorted soon to prepare a fresh DPR.

“The DPR done earlier has some issues regarding calculations. This should be shorted out and things should move ahead,” said Upadhayay, adding the Nepali side has to have that willingness and the Indian side has to loosen its stand on the project to take the initiative ahead.

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