Decision Making in the Electricity Bureaucracy: Case

of Budhi Gandaki

n Prabesh Paudyal and Bashanta Dhoj Shrestha

Prabesh Paudyal Bashanta Shrestha

Abstract: There is a power shortage in the Nepalese market and in the peaking demand as well. This clearly indicates the
need for storage type hydropower stations. The Budhi Gandaki (storage) Project (BGP) was identified and studied in 1983.
The project has been proposed with an installed capacity of 600 MW by constructing a 225 m high dam on Budhi Gandaki
River in central Nepal. The main attraction of this project is its nearness to the load centers. The government of Nepal decided
to implement the project for more than three times; but there were no seriously interested investor. It has been 25 years that
we have been talking about this project; but why the project is not happening is a crucial question to be addressed. Only
recently, six developers have shown interest to develop it in association with the Nepal Electricity Authority. It is also interest-
ing to know about the status of this project that has been left untouched since early studies in the 1980s. Further, there is a
proposal of a road construction network in the BGP site area which might ruin the project.
Key words: storage type hydropower projects, downstream benefits, private investment, resettlement and rehabilitation

Introduction Ordinary people have to make plans according to the load

D espite Nepal’s vast hydropower potential, less than 2%

of the potentially economically feasible hydropower
production has been achieved. The people are bearing power
shedding schedule. The power deficit was known to be
a problem long before, but the inability to mitigate the
problem by the authorities is definitely a common concern
cuts for more than 16 hours a day in the dry season. This of the people. The power demand is rising by 10% per year;
scenario is more critical at the peak time as the majority of i.e. around 80MW, and the national system has an addition
the hydropower projects in Nepal are Run-of-River (RoR) of 70 MW Middle Marsyangdi Hydroelectric Project
type, and consequently the power available in the dry season (MMHEP) since last 10 years. This led to the deficiency in
is less by about one third to one fourth compared with the the national power system. Nepal is in dire need of storage-
wet season, whereas the demand is larger at these times. This type hydro projects as it has been facing an acute power
has led to the necessity of storage type projects that have shortage for a couple of years mainly because most of the
many benefits like peaking, system balancing, flood control, hydropower projects are run-of-river type, which generate
navigation and can be used as multi-purpose projects for low (about one fourth) during the dry season; whereas the
irrigation and water supply along with power generation. demand is larger at these times. The only existing storage
The storage type hydropower has various advantages in project Kulekhani HEP (60MW+32MW) is unable to meet
terms of storage of water and energy generation, instant the peaking demand in dry periods as it is in operation
generating capacity, and flexibility in providing base load throughout the year to meet the peaking demands. The
and peak load services. Furthermore, the impact of climate total installed capacity of electricity generation in Nepal
change resulting less snow in the Himalayas is expected is 687.7 MW and the possible generation is 500 MW in
to aggravate the situation. For this, storage is an essential wet season and 200 MW in dry season against a demand
water requirement in the dry season. of 720 MW (wet season) and 900 MW in dry season (FY
Nepal’s storage type hydropower projects open the 2008/09). With 100MW import, the net deficit is 120 MW
possibilities for bilateral and regional cooperation. This in wet season and 600MW in dry season. There is deficit
development is associated with the multiple benefits like all year round.(10 year Hydro Electric Project Development
flood control, navigation and increased irrigation in dry Planning Task Force).
season, which lead in turn to economic growth along the
region. Nepal has identified several storage and cascade Facts of Budhi Gandaki
projects that are suitable for development under regional The proposed BGP is located near Benighat about 79 kms
cooperation. However, it is now considered that the energy south-west from Kathmandu, capital of Nepal. The project
produced by the BGP will be required for the internal envisages utilization of the hydroelectric potential of the
consumption. Budhi Gandaki river, a tributary of Gandak River, for power
generation by a storage type development. As per the study
Electricity Needs report of 1984, it would involve construction of a 225 m
Normal life of the urban dwellers has been crippled by the high earth and rockfill dam across the Budhi Gandaki river,
long hours of load shedding in the dry season in Nepal. about 2 km upstream of its confluence with Trishuli river

