Reply by Minister for Water Resources, Hon. Govind Raj Joshi, to the questions raised by Hon. Members of Parliament regarding budget allocation and programs under the Ministry of Water Resources for Fiscal Year 2056/057(1999/2000). Date: 2056/5/21 (1999 September 6) First of all, I would like to thank all the members of Parliament for providing ideas and comments on the budget allocations and programs under the Ministry of Water Resources for fiscal year 1999/2000. I have taken the comments and suggestions as directives to develop water resources related projects and development activities. Regarding the suggestions on various programs and projects in your district and constituency, I would like to assure you that these programs would be carried out in the current or future plans and programs of the Ministry on the basis of their feasibility and availability of resources with the His Majesty’s Government.
For the development of water resources, the government fully agrees with the views on national consensus and water resources utilization, master plan development, and long-term policy formulation for the water resources sector expressed by the parliamentarians during the discussions. Taking heed of the Royal Address by His Majesty the King to the joint session of both the Houses that “Water Resources Development, the Basis for National Prosperity”, I would like to assure the members that a national strategy based on national consensus will be formulated for the development of water resources. Right Honorable Speaker, After the re-introduction of democracy, the necessary Hydropower Development Policy 1992, Water Resources Act 1992, Electricity Act 1992, Electricity Regulations 1993, Water Resources Regulations 1993, Irrigation Policy 1992 (1st Amendment 1996) have all been formulated and implemented. We have started an exercise to update the existing Policies and Acts in order to address the current and future needs of the national development, such that private sector participation becomes more competitive in the comprehensive development of water resources and hydropower and optimum national benefits from the export-oriented large-scale projects is assured. Taking in view the suggestions made by the members regarding hydropower development policy, issues on Rent Policy, Project Transfer Period, and other direct and indirect benefits will also be given due importance.
As our own resources are not sufficient, we need to attract the private sector as well as foreign investment in order to develop the hydropower by creating a suitable environment and to be concerned about how we can benefit from this. In the water resources sector, rather than debating for or against small or large scale projects, it is important to proceed with both small and large-scale projects by taking into consideration the country’s needs, the possibility of export, downstream benefits, and the need to supply electricity and water for irrigation in the remote and hilly regions. The Power Exchange Treaty signed last year by both the governments of Nepal and India has opened up the new market potential for the development of the electricity sector. This Treaty, which was the outcome of consensus amongst the principal political parties, has already been tabled for approval by the Parliament. Right Honorable Speaker, We have been lagging behind in our effort to utilize the vast water resources potential and reap economic benefits from it. Even after 40 years of planned development, we are at present generating 11.5 MW from small hydel plants and about 250.5 MW from the larger hydel plants, with a total capacity of only 262 MW of hydropower. The diesel plant capacity is 57 MW resulting in total electricity generating capacity at 319 MW. The utilization of water resources for irrigation, drinking water, and other uses has not been adequate. These result to unlimited benefit in economic terms.
Therefore, I believe that there is a need to utilize our vast water resources potential to get optimum economic benefits by focussing on a timely, practical, and liberal attitude rather than getting involved in theoretical disputes. As per the open and liberal economic policy and the implementation of relevant Acts and Regulations, both national and foreign private sector investors have been attracted in hydropower development. Among the hydropower projects being developed by the private sector, 60 MW Khimti and 36 MW Bhote Koshi hydropower projects will be completed in the next fiscal year and 5 MW Indrawati hydropower project will be completed by 2001. Kali Gandaki ‘A’, Modi, Puwa-Khola, Chilime hydropower projects are under construction and the Upper Marsyangdi hydroelectricity project is ready for implementation. Necessary steps are also being taken for the implementation of projects such as West Seti, Karnali, and Arun-3 in the future. This past year, the peak demand in the central electricity grid reached 327 MW. This demand is growing at a rate of about 10 percent every year. Though the installed capacity within the country is 319 MW, only about 250 MW could be supplied in the dry season. The shortfall is being taken care of by the optimum generation from existing plants and importing of electricity from India. Due to difficult terrain, remoteness, scattered rural settlements, and shortage of generation capacity, a large number of the population does not have access to electricity. At present, about 525 thousand consumers of 72 districts have electricity supply and there are plans to connect additional 50 thousand consumers this year.
