Unfair deal

The promise of 10 percent free energy to Nepal from the 750-megawatt West Seti hydroelectric project, awarded to Australia's Snowy Mountain Engineering Corp (SMEC) a decade ago, has turned out to be a hoax. Clauses in the agreement between the government and SMEC, which was kept a secret from the public, deprive the country of any free energy, and even give rise to a distinct possibility of no benefit to Nepal at all. The government put West Seti project on fast track stating the project would provide 75 megawatts of free energy to Nepal. That was the original arrangement with SMEC, and that was what the government as well as the project's developer had been saying in public. However, a renegotiated deal does not require SMEC to give Nepal any free power. Instead, SMEC is required to pay the country in cash, that too only in the event it has money after paying back its debt participants, and bearing its operational cost. This is sheer treason.

SMEC took a decade to bring the storage-type project to the construction stage since signing a project agreement in 1997 to develop and operate the project for thirty years. In other words, SMEC got hold of the project without having the ability to fund it. A decade down the line, SMEC has convinced four countries and two international banks in areas of investment, construction, insurance, and transmission. It has also made an arrangement to sell all power generated from the project to India through PTC India Ltd. If Nepal is getting no free energy, and if the cash benefit is also uncertain, why is the government hell-bent on re-awarding the project to SMEC, despite the length of time it has spent without laying even the foundation stone for the project. Signing an agreement that will put at risk any benefit Nepal might get from a project is totally unacceptable. Therefore, the agreement the government has with SMEC is totally unfair.

The government, therefore, should initiate an impartial investigation to figure out officials involved in signing and renewing such suicidal agreement with SMEC. When it comes to deals on big infrastructure projects, Nepali officials have always failed in the negotiating table. This has to be ended once and for all. The least that the country demands is that our negotiators uphold national interest. A mistake that will leave Nepal regretting for thirty years is the last thing we need now. There is no question of re-awarding the project to the developer if Nepal's rightful benefit from the project is not ensured. The best way to ensure that benefit is through an arrangement for free power, and not through the tricky course of cash benefit.

Source: The Kathmandu Post, June 5, 2007