HYDRO NEPAL ISSUE NO. 6 JANUARY, 2010 61

at Benighat, to create a reservoir with an effective storage agricultural land are expected to be submerged.
capacity of 2755 million cu. m. The project has a capacity of The BGP was intended to be started in 1984, 1996, 2004,
generating 600 MW power with annual energy generation and 2007 but the project could not materialize so far.
of 2495 GWh.
Political Commitments
Despite commitment by the political leaders for
speedy hydropower development, it has not yet
been translated to implementation. The BGP is
an example that has not started despite it being
a priority project of both Nepal and India for 25
years. There is lack of political commitment for
the speedy development of the sector.

Gandak Treaty
The Gandak Treaty signed between Nepal and
India in 1959 is very harmful to Nepal. It totally
Index Map
curtailed Nepal’s right to utilize the Gandak water
within Nepalese territory. The Treaty as revised
The BGP is one of the attractive storage type projects. in 1964 partially restored Nepal’s right for transvalley use
This project was given importance because the site is near of water except in the period of February to April. After the
the capital (Kathmandu), the main load Center and the completion of the BGP, the dry season flow of the Gandak
national grid. The accessibility to the project site is very easy River will increase substantially.
and convenient for the transportation of materials. The site Before we take the decision to implement the BGP,
is centrally located and less expenditure is accounted for however, it will be wise to try to further amend the Gandak
access infrastructures. Despite many positive features and Treaty to lift the restriction on the transvalley use for the
accessibility of the project, however, it is stalled. months of February to April.
The reservoir of the proposed BGP covers about 49.8
square kilometers which was expected to displace about India’s Involvement
10,000 people or 2000 families (at the time of study in In the mid-1990s, the BGP was envisaged as a mutual benefit
1984). With the population growth of 2.3% in the area, it project with India. It was later withdrawn at the Secretary
is expected that the number of people to be displaced is level meeting held in November 1996. It should be noted,
17,660 in 2009. The project will affect the residents of 18 however, that these cost effective hydro projects should not
VDCs―eight in Dhading District and 10 in Gorkha District, be allocated solely for foreign investment and export to India
About 5,000 hectares of land including 1,240 hectares of at arbitrarily fixed cheap export royalty. The consequence
will be that Nepal will have to bear social and environmental
Table 1 Salient Features consequences, whereas downstream riparian countries will
receive downstream benefits like flood control, irrigation etc.
Salient Feature of the Project
India will be interested in storage projects so that they
Location
will have regulated water in the dry season and flood control
Region Central/Western Development
District Dhadhing/Gorkha
in the monsoon. They are also interested to make the inter
Type storage basin water transfer links. The case shows that the major
Installed capacity 600 MW (4 x150 MW) downstream benefits will be towards the Indian side by
Net head 185 m the regulated flow. Based on this fact, India should invest
Design discharge 430 m3/s certain equity in the project sighting the above benefits. The
Dam height 225 m
Indian government, however, does not show its willingness
Live storage 2755 million cubic meters
Dam type rockfill with inclined core to invest for the said benefits. A question will always arise
Powerhouse type underground as to why Nepal should submerge its valuable farm land/
Tunnel length & forests and displace its people; and then share the benefits
276 m /12m
diameter
Average annual with India. A reasonable export tax on the energy generated
2495 GWh
energy by large storage projects may compensate for the losses
Access road length 2.5 km
Transmission length 65 km (220 kV) suffered by Nepal in the storage projects. In the case of the
US$ 774 million (1983) BGP, however, the energy generated would be consumed in
Project cost Rs 45,250 million (Indian currency) at Nepal itself.
2006 price level (Source: CEA/Govt. Nepal and India’s power systems and demands/
India)

