India has agreed in principle to invest more for the development of the Pancheshwar Multipurpose Project, a move that could pave the way for the development of the mega bilateral undertaking, according to a senior official at the Ministry of Energy, Water Resources and Irrigation.

With the southern neighbour benefiting more from the project’s development, particularly in the area of irrigation and flood control, India agreed to pump more money for its development during the fourth meeting of the team of experts held in New Delhi on Friday and Saturday.

“India has agreed to invest more but we are yet to reach a concrete agreement on additional benefits the southern neighbour will get and extra investment it will have to make,” said Madhu Bhetuwal, joint-secretary at the energy ministry, who is also a member of the Nepali delegation. “But there will be equal sharing of electricity.”

The understanding reached on the matter will have to be included in the Detailed Project Report (DPR) of the 6,480MW plant to be built on the bordering river of Mahakali. A DPR draft was prepared and submitted to both sides in 2016 by India’s state-owned Water and Power Consultancy Services (WAPCOS) Ltd.

Bhetuwal said that the experts’ meeting also instructed WAPCOS Ltd to revise the DPR in line with the understanding reached in the fourth and earlier meetings and submit it within 15 days.

“After the understanding is included in the DPR, we will try to reach a final deal on the exact benefits each side will get and investment to be made by each side based on their benefits,” he said. “We also reached an understanding to hold the next meeting right after the WAPCOS submits the revised DPR.”

Nepali officials say that even though two countries would equally benefit from the hydropower, New Delhi would benefit much more in terms of flood control after the building of the dam to ensure regulated flow of water downstream in India, and the southern neighbour would get more irrigation facilities.

Nepal had thus been requesting the Indian side to invest more to develop the project, which is the vital part of the Mahakali Treaty signed in February 1996.

Nepal’s request is also in line with the controversial treaty. As per the treaty, both sides agreed in principle that the project cost would be borne on the proportion of benefits for each side.

Both sides agreed to design the project so as to ensure maximum total net benefit. All benefits accruing to both the parties with the development of the project in the forms of power, irrigation, and flood control shall be assessed, article 3 of the treaty says. “The cost of the project shall be borne by the parties in proportion to the benefits accruing to them. Both the parties shall jointly endeavour to mobilise the finance required for the implementation of the project.”

Nepali officials clarified that Indian compensation for more benefit is not related to existing higher use of water from the Mahakali river. Article 3 of the Mahakali Treaty clearly states that two countries have equal entitlement to the utilisation of the waters of the Mahakali river without prejudice to their respective existing uses of the waters of the Mahakali.

At present, Nepal utilises 12 Cumecs (cubic metre per second) of water from Sarada Barrage through Eastern Mahakali canal in Nepal. India withdraws an annual average of 248 Cumecs of water through Western Sarada canal, according to a report of the Jalsrot Vikas Sanstha, a non-government organisation in Nepal.

“There will be equal sharing of water, leaving aside the existing use of water by the two countries as per the treaty,” said Energy Secretary Dinesh Ghimire. “Now, we are talking about benefits to both countries after the development of Pancheshwar which is also skewed towards India. More regulated water flow will mean less flooding and more irrigation facilities for large swathes of land,” he said.

The understanding reached in the meeting of the team of experts on determining the benefits and compensations to be made by the beneficiary party, is a step towards the development of the project which has been in limbo for nearly three decades since the signing of the Mahakali Treaty.

The meeting of the team of experts was held after its deadline was extended for six months by the meeting of the governing body (board of directors) of the Pancheshwar Development Authority in the first week of July.

The meetings of two mechanisms were held after the two countries agreed to finalise the DPR of the Pancheshwar within three months during the visit of Prime Minister Pushpa Kamal Dahal to India from May 31 to June 3.

“The Pancheshwar Development Authority shall submit the finalised DPR to both governments and the two governments and their relevant entities shall take the lead in arranging finance for the project,” the Nepali Embassy in New Delhi stated after the bilateral meeting. “The modalities of implementation shall be concluded within one year after approval of the DPR by the two governments.”

But concluding the DPR turned out to be a Herculean task for both the sides as there were many disagreements. One of the key disagreements was over determining the formula of how much benefit each country would receive from the project and how the country taking more benefit would compensate for those benefits.

Through the earlier negotiations, the two sides, however, brought down the number of differences drastically after the WAPCOS submitted the DPR draft.

“There were more than 500 unresolved issues, which came down to 127 in the past negotiations,” said Bhetuwal, the joint-secretary. “These are mostly related to determining the benefits for each side and costs involved while there are some design and safety related differences too and we have tried to reach an understanding on resolving those differences this time.”

With both countries failing to make concrete efforts, years have been spent to reach an understanding on the DPR. The fourth meeting of the experts’ team took place four years after the third meeting held in Kathmandu in February 2019.

Earlier, the meeting of the governing body (Board of Directors) of Pancheshwar Development Authority had decided to send permanent members to the executive committee of the Authority, changing the tradition of only sending officials on additional duties.

“Permanent representation in the executive committee will help expedite preparatory works for the project,” Bhetuwal told the Post earlier. Currently, the authority’s chief executive is from Nepal while the additional chief executive is from India. There are eight executive committee members—four from each country.

The Pancheshwar project was conceived under the Mahakali Treaty between Nepal and India in 1996. Apart from generating electricity, the project will irrigate 130,000 hectares of land in Nepal and 240,000 hectares in India.