The papers regarding the Integrated Development of Mahakali River Treaty, which was ratified by the joint session of both the Houses of Parliament, have been already exchanged. Detailed Project Report (DPR) for Integrated Development of Mahakali River as specified in the Treaty has been discussed between both the concerned parties and some progress has been made as per the agreements made at the technical level. I would like to assure that the suggestions made by the Parliament to acquire maximum benefit from the project will be followed by the government at the time of preparing the final DPR. In order to transmit electric power that has been provided as compensation to Nepal from the Tanakpur Hydropower Project, Lalpur-Gaddachauki 132 kV transmission line is being constructed in Nepalese territory with the joint investment of the government and Nepal Electricity Authority. We have been notified that the Indian government has initiated the necessary work required to construct a transmission line in the near future in Indian territory. The government is making every effort to implement the Pancheshwar Project as early as possible as per the Mahakali Treaty. Right Honorable Speaker, I have already informed the House regarding the informal news on ENRON’s visit to Nepal to discuss Karnali Multipurpose Project. The faster implementation of this project will play a crucial role in the rapid economic development of the country. In addition to the benefits from exporting electricity, Nepal will negotiate for a share of downstream benefits taking a practical, long-term, and liberal stance on the issue such that Nepalese people would not have to return to the phase of past twenty years lost benefits.
In order to develop West Seti hydropower project and export electricity, the Snowy Mountain Engineering Corporation of Australia and His Majesty’s Government have already entered into an agreement. The Corporation will begin the construction of the project as soon as it concludes the power purchase agreement. In addition to the royalty and export tax revenue as per the existing Act, there is a provision to pay revenue equivalent to 10% of generated electricity. The government has plans to develop Arun-3 and other feasible hydroelectric projects in order to provide for electricity to meet national demand as well as export purposes for economic development. In relation to Sapta Koshi Multipurpose project, an agreement was reached to prepare a DPR during the visit to India by the then Prime Minister of Nepal in 1991. Since then, two technical level meetings have been held and agreements have been reached on the procedures for preparing the DPR. Also, an agreement has been reached on both sides to prepare jointly the DPR for Sun Koshi-Kamala Diversion. This project will be promoted on the basis of joint collaboration. Right Honorable Speaker Though the government is eager to provide electricity services to through rural electrification. However, in the current situation of lack of adequate electricity supply, scattered population, and costly endeavor to construct a transmission line in mountainous and remote regions, rural electrification has not expanded as per the expectations. In order to promote rural electrification, construction of upto 1 MW hydropower project has been de-licensed and the government is also undertaking the construction of a number of small hydropower projects. Although the cost of electrification with such small projects becomes high as a result of which the rural people would have to pay higher tariffs, His Majesty’s Government is committed to expanding rural electrification. Therefore, the government has made some investments in rural electrification every year despite of limited resources.
This program will be expanded in the future. I would like to submit that the government in the future will prioritize rural electrification projects by encouraging local participation. Attempts are also being made to increase the capacity of small hydropower projects wherever it is feasible. Nepal Electricity Authority has adopted the policy to use one percent of its revenue from its hydropower projects to electrify the district where the project is located, and this policy will be continued in the future. In order to reduce electricity loss, Nepal Electricity Authority is implementing improvement programs to reduce technical losses and undertaking awareness programs, on-the-spot checking and sealing of meters to reduce non-technical losses. In order to make loss-reduction programs more effective, legislation is being drafted to deter theft of electricity. Work on improving the current tariff policy of the Authority is being carried out. While investigating electricity losses, consumers in some sectors have been found to be responsible for maximum losses, and resistance have been faced while preventing such losses. Therefore, if cooperation is not available, there would be a negative impact on the electricity supply in those sectors.
In order to reduce electricity losses, special programs would be implemented to make the electricity supply system more effective, regular, and improved such that it brings about a positive impact on the Authority and consumers. Similarly, necessary arrangements are being made to separate electricity tariff for off-peak and peak-hour. In order to increase the effectiveness of the Nepal Electricity Authority in its operation, the concept of Profit Centre is being implemented, which will help reduce losses in electricity, reduce distribution costs, increase the flow of revenue, and provide better services to the consumers. After the implementation of this policy, a performance BenchMark will be set up, and action will be taken against those employees not able to meet the BenchMark. This way, the government has given priority for the development of water resources and will carry out necessary amendments to existing rules and regulations to attract national and foreign private investment. A proposal will be floated to request interest for the development of all feasible hydropower projects in the country. Permits will be given to developers giving due consideration to maximum benefits for Nepal. Right Honorable Speaker, In order to develop agriculture as the leading sector, the government has started the 20 years’ long-term agriculture perspective plan. The purpose of this Plan is to increase the growth rate of agriculture production by 5% from the present growth rate of about 3%. In order to increase agricultural production, it is necessary to increase land productivity through the extension of irrigation facilities. That is why the Plan targets to irrigate all irrigable agricultural land in 20 years’ time. Of the total irrigable agriculture land, irrigation facility exists in 62% or 11 million hectares.
