Nepal Dam’s Future Uncertain


The Seti River has been targeted for a major dam project for 16 years
The Seti River has been targeted for a major dam project for 16 years

The Nepal government revoked the license of the West Seti hydropower dam project in July. The project had struggled for 16 years to find funding. It is the second largest dam in Nepal to be cancelled, after the Arun 3 hydroelectric project, which was jettisoned after the World Bank withdrew from project financing in 1995.

The combination of local and international pressure and strong arguments against the project from legal, human rights, environmental and economic perspectives were key to the success of the West Seti campaign.

The West Seti Dam is a 750 MW project proposed for the Seti River in western Nepal. The project license was awarded in 1994 to the Australian multinational company, Snowy Mountains Engineering Corporation (SMEC). SMEC reportedly has invested over $31 million in the project over the past decade. Under the terms of the project, SMEC would be allowed to export 90% of the cheap power to India even though more than 60% of the Nepali population has no electric power and those who do face up to 18 hours of blackouts daily in the dry months.

The project was estimated to cost US$1.6 billion. At one time both the Asian Development Bank (ADB) together with the China National Machinery and Export Corporation (CMEC) and China Exim Bank were involved as co-financiers, but all of them pulled out. Nepal was to receive 10% of the project’s electricity along with a nominal royalty from SMEC’s profit from the project.

Project flaws

The campaign to stop the project raised several issues of concern. Local issues concerned the effects on the dam-affected population. The people of four isolated rural districts (Bajhang, Baitadi, Doti and Dadeldhura) were unhappy about the lack of disclosure of project information, which was made available only in English. The only materials available in Nepali were a propaganda booklet and misleading summary of the environmental impacts. Flawed public hearings were another major concern. Inadequate environmental impact assessment and poor mitigation plans were the third factor. The relocation of some 30,000 people from the highlands to the plains of the Terai in Kailali, the heartland of the indigenous Tharu people, was another major issue. The Tharu people were vehemently opposed to the project’s resettlement plan.

Moreover, the project did not envisage training and employment for the local people, nor was there any provision for the compensation and resettlement of landless oustees or those with no formal entitlements to their traditionally owned land, nor for those dependent on fishing. Making electricity available locally before exporting it to India was another demand. None of these demands were properly addressed, and the few measures adopted by ADB and SMEC were grossly inadequate and ornamental.

At the national level, there were serious concerns about the project‘s constitutional validity. The project by-passed the constitutional provision requiring parliamentary ratification of any project or agreement in which resources or its by-products were to be divided between Nepal and India. In addition to the power exports, the project benefited India with free stored water during the winter, enabling the irrigation of some 600,000 additional hectares of land in Uttar Pradesh.

Wide support network

The successful activist campaign had local, national and international dimensions. Notably, the campaign benefited from the leadership of Nepali human rights lawyer Gopal Siwakoti 'Chintan', who was also the main force behind the cancellation of the Arun 3 Dam by the World Bank in 1995. The pro-people position taken strongly by the UCPN-Maoist, the main elected force in the country, and parliamentary Public Account Committee was also instrumental in the success of the campaign against the project. Inputs made by various water experts and the media was equally important. Kathmandu-based Water and Energy Users' Federation-Nepal (WAFED) was the main group leading and coordinating this campaign.

Additionally, the international campaign involved Japanese associates and other well-wishers in our struggle. The Tokyo-based Japan Center for Sustainable Environment and Society (JACSES) played a very important role, mobilizing public opinion within Japan and putting pressure on the ADB and Japanese Ministry of Finance. JACSES also made several field visits to the project site, which enabled them to prepare ground-reality reports for effective campaigning. Likewise, we got a lot of support from the NGO Forum on ADB, International Rivers, the Amsterdam-based Both ENDS and the Environmental Defense Fund. Various groups and friends in Australia also helped exert pressure on SMEC for withdrawal from the project.

It is very clear that SMEC's main failure to find funds was because it could not sell the project as being economically, socially and environmentally feasible for Nepal. The campaign managed to communicate details about these failings to all institutional levels and so blocked the company’s capacity to generate funds. But ultimately there was a general institutional consensus that the project was deeply flawed, especially since it had no benefits at all for the local populace. It was clear to everyone that there was something wrong in displacing people and diverting water to India in the name of exporting surplus electricity from a country and a region that is deficit in electricity.

While the popular movement has succeeded in stopping the West Seti Dam for now, such projects never disappear for good. Nepal's government is trying to revive it, and the Chinese government has expressed an interest in providing financial support. We have stopped a Chinese-funded dam at West Seti in the past, and we must remain vigilant to stop destructive projects from going forward on the river in the future.

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The author is coordinator of the Kathmandu-based Water and Energy Users' Federation-Nepal (WAFED).