62 HYDRO NEPAL ISSUE NO. 6 JANUARY, 2010

 Nepal Government’s Commitment
The Nepal government has committed to develop
25,000 MW in 20 years and provide electricity to its entire
people. Storage type projects displace significant number
of people from their settlements. So to gain the confidence
of the people, there must be a strong bonding commitment
between all the parties about the construction of such
reservoirs. The government needs to ensure an investment-
Budhi Gandaki Valley friendly environment so that private parties can feel safe to
invest in the large projects.
availability are complimentary. In wet season, there is very Nepal is upper riparian country and India and Bangladesh
high potential of hydropower generation in Nepal due to are lower riparian countries. With the construction of high
high flows in the rivers but the demand is low. In dry season, dams in Nepal, India and Bangladesh will get the benefits of
the potential of generation is low but the demand is high. In flood control in monsoon and irrigation facilities in winter
India the situation is reverse. This gives us an opportunity and the extra power generation from their regulated flow.
to export power to India in wet season and import about And according to the international practices, the benefits
equal energy (thermal generated) from India. For this no and costs of construction of dams including other losses
haggling of price is required. It is a brilliant strategy. For are to be shared among the riparian countries. The conflict
this Nepal should negotiate with India. Storage projects are between the upper and lower riparian countries may affect
expensive. There are environmental and social issues. The the political relationship between them. Therefore, certain
project will have short life of about 50 years due to reservoir provisions need to be made according to international laws
filled up with sediments. Hence, only the most important to resolve the water disputes regarding sharing of cost and
storage projects should be undertaken. There should be benefits. Example of Columbia River treaty could be taken,
appropriate mix of ROR, storage, and seasonal export/ where the downstream country compensates upstream
import from India. country for 50% of the additional benefits, the benefits are
hydropower generation and flood control between the USA
Investors’ Problem and Canada.
Despite the fact that expressions of interest were called for
BGP several times by Nepal’s Department of Electricity Bureaucratic Thinking
Development (DOED), not a single developer came forward. The bureaucrats and the technocrats were quite clear that
The reason probably was due to the large scale displacement Nepal is going to have energy deficit without any storage type
problems involved. For hydropower projects, which have project in the early 1990s, other than Kulekhani; but at the
long gestation periods, the private investors need some type same time they were attracted towards Arun III (402 MW).
of commitment from the government. Generally private which was going to be initiated. The Arun-III was eventually
investors have problems with the resettlement issues, cancelled by the World Bank, which was the striking part for
particularly in the large projects where thousands of people construction of any mega scale construction in Nepal.
will be displaced involuntarily. There is no risk-sharing
mechanism between the government and the private sector. Upcoming Ground Realities in the BGP Site
But favorable conditions for the investors to invest are yet There is now a road link along the BGP reservoir area. If this
to materialize despite the amended hydropower policy. road comes into operation before the commissioning of the
Similarly, they also point out unstable government, conflict, project, many parts of the road, along with a large part of
social and resettlement issues as other problems for large the fertile land will be submerged. Similarly, the road will
investment in Nepal. encourage many people to shift to the roadside for better
Development of the project-affected area should be transportation facilities and business opportunities. It will
done focusing mainly on the resettlement/rehabilitation further complicate the resettlement issues. So, there should
of displaced people, construction of infrastructure like be coordination between the implementing government
roads, schools, health posts, water supply, etc. With these bodies about the status of the upcoming project and the
developments, people think that they are also benefited suitable locations of the infrastructures.
by the project. The alternative could be the Public Private There is no stable government in the country for the
Partnership (PPP) module where the local stakeholders also past one decade, and since the policies and development
invest a certain percentage in the construction of the project initiatives made by the previous governments might not be
so that they think that the project does not belong only to the supported by successive governments, previous decisions
government but also as their own property and, thus, show are likely to be changed. Due to the uncertain condition of
their commitment for the early completion of the project. the country, private investors are unable to express their

