At a press meet attended by senior Maoist leaders including C PGajurel and Lilamani Pokharel, the chief of water and energy department of the UCPN (Maoist), declared that fourteen joint venture hydropower projects under implementation at present should be stopped.
The projects, among others, include Upper Karnali, Arun III and Upper Tamakoshi on which the government is reported to be in the process of finalizing the negotiations for project development agreements.[break]
It may be recalled that the project survey license of Upper Karnali (300 MW) and Arun III (402 MW) projects were awarded to GMR Infrastructure Ltd. and Sutlej Jal Vidyut Nigam, both Indian companies through global bidding process where several other international companies had also participated. The Norwegian SN Power had received the survey license with respect to Tamakoshi III (880 MW). The leaders thundered that all activities relating to the development of these projects should be shelved for now as the projects are being “built against national interest”. They further declared their “total opposition to export-based hydropower projects in the country”.
Past Reminder
This is not the first time the Maoist party has created hurdle in the development of Nepal’s hydropower, the only known major natural resource which could usher in economic transformation in Nepal. Local Maoist cadres placed obstacles at project sites during field studies. The technical personnel were reportedly allowed to work, only after payment of a hefty kickback to the party central leaders following behind the scene negotiations.
This development is another reminder of the fate of Arun III one and half decades ago. The World Bank cancelled the project even after all negotiations including the financial closing had been completed with Nepal government. The CPN-UML leadership wrote to the World Bank president questioning the project’s viability and transparency, as if they fully understood the projects technicalities and financial complexities more than the world organization. The project opponents naively believed that the donor commitment to the one-billion-dollar-project would be diverted to other smaller projects to meet Nepal’s power needs. That never materialized.
If Arun III had been implemented then, the country would have been spared of the current power crisis, while the revenue generated by the project would have serviced the donor soft loan, further augmented the country’s development budget, and the country would have gained more self-confidence. I am sure the UML must be regretting that ill-advised action, which was taken under the influence of diverse groups including the business interest, INGO/NGO lobby and some sections of the Kathmandu’s elite not familiar with the dynamics of international development assistance. If the Maoists are truly nationalists and committed to the country’s economic development, they must immediately disown the statement under reference to avoid future embarrassment. Let the Maoist understand some pure and simple facts:
Pure and Simple facts
One: Water is Nepal’s renewable source of energy unlike petrol, which is exhaustible -- a perennial white gold unlike the yellow metal, which is finite. By delaying the development of this precious resource, the country is losing precious revenue every second, which could have been used to improve the lives of millions.
Two: By announcing their “total opposition to export of hydropower”, Maoists are exposing the bankruptcy of their economic thinking. Export is the only way to economic prosperity in the modern world. Let the Nepali Maoists learn from China, Vietnam and other communist countries, which have learnt this simple truth in recent years and have prospered. A country’s ability to export will depend on its comparative strength. One area of Nepal’s comparative strength is hydropower.
The Maoists have already destroyed the competitiveness in other sectors through their militant trade unions, violence and irresponsible acts, which have scared away country’s capital and potential investors. The only major export industries that exist are the ones started during the Congress rule. Do the Maoists have any solution to the two billion dollar balance of trade deficit with India at present? How do you bridge this gap, if you are against large projects for export? It is reasonable to say that power export must be allowed after meeting the domestic need, which is possible and should be negotiated. But total opposition to export project betrays economic insanity.
Three: Nepal’s internal resource is insufficient to develop the hydro potential. There is no alternative to inviting FDI, which demands rule-based system -- transparency in rules and regulations, predictability of policies and government stability. If the largest political party of the country does not honor the past agreements entered into by its own and other governments, how can the foreign companies believe that it will honor the present agreement. Economic freedom and investment-friendly policies are necessary to attract foreign capital. The latest Economic Freedom of the World Report says that Nepal’s economic freedom index has slipped further from 5.75 points to 5.54 over the last decade. The Maoist behavior is the principal factor behind this decline. Nepal is increasingly considered mostly an “unfree country” for investment opportunity due to many factors including the size of government, freedom to trade internationally, credit, labor and business regulations. Nepal has been placed at 137th place in the community of 183 countries in the World Bank Doing Business Report.
Four: Economic decisions must be swift and timely. Delay means more cost and higher prices to consumers. There are more than 136 countries that have better investment-friendly policies than Nepal. Nepal’s need for FDI is greater than FDI’s need for Nepal. Everybody has the right to demand transparency in deals affecting national interest, particularly during transitional politics. But this should not be done to delay, kill or scare away investors. The world has no patience for ever changing political idiosyncrasies and unpredictable decision-making. Also, water is not the only source of energy, alternative and cheaper sources of energy are being promoted elsewhere including India -- our principal market. Take note of their recent nuclear technology pact with USA.
Five: Decisions on any major hydro projects require consultations with major stakeholders including the local population, which must be conducted within the defined policy and legal framework of the state. The investors must comply with that. They will negotiate with the state, not with everybody. It is state’s job to facilitate project implementation, and offer necessary security.
Impoverish further
Apart from the monetary value of these tactics, this is politics. The Maoists have targeted the Indian investment probably to warn that they could play bad guys against Indian economic interest in Nepal. This looks like a clumsy bargaining tool for political support, which will do more harm to Nepal’s own national interest. By obstructing foreign investment in Nepal’s power sector, they are giving anti-investment message globally. Action like this is certain to increase the country’s dependence on India, making mockery of their nationalist rhetoric.
The Arun III cancellation led Nepal to import power worth billions of rupees from that country. The current Maoist action will make the country even more dependent and vulnerable. We know that poverty is the perfect habitat for Maoist radicalism. The recent action will precisely serve this purpose -- impoverish the country further to promote Maoist revolution.
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