Arun III, Nepal’s Reluctant Narmada

The Indian Government's decision not to use World Bank money to build the Sardar Sarovar (Narmada) Project was a victory for Indian environmentalists and human righters. The Bank heaved a sigh of relief, as questions on the environment, equity and resettlement of "oustees" had made the project an albatross that promised endless public embarrassment. Better to bail out from this one and continue with projects elsewhere in the Bank's, realm..It is business as usual for the Bank elsewhere in South Asia, though, particularly where there are no groups with the singlemindedness, media savvy and grassroots reach of the Narmada activists. Nepal's Arun III Project, for one, has no Medha Patkar. And Bradford Morse will not come out of retirement to do another evaluation (as he did for Narmada) on a project which all but a handful hope will slip through while no one is watching..The World Bank has pushed the Arun III under the fig leaf of its "Least Cost Generation Expansion Plan", which in 1987 passed judgement that this was the only project in Nepal that was ready for implementation. A "no option trap" was set, and despite Prime Minister Girija Prasad Koirala's allergy to the Bank when he took office, the Nepali Congress Government has walked straight into it. The communist opposition, which has maintained such a barrage over the Tanakpur case, has been strangely silent, possibly because the eastern hills of Nepal, which includes the Arun river basin, is a Left stronghold. A boondoggle is a boondoggle. A Left parliamentarian who questions the project confessed, "Our voter strength is in the east, so we cannot openly oppose Arun. Sadly, we do not have enough representatives from the West of Nepal.".Then there are the commission merchants as not-so-silent partners. A 10 percent kickback is accepted even by officials as the minimum for a project like Arun. Which means that the Baby Arun agents could make off with U$ 70 million, the sort of money that rarely makes an appearance in bulk in Nepal. This was what got Nepal into the no-option trap in the first place..The possibility of generating power in the upper Arun basin was first identified by the Japanese in 1985. The project's detailed design and even its tender documents were prepared by a consortium of Western consulting companies, the Joint Venture Arun III. Since the mid-1980s, Bank, Government and Royal Palace officials, as well as the commission-wallahs, stalled all progress on alternative projects. For this reason alone today there is heavy load shedding in Nepal, expected to stay in place well into the 2000s..The original plan was for a 268 megawatt project. When there were no takers, it was upgraded to 402 MW, costing. U$ 1.2 billion, with the idea that prospects of sale of power to India would make the project more attractive. But when everyone balked at the price, rather than look to other projects, the Bank pulled "Baby Arun" out of its bag. So now the project will generate only 201 MW, and the 'quoted figure' is down to U$ 764 million. To put things in perspective, Nepal's total annual revenue comes to about U$ 300 million..Where will the money come from? U$ 355 million and DM 235milli on have been committed, according to official information, by donors who include the Bank, the Asian Development Bank, the Kredittanstalt fuer Wiederaufbau, and the Overseas Economic Cooperation Fund. The Japanese would also like to construct the powerhouse and provide electrical equipment. The Finns have agreed to provide deisel-generators for the power required during construction..One reason the bureaucrats are so bent on Arun III is that, as one official claimed, "89 percent of the financing is through grants." This, however, is not proven, especially because high-profile donors include the OECD, the ADB and the World Bank, all of which provide loans, albeit some of them soft..The project will use helicopters to ferry construction material including cement and equipment. Hiley and Tumlingtar will be transformed into "air support" bases and helipads will also be constructed at the damsite, powerhouse and the permanent and temporary camps of contractors. The cost of the helicopter services is expected to be about U$ 50 million. (For comparison, the United Nations Transitional Authority in Cambodia (UNTAC) will reportedly spend U$ 47 million for an armada of helicopters, including heavy lift Russian MI-7s, for two years of continuous support.).The Nepali Government is committed to proceeding with Arun III and the National Planning Commission is staunchly behind the project. Neither Government officials nor NPC members found it worth their while to attend a public hearing on Arun III organised by some Kathmandu NGOs on 12 February. Ironically, when it was learnt subsequently that the Bank requires a public hearing for "Category A" projects such as the Arun, some officials were quick to claim that that requirement had already been fulfilled..Hundreds of thousands of dollars were spent on an environmental impact study of the road up to the project site, but this report is now waste paper. Because, to make Baby Arun cheaper and more palatable, the planners decided to take the low road, a route along the steep valley bottom. Meanwhile, no environmental impact study has been carried out for the project as a whole..The projected per-kilowatt cost of power generation for Arun III is U$ 3800, which experts say is more than twice the cost of power from projects of up to the 60 MW range (about $ 1,500 per kW). Arun's power would cost four times the cost per kW expected from the First Phase (1000 MW) of the controversial Tehri Dam in Garhwal, claims Rajendra Dahal, a journalist who has followed Arun III for more than four years..Load-shedding, which averages 10 hours every alternate day, is not likely to improve regardless of Arun III. Over time, this will blow the fuse of tolerance of the middle and lower-middle classes, and when that happens, Arun III will be of no help to the Government..Are Nepali officials and the Bank free to blunder into projects that will mire the country in economic quicksand, just because activism is weak in Nepal? The day when Nepali activists are able to organise villagers to challenge faraway bureaucratic decisions is still remote..Says Dahal, "The Bank and the bureaucracy love to keep the information close to their chest. We will ultimately bring out all the information on Arun III, and the alternatives that are being neglected.".Like journalists, Kathmandu's engineers and economists too have begun to speak out. A group calling itself the Alliance for Energy (see overleaf) has begun to ask questions about Arun III, and promises to be insistent..Bhattarai reports for The Independent of Kathmandu.