It was on 12 February 1996 that the the Nepalese Prime Minister Sher Bahadur Deuba and the then Indian Prime Minister P.V. Narsimha Rao signed an agreement on the integrated development of the Mahakali river in Delhi. The Pancheshwor Project under the Treaty was expected to produce 6,000 MW of hydro-power with the investment cost of US $ 4 billion during 8 years till 2002. There was also provision for irrigation of vast tract of agricultural land both in Nepal and India, apart from the benefit of flood control.

As per the Nepalese constitution, the Mahakali Treaty had to be endorsed by the parliament. Accordingly, when it was introduced, it was passed by over two thirds majority of the parliament members in 1996.

In Nepal’s history, the signing of the Mahakali Treaty in 1996 was perhaps the only occasion when Nepal had demonstrated rare boldness to move

forward towards economic nationalism. All the major political parties in Nepal

including the Nepali Congress, CPN-UML, Rastriya Prajatantra Party and Nepal Sadbhavana Party supported the Treaty as they all found it in Nepal’s best interest.

Moreover, the CPN-UML was fractured when certain factions within the party could not reconcile with the stand of the party in regard to Mahakali Treaty. But the important thing was that the party did not give up its stand to demonstrate its solidarity with other political parties in supporting the Treaty. It was not a small event that a national political party like CPN-UML remained firm on the issue of the Treaty at the cost of party division.

Even the media, intelligentsia, academicians, civil society groups and political activists from various political parties are on record to have supported the Mahakali deal. The opposition to the Treaty was only from a few both within and outside the parliament.

What was there in the Mahakali Treaty that united most of the Nepalese and political forces together? Under the Treaty

provision, the Pancheshwar Multipurpose Project was to be constructed on the stretch of Mahakali, the boundary river between Nepal and India as there was provision for equal entitlement in the utilization of the waters. As per the Treaty, Nepal and India agreed to “have equal entitlement in the utilization of the waters of the Mahakali River without prejudice to their respective existing consumptive uses of the waters of the Mahakali River.”

Besides, the Treaty was based on the principle that the cost of the project would be borne by the respective countries on the basis of benefits in the form of irrigation and flood control. Section 3 of Article 3 of the Treaty clearly stipulated that the “cost of the Project shall be borne by the Parties in proportion to the benefits accruing to them.”

Because of the above provisions, Nepal made a claim for 8,000 cusecs of water in the Mahakali river out of the total excess water of 16,000 cusecs. Of the 8,000 cusecs of water in Nepal’s share, the maximum that country could use was 4,000 cusecs to irrigate the entire 930,000 hectares of land of Kailali and Kanchanpur districts. In such a case, Nepal made a provision to allow India to use the extra 4,000 cusecs of water with the condition that it would have to seek fewer loans and India would have to invest more amounts in the project, which many believe was in Nepal’s national interest.

With a view to implementing the Project, the two countries agreed to jointly prepare the Detailed Project Report (DPR) within six months. But nothing tangible developed during the last 13 years until Nepal and India signed a pact recently to set up Pancheshwor Development Authority (PDA). It is this body that is expected to commission the Pancheshwor Multipurpose Project, which is the most important factor in the Treaty.

Ostensibly, the above breakthrough was made in regard to the Mahakali Treaty due to more accommodative provisions of Nepali concerns as compared to any of the past such agreements with India. India has agreed to establish PDA office in Nepal’s Mahendranagar and not in any other place

in India. Besides, the Chief Executive Officer for the PDA would be selected through open competition from among Nepali and Indian candidates. There would also be equal number of staff in PDA from both these countries.

Though late, it is at the most opportune time that Nepal and India have realized that they need to do something tangible towards harnessing water resources from Mahakali river for the integrated development of hydropower, irrigation and flood control. It is likely that the project would help produce six times more power for Nepal alone than what the country is producing today. With the access of so much of power, Nepal’s agricultural, industrial, service and other sectors are likely to get life-blood. We would no more be a country begging for power. We would rather be one that could bargain even with strength if at all we decide in future to sell the extra power.

Dr. Jha is Professor of Economics & Executive Director, CETS