Hydropower policy and site-level contestation under the political transition:

Challenges for Ending the Power Cut in Nepal

Dr. Hari Dhungana & Gyanu Maskey

Southasia Institute of Advanced StudiesOctober 9 2015

www.sias-southasia.org

Outline Hydropower in Nepal

Background: Urgency of HEP development

Objectives

Methodology

Hydropower Policies –investment friendly

Hydropower Policies-benefits to local peoples

Site level challenges

Conclusion

Hydropower potential & utilisation in South Asia

Country Feasible (MW) Installed (MW) Harnessed

India 84044 39,060 46.48%

Pakistan 59000 6,555 11.11%

Nepal 43000 659 1.53%

Bhutan 24000 1,488 6.2%

Srilanka 2550.7 1,401 54.93%

Bangladesh 755 230 30.46

Total 213,350 49,394 23.15

Nepal occupies third place in terms of hydropower potentiality but appeared last with respect to utilization.

Source: NEA

Demand & supply

Fiscal Yr Demand (MW)

Supply (MW)

Load shedding (MW)

2013/14 1201 791 410

2014/15 1291.80 706.861 585

Annual Report, NEA

• Total capacity for 99 hydropower projects (issued generation licenses) 2225.433 MW (DoED)

Background Experience of Load Shedding Post-conflict period: Growing optimism in

Nepal for hydropower development Survey and generation licenses

Still, projects facing local struggles and resistance

significant challenges on projects that cannot be overlooked

Objectives

Hydropower policies –investment friendly

Hydropower policies-benefits of local people

Site level Challenges (UM-A Hydropower Project)

Methodology

Review of Policy Documents

Case study at Bhulbhule, Lamjung

Field observation

FGDs

KII/SSI

Stakeholder Consultation

in Kathmandu

Political transition

Post-2006 transition: still ongoing after constitution promulgation

Over the past 13 years, vacuum of elected leadership in the local governments

no meaningful deliberation and contestation in regard to local affairs

DDCs, VDCs and municipalities run by centrally appointed civil servants and exercising powers

Policies: investment friendly post-1990 policies

break the monopoly of NEA

securing investment

Hydropower Development Policy 2049 (1992)

Water Resources Act 2049 (1992)

Electricity Act 2049 (1992)

Associated regulations

Environmental Protection Act 2053 (1996)

Environmental Protection Regulations 2054 (1997).

In 1993 HMG promulgated Nepal's first Environmental Impact Assessment Guidelines 2050 (1993, revised in 1997)

Policies Provisions on

- eight five-year plan (1992-1997) - Hydropower Development Policy of 1992

• open market and liberalization

- Hydropower policy 1992- Water resource act 1992

• domestic private sector, foreign investors, community producers as well as the NEA

• BOOT model

• provisions on licensing, power purchase agreement, tariff fixation, acquisition of land, and environmental conservation

-Twenty-Year Hydropower Development Plan Formulation Task Force

• projects local people as a problem• Sensitise people and regular dialogues

Policies Provisions on

- 38-point Electricity Crisis Resolution Action Plan (2009)

• concessions around investment• waiver of the provision for doing EIA for power projects, only IEE

-Project Development Agreement Procedure, 2069, amendment 2070

• clear, transparent and managed agreement process

Acquisition of land-1992 hydropower policy

- 2001 hydropower policy

-2009 Plan

• government acquire land upon request of hydropower developers • use Land Acquisition Act of 1977

• promising support required to acquire land. • encourages voluntary exchange of land• government intervention when lands are not voluntarily acquired

• need for simplifying the process of land acquisition

Policies Provisions on

Resettlement & Rehabilitation-Hydropower policy 2001 •assistance in regard to resettlement

and rehabilitation by the government

-EIA- Ordinance 2006

• installed capacity between 1 and 50 MW -IEE those greater than 50 MW: full EIA

Policies Provisions on

Royalty distribution

- Hydropower development policy of 1992/ Electricity Act 1992

•hydropower developers to pay royalty to central government

HydropowerPolicy 2001 to return 10% of the royalty from a hydropower project to the district where it is located

Second amendment of the Self-Governance Regulations (2004)

Electricity Ordinance (2007)

• DDCs (12%), which is then redistributed to VDCsDevelopment Region (38%) national exchequer (50%). • Smaller projects, with capacity up to 1000 KW, exempted from the payment of royalty.

Policies: Local Benefits

Policies: Local Benefits

Policies Provisions on

Use of local labor and skillsHydropower Policy 1992 • Local people to benefit directly

• Use of local labor and skills• foreign investors to transfer technology to Nepalese citizens.

Hydropower Policy 2001 • similar points about benefit to local • reaffirms the provisions of local governance legislation to share revenue with local governments.

