Dams and dreams a journey down the Karnali

Dam site of Upper Karnali hydropower (900 MW) in Daab in Dailekh district. Indian company GMR is in final stage to start construction of the project. Photo: NABIN BARAL

Dal Bahadur Shahi lives in Tuinkuna, in Dailekh district of western Nepal. This is the proposed site for Nepal’s largest hydropower project, the 900 megawatt (MW) Upper Karnali. He was in his 50s when he first heard that electricity would be produced from the river he used to cross it several times a day. 

“My arms could conquer the strongest waves of the river back then, but now I don’t dare to go near it,” he said. “Even if the project is built, I won’t be able to see it. But I hope that our sacrifice of leaving this place for the sake of the nation will not be forgotten.” 

Read also: 

Part 1: Faith to reality

Part 3: Climate denial in the Himalaya

Part 4: Dancing with the river 

Part 5: A Karnali portrait 

Dal Bahadur Shahi in Twinkuna in Dailekh district in the bank of Karnali river where the biggest hydropower is about to kick off. Shahi's family will be displaced once the dam construction starts. Photo: NABIN BARAL

In the late 1990s, when the first project survey began, an engineer advised Dal Bahadur to buy more land so that he would receive compensation when the dam was built. But Shahi did not heed the advice, he did not have enough money anyway. There have been numerous surveys after that, but the locals were unaware of the wider water and electricity politics at play. 

In 2008 an Indian company, GMR got the deal to carry out a detailed study, but a decade later the project is yet to take off. The company signed the project development agreement four years ago but has not yet managed to attract investors. 

“I don’t think this company has money. It looks like it will sell the license at higher price to another company and it will be delayed,” says another resident, Lokendra Rawat, who left his village in 2008 when the company set up a project office. 

“I came here to operate a hotel as the construction work would bring a lot of people. But it looks like I will be too old when it will be implemented,” he smiled. 


Recently the company said it had provided compensation for the 250 families whose land will be submerged, but only a few people have received it. Dal Bahadur’s two sons were lucky to get compensation a few months ago. The company has now halted the compensation process and no one knows when it will resume. There is talk that the company is only paying compensation to influential and politically powerful people. 

The Upper Karnali has always been a high profile political project. The Prime Minister of India, Narendra Modi, and Nepal’s then Prime Minister Sushil Koirala signed a deal for the project during Modi’s visit to Nepal in 2014. 

But investors have not been convinced and it is unclear who will buy the electricity. The project is designed to generate power for export to India, but there is no power purchase agreement. 

Frustrated by the lack of progress in India, last year the company signed a memorandum of understanding with Bangladesh, which could buy the electricity. Later in August this year Nepal signed a cooperation agreement with Bangladesh aimed at facilitating power trade. 

Read also: 

Reservoirs of suspicion, Om Astha Rai

Storing water, Bishal Thapa

In Rabalde, power house site of Upper Karnali hydro project is seen through fish net hung in Roshan Buda'a home in Accham. Zinc sheet roofed buildings in the field is the office of GMR company which is building the project. Photo: NABIN BARAL

Nepal needs permission from India to take electricity across India to Bangladesh so all three countries need to agree on a deal. But experts say it’s not easy given the complex geopolitics of the region. Even so, India recently indicated that it’s open to trilateral trade by amending its earlier cross border trade regulation.

Some speculate that this move to ease the trade of electricity was only to help the Indian company GMR to secure financing for Upper Karnali. Nevertheless the amendment is also good news for Chinese and other companies who have been eyeing bigger projects in Nepal. 

The project on the Karnali Bend was first envisaged as a 240 MW project in the 1990s, but has grown in scale over the decades. GMR agreed to build a 900MW plant in 2008, but some technocrats and activists have blamed Nepal’s government for selling the project short. 

The feasibility study identified the possibility of developing a 4,180 MW project a little further upriver from where the current 900 MW project is planned. Whether this is really possible or not, given the fragile geology of the region, is another matter.

“Why was the best and cheapest project to build handed over to a foreign company who will export the energy, while we have a shortage of power? It should be developed for us,” said Ratan Bhandari, a water rights activist from the region.

A kayaker paddles in the Karnali River in Accham district of Nepal. Photo: NABIN BARAL

The current project will still be the biggest hydropower project in Nepal worth $1.5 billion. The Upper Karnali has rare hydropower potential, where water can be pushed through a 2.5 km tunnel over a drop of 130 metres, creating a huge generating capacity. This project is often called ‘jewel in the crown’ of Nepal’s hydropower. 