HYDRO NEPAL ISSUE NO. 6 JANUARY, 2010 63

commitment for investment as they do not feel the security Corresponding Address: mailprabesh@gmail.com
of their investments.
Moreover, such hydro projects must be seen as an Bashanta D. Shrestha, M.Sc. (water resources) is
interdisciplinary project rather that just an engineering Assistant Manager (Civil) in Nepal Electricity Authority.
project. The government should encourage local private Currently, he is working in Middle Marsyangdi
companies\institutions to take up such project, in Hydroelectirc Project (MMHEP) as a Contract Engineer.
collaboration with larger foreign investors, which can He has also worked as a civil engineer for the supervision
address the present power shortage. of construction works in MMHEP. He was also involved in
the Glacier Lake Outbrust Flood (GLOF) study/monitoring
Recent Development of Thulagi Glacier Lake, Manang, Nepal.
Recently, the Government of Nepal has, through a cabinet Corresponding Address: bdshrestha@hotmail.com
decision, given the NEA authority to develop Budhi
Ganadaki in association with other partners in the Public References
Private Partnership (PPP) mode. Six private international Bhattarai, Narayan Prasad, 2005, Hydropower Development in
companies including Indian companies have shown their Nepal, Kathmandu: Pairavi Books and Stationery Center.
interest for investment in the project in collaboration CEA/GOI, 2009, Cooperation with Neighbouring Countries
with NEA. An evaluation committee has been formed, (As on 31st Oct., 2009), New Delhi: Central Electricity Authority,
coordinated by a board member of the NEA. A French Government of India; URL: www.cea.nic.in/hydro/nepal.pdf.
Company (edf) has shown interest in development of Budhi ED/MWR, 1984 (April), Budhi Gandaki Hydroelectric
Gandaki and Kali Gandaki. The PPP is the right approach Project, Pre-feasibility Study, Main Report, Kathmandu,
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Force has proposed a schedule for its implementation with Sabha, Ministry of Water Resources, Government of India;
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with pre-construction works at end of 2013, construction Gyawali, D., 2001, Water in Nepal. Kathmandu: Himal
start-up by 2014 and project completion by 2018. By this Books.
time, all the energy generated by this BGP will be consumed MOE/GON, 2008 (2065 VS), Ten Year Hydropower
internally in Nepal. Development Task Force, Main Report, v.1, Kathmandu:
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The BGP, primarily targeted for export, is now a prime project Resources, Government of India; URL: http://wrmin.nic.in.
for internal consumption. The BGP should be implemented Paudyal P, 2008, ‘Budhi Gandaki: Let’s do it’, Kathmandu
early to tackle the severe energy crisis in Nepal. It should be Post (Kathmandu), April 2.
in partnership with the private sector, with the government Paudyal P, 2008, ‘Old project new initiative’, Kathmandu
of Nepal taking responsibility for involuntary resettlement Post (Kathmandu), May 1.
and risk sharing issues. Road construction in the project Pokhrel, Sumit, 2006, ‘Nepal’s hydropower dream: Are
area is a serious concern. And, development of the area (the we prepared for nightmares?’, Development Nepal, 7 October,
BGP site) without prior consultation with the electricity 2006; URL: www.nepaldevelopment.com/Article S Pokhrel_
authority can ruin such sites forever. 1006.htm.
It is also necessary to develop a modality to get Nepal Rajan, Krishna V, 2005, ‘Nepal-India relationship’, South
compensated by the lower riparian state for the regulated Asian Journal, January-March.
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valuable agriculture land and large numbers of people power failure’, American Chronicle, 18 January; URL: www.
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It is necessary to put this project in a fast track. Thapa, Anand Bahadur, 2008, ‘Gandak Treaty and Burii-
--- Gandaki Project’ (Water & Energy Users’ Federation Nepal),
Prabesh Paudyal is a civil engineer. He is currently Spotlight Weekly (Kathmandu), 13 June; URL: www.wafed.
pursuing his Masters degree in Environment Management org/budhigandaki_news_eng001.php.
and Sustainable Development at UNEP-Tongji Institute of Tucci, Carlos E.M., n.d., Dams and Flood Control, Porto
Environment for Sustainable Development, Shanghai, China. Alegre, Brazil: Institute of Hydraulic Research, University
He has worked as a civil engineer for designing hydro power Federal of Rio Grande do Sul; URL: www.iph.ufrgs.br/
plants. He has also worked in climate change studies. corpodocente/tucci/publicacoes/damsfloods.PDF. w

64 HYDRO NEPAL ISSUE NO. 6 JANUARY, 2010