India, Pakistan in Race to Complete Hydel Project

Sandeep Dikshit
Wednesday, October 1, 2008

Originally published in The Hindu (India)

Technically only one country can build it and use the water

NEW DELHI: Amid indications that India and Pakistan are on the verge of resolving some long-standing territorial disputes, differences over utilisation of the waters of the Kishanganga (Neelum in Pakistan) is casting a new shadow over relationship.

Both sides want to build a hydro-electric project over the river as well as use the water for irrigation. But the problem is that only one country can build a technically feasible power project as well as use the waters for irrigation.
New twist

In the latest twist to the issue, Pakistan High Commissioner Shahid Malik has threatened to take the dispute to a third party for arbitration following several rounds of fruitless talks between experts of both countries. In response, India has accelerated works on the project because it fears that if the project is not completed earlier than the downstream Neelum-Jhelum project in Pakistan, it may permanently lose its rights to utilise this site. Besides, there are very few other sites on the western rivers for utilising India's share under the Indus Waters Treaty.

Apprehensive that Pakistan could plead before a court of arbitration to get the Kishanganga project stopped, India took the unusual step of completing the digging work on a diversion tunnel even before the project could be awarded to a company. And now with none of the companies participating in the tender prepared to pick up the contract on the amount indicated by the government, New Delhi is prepared to extend several concessions, including a huge loan of more than Rs.2,000 crores at a minimal interest of one per cent which will be applicable after the project is functional.

India's eagerness to start work on a commercially unviable project stems from the Foreign Office's understanding that if Pakistan achieves significant progress on the three times larger Neelum-Jhelum project and the contracts of the Indian project are not even awarded, India's position on the project will be weakened.

In case Pakistan takes the dispute before a third party and the project remains a non-starter, India could even lose the case.
In compliance

India firmly believes that the Kishanganga project is in compliance with the Indus Waters Treaty and rejects Pakistan's claims for using its waters for irrigation and hydro-electric use as not credible and non-existent, respectively. On the basis of departmentally executed civil works and excavation of the diversion tunnel, it claims that while work on the project is ongoing, Pakistan has only completed feasibility studies on the Chinese-funded Neelum-Jhelum hydel project.

The project envisages construction of a 100-foot dam and diverting the water into an underground powerhouse near Bandipur.

Preliminary construction work is being done while the digging of the diversion tunnel has been completed. The project was to be completed in 2014 but the bids saw contenders quoting much higher than the anticipated cost.

Pakistan has already sought a World Bank nominated expert to adjudicate on the Baglihar hydro-electric project in Doda district of Jammu and Kashmir. While India rejected Pakistan's request to stop construction, Islamabad rejected New Delhi's plea for time to consider its technical objections. Pakistan's objections to the Kishanganga project are also on the same lines.