Tells govt not to extend financial close time any more
KATHMANDU, JULY 07
The Supreme Court has quashed the writ petition filed by Karnali residents against GMR company and the government, but issued a directive order to the government telling it not to extend financial close time for the 900 megawatt Upper Karnali Hydel project as much delay has already happened.
The constitutional bench of the Supreme Court led by Chief Justice Hari Krishna Karki passed this order in response to a writ petition filed by Karnali residents against GMR company and the government, saying that GMR could get only that time for financial close that it lost due to the interim order of the court. The bench had passed the order on May 7, the full text of which was released today.
The bench observed that since it was almost 10 years since the agreement was signed between the two parties, endlessly extending the deadline for financial close would be against the people's desire for rapid development and prosperity and public policy. The court also ordered the government to complete its responsibility of acquiring land for the project in Achham district soon and to provide employment and enough compensation to the people who would be displaced. It said that of the free energy and share the government would get from Karnali project, it should spend those funds for overall development of Karnali watershed residents and the ecology of the region.
The top court said the agreement signed between the government and GMR company was a contract and it did not require to be ratified by two thirds majority of the Parliament as the contract did not involve distribution of Nepal's natural resources. The court said that a river was a natural resource, but energy produced from river water was not natural resource.
Any consumer good produced from natural resources involving other resources cannot be categorised as natural resource.
The SC stated in its order that since GMR Upper Karnali Hydro Power Company Limited, was established in Nepal in accordance with Nepali law and it abided by Nepali laws, the agreement could not be termed a treaty requiring ratification by the Parliament.
As the Upper Karnali hydel project was not a multi-purpose project, the SC stated it was only an energy project which did not propose to divide Nepal's natural resources between the signatories. It said the project's development agreement (PDA) signed by the two sides had replaced the original agreement signed on 24 January 2008.
The court observed that as financial close was not done almost 10 years from the date the agreement was first signed, that gave rise to doubt that the signatory was not a genuine party. The court said that end of deadline for financial close did not mean the end of the agreement.
The court observed that the government amended the agreement, giving third extension in accordance with the suggestions made by the Bishwa Paudel-led committee, and that was in line with contract laws.
The petitioners had argued the project developer would halt the flow of the river for 18 hours to generate hydro energy and when it released water into the river for four hours of the day, it could flood the human settlement downstream.
GMR said that it had sought extension of deadline for financial close as the government failed to complete its contractual obligation due to the Gorkha earthquake and border blockade - a force majeure case.
The Investment Board had on 8 January 2017 extended the time for financial close by one year. It granted second extension to the company on 13 November 2017 for one year. The Council of Ministers extended for the third time on 15 July 12022 for two years, amending the contract.
Other members of the constitutional bench include Justices Bishowambhar Prasad Shrestha, Ananda Mohan Bhattarai, Sapana Pradhan Malla, and Tanka Bahadur Moktan.
A version of this article appears in the print on July 8, 2023, of The Himalayan Times.
