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Go-slow on Enron hydel power project provokes political storm in Nepal

The US energy and gas giant Enron's attempt to close a giant hydroelectric project deal in Nepal has snowballed into a political storm that could unseat the fragile four-month-old centrist government in the Himalayan kingdom.

There was an uproar in Parliament and the media all week because Shailaja Acharya, the country's first woman deputy prime minister, decided to go slow on Enron's renewed bid to develop the 10,800 mega-watt Karnali-Chisapani hydroelectric project.

Acharya, who is also the water resources minister, instructed her ministry last month to write a letter to Enron telling the US-based transnational to be ''patient'' on Karnali until Nepal and neighbouring India finalise another huge hydroelectric project -- the 6480 mega-watt Pancheshwar project on the border river Mahakali.

The decision has ignited a dormant debate over large water and power projects in Nepal. Not since the demise of the controversial World Bank-funded Arun-III hydroelectric scheme three years ago has so much been said and written in Nepal on water projects.

Her critics say Acharya's decision is ''audacious'' for an impoverished country like Nepal. ''What sort of message is she sending to foreign investors who are willing to invest in Nepal's water resources?'' asked former prime minister Manmohan Adhikari, present leader of the Opposition.

''Irrespective of whether Pancheshwar materialises or not, we must press ahead with Karnali because investors are willing to invest large sums of money on this project. Why turn them away?'' said another ex-minister who did not want to be identified.

Acharya's party colleague and a former prime minister, Sher Bahadur Deuba, went as far as accusing her of ''murdering'' the Karnali project on a whim.

Enron's supporters believe Nepal needs big projects to lift itself out of poverty. Big dams on the country's Himalayan rivers will generate electricity, which can be sold to neighbouring India and China. Nepal's rivers have an estimated potential of 83,000 MW of electricity, only a fraction of which -- 280 MW -- has been tapped so far.

Critics of large dam projects who say small is beautiful, are supporting the water resources minister. Dipak Gyawali, an authority on water who campaigned successfully against the Arun- III project believes, ''Large projects mean large risks.''

He says he is appalled that politicians across the spectrum, from Communists to royalists, rightists and centrists have banded together against the water resources minister and in support of big projects funded by transnationals.

There have been protests all week on the streets, inside Parliament, and newspapers have castigated Acharya for snubbing Enron. The government has been urged to retract the decision.

Only three months ago, Enron had withdrawn its request for a survey license for the Karnali-Chisapani project citing unfavourable trends in the region's power market. The US-based giant had originally proposed investing between $ 6 billion and $ 9 billion to build the Karnali project and export power to markets in India and China.

Immediately after the centrist minority government took over in April, Prime Minister Girija Prasad Koirala said he would request Enron to re-think its withdrawal and talks re-started in mid-July when Enron officials came to Kathmandu on the government's request.

Within days of their leaving the country, the water resources ministry, in a letter sent on July 24, asked Enron to wait till discussions on the Pancheshwar project were finalised with India. Those talks are stalled over water rights issues, and Acharya says the issues are similar in the Karnali-Chisapani project.

Replying to her critics in Parliament on Friday, Acharya also did the unthinkable for a government minister -- she openly questioned the controversial Mahakali treaty with India, hammered out and ratified in Parliament with support from her own party.

Quoting critics of the treaty, the deputy prime minister said, ''The treaty is as good as dead ... We have reached a state of deadlock on a project of such importance. We must patiently ponder over the possible reasons behind the failure to realise the objectives of the (Pancheshwar) project.''

''It was in this backdrop that we sent a letter to Enron requesting them to have patience till we make substantial progress on the Pancheshwar project with India. We have not rejected them altogether,'' she explained.

Even some of her critics admit, Acharya has a point. But because of the politicisation of water resources, they say they find it difficult to agree with her in public.

''You have to admire her for calling a spade a spade,'' said one such critic, a former minister. ''Many of the points she raised should have been addressed while negotiating the Mahakali treaty. But we cannot hold Karnali hostage to Mahakali.''

There is a problem in this argument, counters water expert Gyawali. It only makes it easier for transnational giants like Enron ''to make easy pickings in Nepal,'' he says.

UNI