Worries About Water Politics

John Child

A Maoist minister's move to block a much-needed drinking water project for Nepal's capital is more about politics as usual than power to the people. As Kathmandu residents queue under the tropical sun for water of dubious purity pumped from battered tank trucks, a much-delayed project to bring water to the city from the Melamchi River to the east appears about to collapse. Maoist Minister of Water Resources Hisila Yami has blocked a critical contract at the last minute, citing concerns about the foreign company which has been hired to manage distribution of the water.

Not even Minister Yami disputes the necessity of the project: Kathmandu is chronically short of water. In the 1980s it became clear that action was needed, and surveys selected Melamchi as the best source close to the city. In 1998 the Asian Development Bank threw its weight behind the project, and serious planning began. In 2001 the Nepal government announced that funding commitments from the finance ministry and international donors had been reached, and it initiated the massive project.

The plan calls for a 26-kilometer (16-mile) tunnel to deliver the water, with associated access roads, power lines and water treatment facilities. Importantly, the plan also requires a private agency to manage the water supply in the Kathmandu Valley in place of the inefficient and corruption-ridden Nepal Water Supply Corporation.

The plan called for completion of the Melamchi project in 2007. So far only part of the access road has been built. Delays caused by political bickering and frequent changes of government are partly to blame. The Maoist insurrection caused long work stoppages, and disputes with contractors led to several false starts. In the face of this, some donors withdrew and other money had to be found.

With contract and funding commitments due to expire early in 2007, the Nepal government last year created an independent water supply board, Kathmandu Valley Drinking Water Limited (KUKL), to hire a private water management company. KUKL received only one bid on its contract, from Severn Trent, one of the ten privatized English water suppliers, and it accepted Severn Trent's $8.5 million, six-year proposal. The company's fee is to be paid directly by the Asian Development Bank. With the original deadline already passed and an emergency extension of the ADB contract set to expire next month, Yami's refusal to approve the Severn Trent contract and the bank's threat to pull all its funding if the deal isn't completed immediately may kill the project.

Minister Yami points to Severn Trent's spotty record in England, where it has been convicted of overcharging customers and misleading regulators and where the government's serious fraud office is investigating the company. She also is reluctant to have a foreign company given the lucrative contract, and says she is confident that Nepali bidders would come forward if the contract were re-opened. Yami has also played up Severn Trent's announced plans to immediately double the effective water tariff for most Kathmandu Valley households.
No doubt those concerns are sincere. But the risk of having the long-planned and vitally important project collapse is so serious that she must have other motives too, ones that are vitally important to her. Cynics suggest that the prospect of renegotiating the contract and perhaps even the whole project, with attending lucrative commissions and kickbacks, is motive enough. Perhaps. But ordinary politics can explain Yami's action.

Consider the situation from the perspective of the long-time member of the Maoist politburo. The Maoist struggle continues in, as Prachanda said last week, "street, parliament, and government." There are big issues on the table: Maoist return of seized land, ethnic tensions in the south, reigning-in the Young Communist League, scheduling a date for elections, and a Maoist-led teacher's strike. Yami saw the Melamchi project as a big chip, and she has laid it down.
Whatever her other motivations, Minister Yami is playing power politics at the highest level with the Melamchi project. The move may already be bearing fruit: Shortly after she said that "other options" would become available even if the ADB and Severn Trent pulled out, Koirala approved funds to build 1,000 barracks-style buildings to replace tents in the Maoist cantonments. Revolutionary or not, Minister Yami clearly knows how to play the old game.

Source: News Blaze, May 25, 2007