National interest vs community needs

Balancing the public good with the interest of local communities has always been the source of dispute over development infrastructure. As Nepal tries to catch up with energy and connectivity projects, it has not always got the balance right.

With a new post-uprising government and fresh elections, there is hope that equity, sustainability and accountability will be prioritised in future hydropower, highway, and natural resource extraction plans.

In 1999, Nobel laureate and economist Amartya Sen argued in his book Development as Freedom that development is not just about chasing GNP growth, but expanding the choices people have to ensure their social, political and economic rights. 

Twenty-six years later, the same question can be posed about Nepal’s development projects. Where does the national interest and public good intersect? What price are Nepalis paying for development? The best place to ask these questions is at frontlines of such projects.

For example, families in the villages of Tiru and Gogane of Rasuwa district were displaced by the earthquake, but now face a different kind of aftershock — damage to their new homes from the relentless drilling and blasting for the 9.5km headrace tunnel of the 216MW Upper Trishuli-1 (UT-1) project.

Financed by the Korean firm Doosan and built by a Chinese contractor, UT-1 tunnel drilling has disturbed the slopes along the Bhote Kosi river. Since the young men have migrated for work, it is mostly the elderly who live in the damaged homes.

“Ten years ago it was the earthquake that drove us away from our homes, now it is the dynamite,” says Tarshya Tamang, 70, who has a widening crack that runs through the rooms in her house. “This is as scary as the earthquake.” Many other mud, cement, old and new houses in the settlement have developed cracks. 

Norsingh Tamang from Mailung was jailed for 35 days together with his entire family on charges of public offence after locking the tunnel gate in protest over the project’s resettlement program.

His 17-year-old daughter relates what happened: “I was returning from hospital when I saw police had taken my father and brother. When I went to see him, they detained me too and I spent four days in custody.”

Rasuwa’s Assistant chief district officer Dhruv Adhikari confirmed public offence charges but denied knowledge of minors being detained. The Nepal Water and Energy Development Company which runs the UT-1 project, said it has commissioned an independent third-party assessment to determine whether the cracks are linked to the tunnel drilling.

This is a hydropower tunnel but near Kathmandu, the Japanese-supported Nagdhunga tunnel construction has also put a community at risk. This is Nepal’s first highway tunnel and the nearly 3km shortcut on the Prithvi Highway will slash journey time on the existing crowded road by at least 30 minutes.

Tika Khatri’s house lies 100 metres from the eastern entrance of the tunnel and has developed cracks and the ground floor has subsided. Then during last September’s floods, a 10m deep sinkhole suddenly opened in the middle of the village. 

The Rs15.2 billion Nagdhunga Tunnel Construction Project is being built under a concessional loan from JICA, and it dispatched a geologist to Khatri’s neighbourhood. They declared the site ‘dangerous’ and 11 households were relocated to rented rooms, but the project stopped paying rent nine month ago, 

Despite the risk, Gayatri Khatri returned to her house after two months of unpaid rent. “I will live in this house no matter what,” she said. “If I die, this government will be responsible.”

The Project said funds had been withheld after allegations that rent money was being misused. Eighteen households were compensated, but five refused because it was too little money. 

The project gave out half the money for dismantling their houses, and the rest was to be provided after reconstruction began, but some locals are unconvinced.

“How can we rebuild the house with so little money?" asks Anjan Khatri. “The project wants to make us homeless.” 

For farmers, losses go beyond housing. Poultry and cattle farms have been affected because nearby springs have gone dry, they say because the tunnel has disturbed the aquifer. Commercial farmers Anjan Khatri, Bikash Kandel and Ganga Devi Saud had taken loans from a cooperative to start poultry and dairy businesses. Now they have no income, are heavily indebted and say the government’s compensation of Rs 800,000 is a joke.

“The compensation doesn’t even cover five years of losses,” says Anjan Khatri who used to have 1,500 chicken. He does not want to return to his damaged house and risk losing his life.

In April police dragged local protesters to the Thankot station. One of them was Kamala Maharjan, she says: “They treated us like criminals and locked us up all day.” 

POWERLESS PEOPLE

When residents of Sankharapur of opposed the Millennium Challenge Corporation (MCC) project to build transmission lines above their property, local women were hauled off to  court. The $500 million US government grant aims to connect Nepal’s grid with a east-west transmission line and upgrade highways in central Nepal.