Water rights of local peopleHydropower policy 1992 Hydropower policy 2001

• silent on water rights• legal provisions will be made to prevent adverse effects on the availability of water

Policies Provisions on

Compensation for harms • no clear provisions• EIAs identify the potential harms & recommend

•2009 Plan • suggests the formation of “Compensation Determination and Distribution committee”

Resettlement and rehabilitationHydropower Policy 1992

•silent about the resettlement

Hydropower policy 2001 • rehabilitate and resettle the families as per standards set by HMG.

Ten-year plan • need for developing a National Resettlement policy •be based on international standards” •Govt support in resettlement process•Better living standards and socio-economic conditions of the displaced people

Policies Provisions on

Consultation & Consent of local/ind peoples• hydropower policies – both of 1992 and 2001

• provision in EIA

• ten-year plan

• Silent

•for identifying environmental impacts

• suitable training to local human resource

• Twenty Yr Plan • silent on indigenous people’s demands,• develop understanding between project developers, local people and people’s representatives

Env protection, norming & EIA• 1992 electricity Act • hydropower development policy

• Environmental Protection Act (1996) and Regulations (1997)

• minimum adverse impact on the environment

• More than 5MW -EIA , IEE for smaller projects• minimum of river flow- EIA or 10% flow

Policies Provisions on

• Ten-year plan • specific provisions on EIA• simplify EIA and its approval, • specify approval timeline• comments and recommendations from different ministries and agencies

• Ordinance 2006 • installed capacity between 1 and 50 MW- IEE• those greater than 50 MW: full EIA

Some issues in policies

policies : local people’s mobilizations primarily as an obstruction.

not diagnosed in regard to how this is happening,

absence of mechanisms of representation and articulation of local people’s concerns in an institutionalized manner

10 yr-plan report, 20 yr plan report

No indication of consulting with National Human Rights Commission, NFDIN

Case study site-UM-A HP Project

50 MW capacity

Sino Hydro and partner Sagarmatha Power Company

Bhulbhule VDC of Lamjung

The Rs 10 billion project

signed a power purchase agreement with the NEA for 6.95 cents per unit.

Original date of completion: end of 2016

Tunnel at Nandeshwora

Project Impacts: Positive

Access to road to Bhulbhule VDC

Economic development

Employment Opportunity

Local business

First traffic tunnel in Nepal

Increased awareness among people

Negative Impacts

Dust/smoke-air pollution Sound pollution-vehicles/blasting

/crusher plant Blasting impact for tunnel

construction-cracks in houses Drying of water sources Reduction in grazing area Decrease in agricultural production Less no. of tourists Cultural impact on river Loss of fishes Social evils

Challenges at site level Social and local demands

Lead to obstructionism, blockage, strikes

Demands on compensation, increasing wages, blasting impact

Chare Khola-girls death

Indigenous peoples concerns FPIC

UMA HP- NEFIN advocating

EIA Not made public

Technicalities of EIA

Grievance Handling District: Hydropower Promotion and PCC

Site level: PCC- to mediate (members from 5 affected VDCs)

Late formation

Accused of not fully acknowledging local peoples

Patron politics prevailing

Preferential hire of labors

Neighborhood Support Programme (Npr 40 million for 3 yrs)

Compensation mechanisms/database No clear provisions

EIA identifies potential harms and offers recommendations

Cracks due to blasting effect in tunnels

Compensation determination and distribution committee (as per 2009 Plan): DTO, PRO, PCC< EMU

Blockage on dust

Resettlement AND REHABILITATION Dam site area

Tanglinchok: Categorized into 3 groups on the basis of risk due to the tunnel 11, 8, 5 HHs for 15 months-10, 2.5, 1 lakh

Surge Tank area

1 permanent (14 lakhs) 4 temporary (15 mnths-3 to 8 lakhs)

• Pay Rs 10,000 month land rent• Toilet/drinking water/kitchen garden/livestock• Elecricity, water pipes, gobar gas

Observations In Bhulbhule, villagers emphasize distributive

issues

To them, justice is about avoiding harm and deriving benefits from the project.

Their demands resonate with Nepal’s regulations on environmental impacts and hydropower projects, which equally stress distributive concerns over procedural rights.

Conclusions

Post 1990 in Nepal have encouraged the investment on hydropower projects from private sector

Policies and laws have also provisioned for local peoples benefits

Some policy provisions are unclear, some weak at implementation

Increasing local and social demands: site level challenges

Recommendation

HEP promotion requires hassle-free local environment, and a predictable environment

Establish effective local dialogue process to facilitate HEP development—with democratic space and to heed to multiple demands

Clarify the rights of indigenous groups

Clarify and agree with indigenous

Indigenous vis-à-vis local community

You tube video on UM-A Hydropower Project: https://www.youtube.com/watch?v=qWVO4FtE6dQ

THANK YOU