The May/June 1991 issue of Himal on 'Troubled Waters' carried a detailed review of Nepal's struggle with its hydropower resource. During the past year, democracy has brought about a sea change in Nepal's water resources sector and a painful period of adjustment for all involved. What follows is an update.
ARUN III REVIEW
"Vanity projects" such as the Arun III have come under scrutiny at last. In September 1991, the then Minister for Water Resources Basudev Risal appointed a task force to look into the selection criteria for large hydro-electric projects. The team took the World Bank-funded and Electricite´ de France-conducted Least Cost Generation Expansion Plan (which justified Arun III as the best option for Nepal) and ran the computer programme without some of the more outrageous assumptions made in the LCGEP. The task force found out that Arun III actually stood eighth, far behind alternatives such as West Seti, Sapta Gandaki, Upper Karnali and Kali Gandaki, It also advised against including the Arun III tunnel, powerhouse, and the 200 km access road into one tender package, as this would limit the bidding to a handful of large contractors.
An intrinsic part of the Arun III plan had been to force Nepal into a "no option" trap and install oil-fed thermal plants to produce about 200 MW of electricity — primarily, it is said, because there is a large unsold inventory of thermal generators in the West. The Government of Nepal has now rejected that suggestion. With 40 per cent of the country´s foreign exchange earnings already being spent on the import of petroleum products, and the fuel blockade imposed by India in 1989 still fresh in memory, taking such an option would have been political suicide.