“It has been five months and we have to honour the court summons to attend hearings,” says 41-year-old Sharmila Tamang, who, along with seven other women, was detained for nine days. Police ordered them to pay Rs 200,000 for allegedly breaking the windshield of a bulldozer last year, or to find the culprits. 

“This is ridiculous,” Tamang says. “It is not our job to take responsibility for something we did not do.”

Indra Kumari Tamang, 60, was also charged with a public offence even though she was not part of the protests. “Yes, I don’t want the transmission lines over my village, but I was not in the demonstration, and definitely did not throw stones at the dozer. I was just returning from a wedding.”

The clash is not only about safety but also land rights. Krishna Bahadur BK said the power pylons are being erected on his property without his consent: “Only two people in the area agreed to sell and receive compensation. But my land was undervalued and I never agreed to sell it.”

Police took away Tiuri Waiba, 57, and her 17-year-old daughter during a protest at a pylon site located on her family’s property. “We have not received a paisa, but the construction goes on under armed guard,” she says.

Under the International Labor Organization (ILO) Convention 169, development projects must secure Free, Prior, and Informed Consent (FPIC) from local and indigenous communities. Actually, UT-1 is the first project in Nepal to formally obtain FPIC. 

However, it did so after land acquisition had already begun, turning the principle of ‘prior consent’ on its head. Rajman Syanbo, says the MCC provided information selectively only to landowners not to the wider affected community. In Sankharapura one of the pylon sites is on Chihan Danda, an ancestral burial site of the indigenous Tamang community.

Villagers were horrified to discover red survey markings on sacred trees where transmission poles were planned. Says Samar Lama of the local community forest user group: “We are not against the MCC, but destroying the cemetery where our ancestors are buried means obliterating our history, culture and traditions.”

Instead of consent, villagers say they were coerced. Indra Kumari recalled how middlemen held clandestine meetings in the forest, pressuring owners to surrender land for the Upper Tamakosi substation funded by the Asian Development Bank).  She was warned her land would be seized if she refused. 

For Buddhimaya Tamang, 60, the consequences have been devastating. With her compensation money she had bought a small plot near the substation, but it was buried in debris from the construction and she has three massive transformers looming over her small shed. 

Since 2023, women have staged daily protests outside the substation gates demanding accountability. Farmers are waging a quiet battle to save their fields. In July we found a farmer tacking sandbags with neighbours in a desperate attempt to stop his paddy field  from being buried by sand from the substation construction. 

SAME OLD STORY 

Across Nepal the pattern repeats itself over and over — consent is bypassed, public audits are absent and there is no accountability from project offices and local governments. 

Every project begins with glossy documents prepared by expensive consultants to do EIAs, and DPRs, all pledging sustainability, community benefit and transparency. 

In practice, however, politicians and their crony middlemen and contractors milk projects dry while locals are left to carry the cost.

A third-party assessment report for Nagdhunga Tunnel Construction Project highlighting some major oversights: the DPR failed to account for ‘potential ground vibration from blasting and subsidence from groundwater drawdown’. It noted ongoing risks, especially during heavy downpours, saying the slopes were not stable enough.

The report recommended ‘continuous monitoring of ground subsidence cracks, especially during monsoon for at least two years, installing earth anchors and building retaining walls’. Local communities are now insisting that the government purchase their land outright. 

The assessment also revealed that the eastern excavation pit was dug before monsoon season. Covid-19 lockdowns delayed work, leaving exposed soil vulnerable to collapse, a predictable consequence that could have been mitigated had the tunnel alignment been shifted by 15-20m, notes the report.

Madhukar Upadhya, watershed expert, recalls similar failures in foreign-funded projects despite seemingly noble intentions. Visiting a watershed project in Nepal’s Far-West in 2016, he found little tangible impact from a Rs40 million scheme launched in 2013 by the ADB. 

“The project was strikingly detached from the everyday struggle of bringing water into people’s homes,” he says. 

Long-standing gaps in accountability are also evident in high-profile projects like Melamchi, Tarai Fast Track, river diversion irrigation schemes on the Babai and Sun Kosi due to donor-driven bureaucratic inefficiency. 

The Kalanki-Maharjganj-Dhobikhola section of the Kathmandu Ring Road, scheduled for completion within two years, remains stalled more than six years later despite a 2018 MoU with China. Donor agencies often distance themselves from sensitive social issues like land acquisition, insisting that local governments resolve conflicts first.

