How accurate are Dr Lohani’s statements on Upper Karnali project?

Sujit Mainali / March 8, 2016

                                                                                                                                                                     Photo: Youtube grab

Rastriya Prajatantra Party’s leader and former foreign minister Dr Prakash Chandra Lohani, during an interview aired on Himalaya Television before the start of the state visit to India by Prime Minister K P Oli, made the following claims:

1. According to the agreement [project development agreement] on the Upper Karnali Hydropower Project, in the event of an earthquake, Nepal government will have to pay for the losses caused to the project.
2. We were under a blockade until a few days ago. If the project had been in operation then Nepal government would have to pay compensation as demanded by the project’s developer, according to the agreement [PDA].
3. Ninety percent of the electricity generated by the project will go to India.
4. As per the rules, the prime minister’s delegation should not contain more than 22 members.

Click here to listen to the interview:

South Asia Check has attempted to examine whether the claims are fact-based or not.

First Claim: According to the agreement [project development agreement] on the Upper Karnali Hydropower Project, in the event of an earthquake, Nepal government will have to pay for the losses caused to the project.

Ministry of Water Resources on behalf of Nepal government had signed a memorandum of understanding [MOU] with Indian infrastructure major GMR and its consortium companies GMR Energy Ltd, GMR Infrastructure (GIL) and Italian-Thai Development Project Company in January 2007 concerning the execution of Upper Karnali Hydropower Project. The MoU has stated that “neither party shall be liable for any default in performing activities…beyond its control….”

When South Asia Check asked Lohani what made him make such a claim, which is contrary to the MoU, he said: “My statement is based on the provisions included in the draft of the Project Development Agreement [PDA] of the Upper Karnali Hydropower Project that I had seen. Several provisions of the MOU have been reversed by the PDA.”

South Asia Check when tried to gain access to the finalized PDA, it was found that the signatories to the PDA have not made it public.

Kathmandu-based Jalshrot Vikas Sanstha (JVS) had issued a 13-page document titled “Suggestions and Comments of Experts” on some of the provisions of the Upper Karnali PDA in September 2014. The document states that the provision in the MoU regarding the liability of the losses in the event of force majeure has been shifted to the government of Nepal.

South Asia Check cannot say if the JVS document is fact-based.

Since, the PDA is not available in public domain, we cannot say whether Dr Lohani’s claim is fact-based or not.

Second claim: We were under a blockade until a few days ago. If the project had been in operation then Nepal government would have to pay compensation as demanded by the project’s developer, according to the agreement [PDA].

There are two facts needing examination in this statement.

First, if the project had been in operation during the blockade, would Nepal government be liable to pay compensation for the loss?

Second, would Nepal government have to pay compensation as demanded by the project’s developer?

Dr Lohani confirmed that these claims are also based on the draft PDA.

About First Claim: Investment Board Nepal had acted as a mediator to finalize the PDA. Its Chief Executive Officer (CEO) Radhesh Pant had made the following comments in one of his TV interview on the issue:

“The risk that the government of Nepal has taken is that in case of a political strike lasting for three weeks continuously then Nepal government will have to bear responsibility for the losses caused. It is justifiable for the government to take responsibility for the losses if the strike continues for three weeks …. [The April 2006] People’s Uprising lasted for 21 days. I don’t think such a situation will occur again. But if occurred, government should act accordingly.”

Based on this statement of CEO Pant, this claim of Dr Lohani is correct.

About Second Claim: According to the JVS document, the PDA has mentioned that Nepal government has to pay the following costs in the event of force majeure:

Since, the PDA is not available in public domain, we cannot say whether Dr Lohani’s claim is fact-based or not.

Third Claim: Ninety percent of the electricity generated by the project will go to India.

The MOU and the official website of the GMR have stated that 12 percent of electricity of the project’s installed capacity will be provided to Nepal free of cost.

Similarly, according to the JVS’ “Suggestions and Comments of Experts”, the PDA has mentioned that “only after the Power Trade Agreement for 90 percent of the electricity is finalized, the company will issue notice to the Nepal government and the latter can purchase the remaining 10 percent of the electricity.”

There is no doubt that more than two thirds of the generated electricity from the project will go abroad. But it is not true that ninety percent of the electricity generated by the project will go to India, as claimed by Dr Lohani.

Therefore, this statement is not fact-based.

Fourth claim: As per the rules, the prime minister’s delegation should not contain more than 22 members.   

When asked about the base of this claim, Dr Lohani said, “I had heard that a state visit delegation should not contain more than 22 members.”

South Asia Check contacted the Ministry of Foreign Affairs to inquire about it. The ministry’s deputy spokesman Sudhir Bhattarai said, “There is no rule on the size of the delegation. The cabinet decides about it and the Ministry of Foreign Affairs implements the decision.”

Therefore, former Foreign Minister Dr Lohani’s claim about the size of the state delegation is not true.

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