“Our jewel has been sold at the rate of coal,” says Ratna Sansar Shrestha, a hydro-economist. 

Nepal’s move towards big dams has come at a time when scientists warn that more extreme weather events like floods and landslides will increase in the already fragile mountains in the region. 

“The changing probabilities and magnitudes of extreme events can place additional risk on power generation infrastructure (dams and hydropower plants) as well as secondary infrastructure (roads and transmission lines). Further, hazards associated with shrinking glaciers, such as glacial lake outburst floods, can jeopardise large infrastructure investment,” says a report by International Centre for Integrated Mountain Development. A study in 2014 also revealed that Nepal’s glaciers have shrunk by 24% and its ice reserves by 29% over the past three decades. 

Mount Kailash in Tibet. Four large rivers of Asia originate from four sides of Mount Kailash-- the Brahmaputra (called Yarlung-Tsangpo) from the east, the Karnali from the south, the Sutlej from the west and the Indus from the north. Photo: NABIN BARAL

However, developers say that current knowledge about impacts of climate change in hydropower is inadequate and does not help better planning. While reports say that the hydropower projects will be impacted, they lack the details as to what degree, and what precisely to take into consideration, says Kumar Pandey of the Independent Power Producers Association Nepal (IPPAN). 

“Investors need accurate information with evidence at micro scale so that they can use it while developing the project so there is need of specific knowledge about the impacts,” adds Pandey.  

There are other dangers. Seismologists like Roger Bilham of the University of Coloradio say that a mega earthquake is long overdue in western Nepal. “There are two dangers lurking beneath the Himalaya: one is the unfinished business of 2015, and the other is a looming megaquake in western Nepal,” he told Nepali Times

If built, the project will be the first hydropower plant on the Karnali, the country’s longest river which originates near Mount Kailash in Tibet and becomes Ghaghara in India before it meets the Ganga at the border of Uttar Pradesh and Bihar.  

Megh Ale, team leader of the Karnali expedition, believes the main stream of the Karnali should be left free-flowing, “We can bring millions of tourists here while other tributaries could be used for electricity,” he says (see below). 

Read also: The rivers are fighting back, Megh Ale


Besides tourism, hydropower development would also endanger aquatic species. “Aquatic life has been threatened by hydropower across the country and if it continues many species will go extinct,” says Deep Narayan Shah, a researcher from Nepal’s Tribhuvan University’s Central Department of Environmental Science. 

Nepal’s hydropower policy has a mandatory provision for developers to maintain 10% flow of water downstream around the year, but this has not been implemented and monitored. 

Chief minister of Karnali Province Mahendra Bahadur Shahi says there has to be greater understanding about river ecosystems and suffering of people, who are critically dependent on the river and its resources, like fish. 

“We may revisit the agreement done with GMR and I have told them that it won’t go ahead as agreed,” he says as he joined the expedition on the banks of Karnali recently. 

However a few weeks later Shahi told journalists that he was willing to waive taxes for the developers, adding that without large hydroelectric projects, Karnali Province would remain poor.  

It is common practice for companies to hold licences for years and then sell them to another company. Late last year, GMR (the same company that holds the licence for Upper Karnali) pulled out of the 600MW Upper Marsyangdi project after holding the licence for years.  A consortium of Nepali and Chinese investors bought shares from GMR just as work was due to start. The parliamentary committee of Nepal has formed a probe committee to investigate further.

China is becoming a new but important player in Nepal’s energy politics, dominated by India for decades. There are two big projects in pipeline, the $2.5 billion Budi Gandaki and the $1.8 billion West Seti – both reservoir projects, and both controversial. 

Earlier last year, the Nepal government announced that the 750 MW West Seti project, on one of the tributaries of the Karnali in western Nepal, would be built by Nepali firms while the license of the project had already been given to China's Three Gorges Company (CTGC). Negotiations then failed, resulting in the Chinese withdrawing from the project.

The 1,200MW Budhi Gandaki in central Nepal has also had a series of setbacks as the Nepal government awarded the project to China’s Ghezhuoba firm, only to scrap it a year later, and then re-awarding the contract to the same company.

This has increased doubts among locals that Karnali will ever be built. “The most productive time of my life has gone waiting for this project to kick off,” says Bal Bahadur Shahi at Ramaghat, 3km downstream from the project site. 

Frustration is growing and locals are in a mood to fight back. Says Shahi: “We will wait at least for one more year. If the project is still not implemented, we will ask the government to take it over.” 

The story is jointly published by Nepali Times and The Third Pole. Subsequent installments of this five-part series will appear from 8-11 January.