KATHMANDU, Feb 10: Whether Nepal can conclude a power development agreement (PDA) with Indian company GMR Group, which signed a Memorandum of Understanding (MoU) with the government four years ago on the Upper Karnali hydro-electric project, is a real test for the Maoist party.
Officials at the Ministry of Energy claim that the government has already prepared a draft power development agreement (PDA) template and is currently in the process of incorporating the recommendations of a technical committee.
Joint-Secretary Rajendra Chhetri says the ministry will send the draft to GMR Upper Karnali Hydropower Limited by March.
But the delay over the Upper Karnali PDA is hardly a technical issue. It was and remains a political issue, and an inflammable one for the Maoist party.
The Maoists started opposing the project right after their Chairman Pushpa Kamal Dahal resigned as prime minister in March 2009, a year after GMR signed the MoU with the Nepal government.
Once out of power, the Maoist party argued that GMR involvement in Upper Karnali was against the national interest and even sent its cadres to vandalize GMR´s site office.
However, things have now changed. The Maoists are back in power and trying hard to make it up to India. And above all, Maoist Vice-chairman Baburam Bhattarai, who has argued in public that without economic development neither his party nor the country has any future, is leading the current government.
Prime Minister Bhattarai faces two challenges: First, he must find an excuse for clearing the PDA so that his party´s past resistance to it remains justified. Secondly, he must placate the radical faction in his party that is wary that Bhattarai may give the green light to mega projects involving Indian investment, and remains committed to opposing this.
Prime Minister Bhattarai has already assured GMR that the project will get his full support. “The prime minister assured us that the PDA would be done at the earliest,” GMR Upper Karnali Hydropower Limited General Manager KK Sharma said after meeting Dr Bhattarai at his office at Singha Durbar along with a hydropower delegation from the Confederation of Indian Industry (CCI), Tuesday.
The Maoist radical faction, meanwhile, seems in no mood to compromise. Maoist politburo member Khadga Bahadur Biswakarma, who is close to party hardliner and Senior Vice-chairman Mohan Baidya, says the project is against the national interest and vows never to let it see completion.
“The government should immediately scrap the agreement and take the initiative to build it on its own as it remains a financially very lucrative proposition,” reasons Biswakarma, who is Maoist in-charge of Bheri-Karnali, where the project is to be built.
He argues that the government should show some competence and act with boldness even if it lacks the financial wherewithal to complete the project--GMR estimates the cost at around US$ 1.42 billion-- and not sell out on the country´s resources to foreigners.
“There is no sense lending your cow to others when it gives milk and taking it back only when it is old,” he counters when told that the project would be developed on a Build Own Operate and Transfer (BOOT) basis.
A group of some 30, reportedly led by Maoist cadres, had barged into the GMR premises at Paltada, Dailekh on May 22 last year and set three buildings on fire.
Construction work at the site has been halted since, despite the government deploying the Armed Police Force (APF) there later in the year.
“We are waiting for a conducive environment for resumption of work and are now just doing social work as part of our corporate social responsibility,” General Manager Sharma says, adding that political consensus is imperative for resumption of the work.
The role of Minister for Energy Post Bahadur Bogati, who is close to Maoist Chairman Pushpa Kamal Dahal, will be crucial in sealing the PDA with GMR.
He was being somewhat diplomatic when he said, “As energy minister I personally don´t want to reject GMR since it has come through competitive international bidding, but ask the party about its official position.”
When prodded, Bogati said he was ready to mediate between GMR and disgruntled “locals”. Maoist politburo member Biswakarma, however, sees no use for dialogue over the issue. “There can never be any negotiation in matters of national interest,” he insists.
GMR ready to sell power to Nepal
GMR, which agreed to provide 12 percent free energy and 27 percent free equity when it signed the MoU with the government, says it is ready to sell power to Nepal.
One of the major objections against GMR within and outside the Maoist party is based on a perception that the Indian power producer will export all the energy to India even as Nepal faces acute power shortages.
“If the Nepal government wants to buy all the remaining energy at an economically feasible rate, we are more than happy to sell. That is what I have been conveying to the government and all the political parties on several occasions,” states Sharma.
“But Nepal should have the necessary transmission capacity to use all the energy from the project,” he adds.
If this provision on selling power to Nepal is included in the PDA, Prime Minister Bhattarai may find it easier to sell the PDA within his party and to others who remain skeptical about the Upper Karnali project.