Backdrop - Karnali Jalashrot Limited

Karnali Jalashrot Limited, abbreviated as KARJAL, has been established in 2012 as a mass-based public limited company, under Company Act, 2063, to safeguard, utilize and develop water resources of the country for the maximum benefits of Nepal and her people.

Water is life. It is thus even more important globally than petroleum products. Former UN Secretary General Boutros Ghali has predicted that the next world war might be over fresh water, which is already occurring covertly in some semi-arid countries. Locally too, several disputes and even fights take place regularly in sharing this limited resource. Nepal, however, is abundantly gifted by nature with a bounteous monsoon. As a part of Ganga Basin, approximately 70% of dry season flow and 40% of annual flow of the Ganga River comes from Nepali rivers. This vast potential, if efficiently and effectively harnessed, can not only make Nepal a prosperous country but can also offer important positive externalities like flood control and augmented/regulated flow in lean season to the Ganga basin's lower riparian countries like India and Bangladesh.

Nepal and her people, however, have not benefited from this gift of nature. Instead, in the past half century, through treaties done without adequate homework and public consultations, Nepal has been losing control over her major river systems and has suffered from negative externalities of inundation of forest and submergence of agricultural land (including water logging) as well as population displacement. On the other hand, downstream riparian lands have enjoyed what is known as "green revolution", while the people in Nepal are dying from water borne diseases for lack of clean water supply system and, in the absence of food security due to single cropping for lack of adequate irrigation, also of famine and starvation, even in this age. With optimum exploitation of water resources, none of these misfortunes need happen, ever again. Her rivers can displace imported fossil fuel, provide multiple cropping, fish harvesting, resort development as well as navigation both internal and with access to the sea.

Despite its high theoretical potential for hydropower generation one- third of the population with access to electricity suffer from perennial power cuts, notoriously known as load shedding, while two thirds do not have any access to electricity akin to load shedding 24 hours each day all year round. Even what is available has been developed very expensively making electricity unaffordable to the majority. Lack of cheap and reliable electricity also means an absence of industrialization, suppressed development, lack of employment and family-breaking labour outmigration. Nepal's economy is ailing due to exponential increase in balance of trade and balance of payment deficit primarily due to import of petroleum product in huge quantum which could have been mitigated by electrification of transportation. Further, electrification of agriculture sector (e.g. electric lift irrigation, grain silos, cold storage, herbal and agro processing) could have increased both agricultural production and food security. But Nepal is yet to build hydropower projects with the objective of lifting Nepal from suppressed economic growth scenario to normal economic growth scenario.

Against this backdrop, successive governments have signed agreements/MoUs to have export-oriented hydropower projects (e.g. Arun III, Tama Koshi III, Upper Karnali, Upper Marsyangdi, etc.) implemented. This myopic approach ignores the fact that just to achieve normal economic growth 5,000 MW will be needed in next 5 years. These projects will be exporting power at rates between Rs 1 to Rs 3 per kWh while Nepal has been importing power at more than Rs 10 in the name of mitigation of load shedding. It is obvious that Nepal should have these projects implemented for internal consumption and exported only the electricity that will otherwise be in excess and will be spilled. Besides, Nepal will not stand to benefit by having foreign investors export power at rock bottom rates directly. The Nepali state should buy all electricity generated in Nepal at lowest possible rate and export the quantum not internally consumed at a rate worked out on the basis of avoided cost and greenhouse gas displacement. Multipurpose water resource projects, which will add value by spatial and temporal transfer, will also facilitate navigation which is cost effective by more than 85% compared to surface transportation. Similarly, these will also facilitate water based recreational facilities thereby boosting tourism industry.

Unfortunately, Nepal's officialdom is yet to focus on harnessing Nepal's water resources in the interest of and for the benefit of people and economy of Nepal. MoU signed for Upper Karnali project is one of the worst examples. The site is nature's rare gift to Nepal with its full potential of installed capacity 4,180 MW storage requiring a tunnel of about 2 km only. GoN has approved the investor's plan to build run of the river (RoR) hydropower project at the site with installed capacity of 900 MW. This basically is a strategy to preempt Nepal from using Karnali water in dry season for consumptive purposes like irrigation which can be understood by looking at Koshi barrage. Had the barrage been located a few kilometers north from the present location, Nepal too would have benefited from irrigation. Moreover, GoN has even "ceded" its sovereign rights over Karnali and Arun Rivers to the respective "developers" by committing to "ensure that the development, implementation and operation of upstream/downstream projects by other developers shall not be detrimental in any way to the project", bypassing the parliament and constitutional provisions.

Karnali Jalashrot Limited (KARJAL) thus came to existence, under an initiative strongly supported by Karnali Basin Conservation Society (Karbacos), as a unique pan-Nepal, mass-based peoples' company to develop all aspect of water resources for the maximum benefit of Nepalese and to provide a healthy alternative to Old Nepal's misguided water resource policy described above. The company was established by over 200 promoters from over 40 different districts of Nepal. It aims to harness Nepal's rivers in general and Karnali River and its tributaries in particular for the larger benefit of Nepal and her people.