Which is why the question of accountability often ends up being projected back to the government. Says former staff of the Attorney General’s office Ganesh Poudel: “Donor hegemony shapes projects while offloading risk onto the most vulnerable.”

Cost overruns and time delays, are other recurring features of foreign funded projects in Nepal. The 14.2MW Khulekhani III hydropower power, for instance, took 14 years to complete, and the 456MW Upper Tamakosi project costs rose by 75% because of delays and dollar appreciation.

The 220kV Khimti-Dhalkebar transmission line project funded by the World Bank, faced a decade-long hold as local communities demanded compensation sometimes up to 50 times more than what was deemed reasonable for land acquisition.

There is a corrupted psyche behind it, argued Rameshore Khanal, former finance secretary when he spoke to us before being appointed finance Minister in the interim government. 

“Locals perceive foreign funded projects as cash-rich, leading to exaggerated compensation claims, protests, and delays,” he says while every day of work stoppage incurs significant financial penalties, from idle equipment and labor to price escalation. 

Khanal recounted the ADB-funded Melamchi Water Supply Project, originally slated for completion in 2006, which faced repeated delays and cost overruns. It remains to be seen how Khanal can address some of these structural issues in the five months he has as caretaker finance minister before the elections.

Upper Trishuli-1 also faced over 90 days of stoppages since 2022 due to local protests. According to the NWEDC engineer,Giriraj Adhikari, each day of delay cost Rs 30 million because of idle equipment, salaries and lost electricity generation. Over its 30-year lifespan, UT-1 is expected to generate Rs84 billion in royalty, 25% of it allocated directly to the local municipality.

Ramesh Koirala, consultant engineer at the Nagdhunga Tunnel Construction Project, quantifies losses from a single month-long shutdown at Rs450 million noting that contractors often claim additional compensation for delays.

Khanal suggested ‘pay-for-results’ — funding in which the government completes work first and is reimbursed by donors only for verified results. “This removes the expectation of donor money during execution and allows smoother implementation,” he told us. 

Unstable project management, frequent staff turnover, and interference by political parties, contractors, local power brokers further exacerbate delays and cost overruns. 

None of this is new, of course. Writing as far back as 1962 in Administrative Science Quarterly, Aaron B. Wildavsky identified reasons why development plans in Nepal failed so often — conflicting priorities between government and donors, mismatch between finance and planning and a rent-seeking bureaucracy.

More than six decades on, not much has changed. Which is why the change in government and the possibility of a new clean start hold so much promise for Nepal. The struggle, locals insist, is not against development itself, but against how it is imposed. 

“We are not anti-development, as they label us,” says Kamala Maharjan of Nagdhunga near the highway tunnel. “We just want it to be mindful of our needs.” 

Another local who was arrested for demanding compensation for damage caused by tunnel digging says, “Despite being called a project of national pride, it is killing and oppressing us like people by taking away our livelihoods.” 

While politicians and planners hail foreign-projects as symbols of national pride, communities on the ground often are found to bear the cost of dislocation, environmental risk, and promises that remain unfulfilled side by side. 

Suresh Dhakal, anthropologist and Associate Professor at Tribhuvan University, says large development projects in Nepal inherently have become fields for political contestation.

This means issues like relocation, compensation, cultural and social friction erupt. He calls for a responsible, transparent, holistic and people-centric approach to development. 

Yet, experience shows that physical construction alone is not enough, even though that can be most attractive for politicians and bureaucrats because of kickbacks from contractors. Development should instil a sense of ownership and responsibility among beneficiaries. 

A 2023 study on foreign aid effectiveness concluded that Nepal is heavily dependent on foreign aid, and this often undermines its national agenda with stringent donor conditions driving high social costs and limited growth, employment and poverty reduction.

 It concluded: ‘Foreign aid is often driven by donor interests rather than purely developmental or humanitarian motives.’

There are currently 33 ongoing foreign aided projects in Nepal. And despite foreign loans often being taken at concessional rates, the interest expenses on that debt is increasing more than those on domestic loans due to exchange rate fluctuations. This increases the financial burden on the government from external debt. 

The overall public debt interest payment has increased by 13%. There has been a significant shift from grants to loans, with loans which accounted for 66.5% of foreign aid disbursement while grants made up 19.8% and technical assistance was 13.6%. 

Yet, on the ground, all this is moot and skepticism remains about big projects trampling over the rights of those affected by large projects. “Even if they call us anti-development, we will continue to protest and demand what is our right and what is just,” says Anjan Khatri of Nagdhunga.