Context: India will be taking over an ambitious hydropower project in Nepal — West Seti — nearly four years after China withdrew from it, ending a six-year engagement between 2012 and 2018.

Background

• The project was earlier accorded to a Chinese company.
• But Nepal feared that India won’t buy power from China-executed projects.

West Seti Hydel Project

• The West Seti Dam is a proposed 750-megawatt (MW) hydroelectric dam on the Seti River in the Far-Western Development Region of Nepal.
• Particularly, it is a storage scheme designed to generate and export large quantities of electrical energy to India.
• The project is envisaged to provide Nepal 31.9% electricity free.
• Besides, locals affected by the project are being given a share of Nepali Rs 10 million plus 30 units of electricity per month free.

Key Significance: India -Nepal Power Relations

• Nepal is rich in power sources with around 6,000 rivers and an estimated potential for 83,000 MW.
• India has formally approached Nepal on many occasions, seeking preferential rights over Nepali waters should it match offers coming from elsewhere.
• India is viewed as a feasible power market for Nepal.
• India has undertaken to harness or expressed intent to harness major rivers in the north.

Issues in project execution

• There has been some uncertainty in Nepal over India’s inability to deliver projects on time.
• An ambitious Mahakali treaty was signed back in 1996, to produce 6,480 MW, but India has still not been able to come out with the Detailed project Report.
• The Upper Karnali project, for which the multinational GMR signed the contract, has made no headway for years.
• Major reasons for stalling of these projects was a lack of consensus over power purchase agreement with India.
• Also, seismic sensitivity of the Himalayan Region is the prime consideration.

What has helped build faith recently?

• India under PM Modi has been successful in executing the 900-MW Arun Three Project in eastern Nepal’s Sankhuwa Sabha.
• After a standoff between Nepal and India led to the economic blockade of 2015, equations changed after Deuba took over last July, replacing Oli.

Benefits for Nepal

• Nepal has a massive power shortfall as it generates only around 900 MW against an installed capacity of nearly 2,000 MW.
• Although it is currently selling 364 MW power to India, it has over the years importing from India.

Hurdles from Nepal’s internal crisis

• Nepal’s Constitution has a provision under which any treaty or agreement with another country on natural resources will require Parliament’s ratification by at least a two-thirds majority.
• That will also mean homework will be required before any hydro project is signed and given for execution.

Road Ahead

• Until India agrees to value Nepal’s water and the existing focus on power is not reviewed, mutual distrust may continue.
• India must start executing its projects timely.
• And its success is expected to restore India’s image in Nepal and give it weightage in future considerations for hydropower projects, when competition is bound to be tough.
• West Seti, therefore, has the potential to be a defining model for Nepal India’s power relations in future.