In the current fiscal year, there is a target to extend irrigation facilities to additional 53,026 hectares of land. His Majesty’s Government is aware of the issues on irrigation programs expressed by the honorable members It would like to inform the House that by investing Rs 1,700 million since 2048 BS (1991), irrigation facility has been extended through new irrigation projects in 85,000 hectares and through farmer’s managed projects in 13,000 hectares. With respect to the questions raised by the honorable members on the deficiency in operation and management of irrigation systems to provide targeted benefits, I want to assure the honorable members that effective evaluation and monitoring mechanisms would be put in place to correct such deficiencies. As the large scale irrigation projects require more time and capital, and farmers have to wait for a long time to get the benefits, the government has prioritized the development of the small scale, less capital intensive, less time-consuming irrigation projects. The government has implemented a plan to involve farmers’ users groups while constructing and improving the small scale farmer and agriculture system and handing over such systems for operation and management to the farmers after the completion of construction and improvement. Since the maintenance and operation cost of these projects is not much and irrigation facility is continued in a managed way, the type of projects have helped in augmenting agricultural production.
The irrigation sector programs are in implemented in 35 districts of Eastern and Central Development Region with assistance from the Asian Development Bank whereas Nepal irrigation sector programs are implemented in three developing regions of Western in loan assistance of the World Bank. In these programs, small and medium scale projects and farmers demanded projects would be developed effectively by including farmers’ participation. Along with small projects, farmers controlled and operated less capital, and time-intensive tubewell irrigation programs have been prioritized and implemented in the Tarai region to utilize the groundwater resources. These tubewell projects would be developed in clusters and connected to rural roads and rural electrification programs. Groundwater investigation is continuing in the Tarai region to find the feasibility of groundwater resources. The program on community shallow tubewell based on farmers’ demand and their participation is being continued in the Central and the Eastern Development Region with the loan assistance from the Asian Development Bank and Rautahat, Sarlahi, Siraha, and Sunsari districts with the loan assistance from the International Agriculture Development Fund. Deep tubewell programs are in operation in Morang, Saptari, Siraha, Mahottari, Chitwan, and Banke districts. Apart from these, both shallow and deep tubewell programs have been implemented under the Nepal Irrigation Sector Project in Nawalparasi, Rupandehi, Kapilbastu, Dang, Banke, Bardiya, Kailali and Kanchanpur districts. Efforts are being made to obtain assistance for Tarai Ground Water Irrigation Program in Bara, Parsa, Rupandehi, and Jhapa districts.
The government managed small and medium irrigation systems will be handed over to the farmer user association after reconstructing the systems. Arrangements would be made to include user groups in the joint management of large scale irrigation systems. Realizing the need to expand irrigation facilities by achieving sustainability through system improvement of traditional as well as recently completed irrigation systems and that there is a risk of more degradation of such system without necessary rehabilitation, the government has prioritized and implemented irrigation system rehabilitation programs. Besides, efforts are also being undertaken to implement large-scale irrigation projects by mobilizing the available resources in order to achieve the prescribed target. Right Honourable Speaker, Emergency, short-term and long-term projects are ongoing by mobilizing the available resources such that they address the problems related to river training. River training works are very costly and complicated and the available resources are very limited compared to the problems we are facing. Nevertheless, the government has adopted a policy of addressing river training problems by effectively utilizing the available resources and mobilizing people’s participation in identified problem areas. His Majesty’s Government will provide necessary assistance to the river training works being executed by the people themselves.
HMG realizes the need to prepare a river training master plan to address a long-term solution to river training, for which the government so far has prepared master plans for eight rivers. I would like to inform the House that HMG will make efforts to seek the necessary resources to prepare similar master plans for other rivers. I also realize the need to change the current ad-hoc process of river training to a trend of carrying out such works only after preparing a comprehensive master plan. Right Honorable Speaker, Nepal’s water resources potential can be advantageously utilized in various sectors. However, it is feared that the potential may remain just a potential for many years to come if we continue to argue on the basic principles of utilizing the resources without resolving the differences in an effective manner. What we should understand is that the water resources potential of Nepal, especially for use in hydropower, irrigation, and drinking water is much more than what we may need in a foreseeable future. We should not forget that if we do not utilize this potential commercially, the benefit of this unutilized potential would naturally go to the lower riparian states. In this situation, I think the need of the time is to keep in mind that water resources potential should be taken as a commercial commodity and that we alone cannot simply convert this potential to commercial commodity and, therefore, adopt a transparent, practical and flexible policy to attract foreign investors, of course, without impairing our national interest.
In the end, I believe that the suggestion given by honorable members during the discussion in Parliament will be very fruitful for the government to move forward. I thank honorable members of Parliament again MPs for their important suggestions. Edited by Shaligram Pokharel/Monday, September 13, 1999.
