Colonization of Nepal’s hydropower

The signing of the “long-term power trade agreement” between Nepal and India in January 2024 was hailed by Nepal's most politicos, bureaucrats, and intellectuals, claiming that Nepal would earn a huge amount of foreign currency -- "hydrodollar" -- and become prosperous by reducing the trade and payment deficit. Some described it as another anti-national activity.

Hence, it is necessary to examine whether Nepal's treasury will actually receive foreign currency by exporting hydropower. It should also be examined whether Nepal’s economy would prosper if hydropower were used domestically. Basically, there are two schools of thought: export to earn hydro-dollars and use domestically to add value to the economy. Value addition takes place as a result of industrialization due to increased production, which can be used for import substitution or export, which in turn reduces trade and payment deficits while generating employment. A comparison is being made in the following lines between the benefits of exporting hydropower and using it domestically.

During the Panchayat era, while planning to implement 402 MW Arun 3, there was debate as to whether to use hydropower generated by it to produce artificial fertilizer in Nepal or to export. Later, when the then-Indian Ambassador, Arvind Ramchandra Dev, was approached by Nepali leaders to export electricity from Arun 3, he instead suggested establishing energyintensive industries in Nepal; which the Nepali side didn’t wish for. Export by NEA

As Clause 5 of the agreement specifies that 10,000 MW will be exported in 10 years, it is necessary to examine if the Nepal Electricity Authority (NEA) can meet the target. NEA had signed an agreement with India to export up to 655 MW last year: up to 321 MW from hydropower plants owned by NEA and up to 344 MW owned by IPPs. And, till last fiscal year, there was 2,538 MW hydropower generation capacity under NEA, including IPPs. If this proportion is to prevail, for NEA to export 10,000 MW it should have 40,000 MW under it including IPPs. In the next 10 years, 37,500 MW should be added by NEA and IPPs. This doesn't seem possible because, after the establishment of the 500 kW Pharping hydropower plant in 1911, hydropower generation capacity under NEA reached 2,538 MW in 112 years. It is beyond imagination to add 37,500 megawatts under NEA in the next 10 years. Export-oriented projects: Besides, India would not wish to import just the spill/surplus hydropower (that otherwise would