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WATER POLITICS

Via Future Directions International, a look at China and India’s competing interest in Nepal’s water resources:

The recently elected Nepalese Prime Minister, Khadga Prasad Sharma Oli, made his first foreign trip, a visit to India, in early April. As he is generally seen as being “pro-China”, the visit would have soothed Indian fears that Nepal is drifting closer to China. A joint statement suggests that the two countries will focus on developing river and rail transport links and closer agricultural co-operation. While time will tell whether those statements translate into changes on the ground, it is likely that water will continue to play a large role in the China-India-Nepal relationship.

Comment

Nepal has significant renewable water resources at 7,372 cubic metres per capita annually, more than enough to avoid water stress. Due to the large drops in elevation along the course of its rivers, it also has enormous hydropower potential. By some measures, it could generate up to 42,000 megawatts of electricity if it dammed some of those rivers, but Nepal lacks the financial and technical resources to develop those hydropower facilities. It therefore depends on foreign investment and technical advisors for their development. Historically, India has provided most of that assistance, but, in recent years, there has been a growing perception in Nepal that India is using Nepalese water resources for its own agricultural and energy requirements, with little benefit to Nepal. China has been able to utilise that perception to increase its own presence in Nepal and develop its own hydropower projects. Mr Modi has reportedly informed his Nepalese counterpart that India will not purchase electricity from Chinese-built dams in Nepal.

India is not only interested in Nepalese hydropower, however. On his first visit to Nepal in 2014, Indian Prime Minister Narendra Modi discussed the feasibility of linking the Sharda River, which demarcates the western Nepalese border, to the Yamuna River near Delhi. If the project were built, water from the Sharda would flow through the Indian states of Uttrakhand and Uttar Pradesh, to join the Yamuna. The Yamuna River replenishes the Ganges when the two rivers meet at Allahabad. The Yamuna carries considerable pollution from Delhi, but is recharged by the purer water of the Chambal River prior to flowing into the Ganges. The Sharda-Yamuna link would help to ensure an uninterrupted flow of water to Delhi. All of the states affected by the inter-linking project need to agree before work can begin. Uttrakhand and Uttar Pradesh have given their consent to the project, but Nepal has not yet agreed.

Another link would direct water from the Sharda to the Sabarmati River via the Indian states of Haryana, Rajasthan and Gujarat. India will benefit from the link as it will provide additional water to arid regions; while Nepal will obtain cheaper electricity from the hydropower projects that will be developed along the course of the link. That might not be enough to allay the Nepalese view that its water is being inequitably shared with India and could increase popular support for Chinese development projects. It is more likely, however, that the Nepalese Government will continue to play the two powers off against each other for its own gain.

China often extends loans to countries that require developmental assistance. These loans often burden those countries with a debt that they are unable to service, however, leaving them little option but to cede control of the asset to Beijing. In November 2017, Kathmandu cancelled a Chinese loan for the construction of the Budhi Gandaki hydropower project and opted to fund the US$2.5 billion ($3.22 billion) project on its own.

Nepalese co-operation is vital if the Sharda-Yamuna water links are to be built. Those two projects will bring additional water to the dry states of north-west India and bolster the water supply in Delhi. The danger is that Beijing could undermine those projects by increasing its own development assistance to Nepal. It is likely that Kathmandu will play the two competing powers against each other to the benefit of its own economic development, but, if it chooses that path, it will need to be careful not to drown in a potential Chinese debt-trap.