ADB CASES OVER THE YEARS

ADB AND HYDROPOWER PROJECT IN NEPAL : A CASE STUDY OF TANAHU HYDROPOWER PROJECT

By Rashmi K. Shrestha Ratan Bhandari

Nepal is a landlocked country with an area of 147108 km2 sandwiched between two developing giants India and China. Nepal suffered from decade-long Maoist insurgent leaving the country in more fragile condition. Every sector suffered a lot and still suffering due to civil war and political instability. Nepal is in transition and constitution making process and newly elected Constituent Assembly II has promised to promulgate a new constitution, which will shape country’s future. Nepalese people are eagerly waiting for the new constitution, which would pretty much shape, their future as well. Nepal, although challenged by its landlocked nature, is naturally a beautiful country. This country is rich with natural resources, cultural and biodiversity, Indigenous knowledge, world heritage and genetically diverse flora and fauna. However, Nepal ranked 157th among 187 countries in UNDP’s Human Development Index (UNDP, 2013). The rate of economic development is only 3.56 % (EcoSurvey, 2011). The average annual income of Nepalese people is $658 (EcoSurvey, 2011). With this dire economic context, one of the economic development means seen by Government of Nepal (GON), International Financial Institutions (IFIs), bilateral donor agencies and multination companies is hydropower development. IFIs are proposing Nepal to harness its water resources flowing from the vast Himalayas.

REPORT ON THE WEST SETI HYDROELECTRIC PROJECT AND ADB POLICY VIOLATIONS

by Yuki Tanabe Japan Center for a Sustainable Environment and Society (JACSES)

The West Seti Hydroelectric Project is a 750 MW dam project in western Nepal (located in Baitadi, Bajhang, Dadeldhura and Doti Districts), which has been planned by an Australian company, Snowy Mountains Engineering Corporation (SMEC). 

The estimated project cost is 1.2 billion dollars, and the project is expected to receive loans and political guarantees by Asian Development Bank (ADB), Multilateral Investment Guarantee Agency (MIGA), Export and Import Bank of China, Bank of China, Infrastructure Leasing and Export Corporation (India), Industrial Bank of China, China Export and Credit Insurance Corporation (SINOSURE). All the electricity produced will be transferred to India by the Power Trade Corporation (PTC).1 As a royalty, 10 % of the produced electricity (or equivalent cash) is expected to be provided to the Government of Nepal.2 

This project has been set under Category A, as per the ADB Environment Policy, and the first Environmental Assessment (EIA) report was carried out in 1999. According to the EIA, 1,160 families (9,096 people) will be displaced due to the project.3 This EIA is currently under revision by SMEC, and is expected to be publicly available 120 days prior to the ADB Board approval (ADB Board approval is expected on December 20, 2007).4 

Between July 6 to 15, 2007, Ratan Bhandari (Water and Energy Users' Federation Nepal, WAFED) and Yuki Tanabe (JACSES) jointly visited affected areas of the West Seti Hydroelectric Project (Deura, Mori Bagad, Lekam, Harada Khani, Dhungad, Talara and Talkot) and resettlement sites in Kailali District (Sandepani, Lamki and Narayanpur). Meetings5 and interviews with more than 200 local people (total) were held in these areas. 

This short report has been made to spell out people’s concerns regarding the project and violations of ADB policies. 

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