The Gadimai Partnership Forest extends 4,150 hectares in Parsa district bordering a nature reserve adjacent to Chitwan National Park.&nbsp; Half of Gadimai Forest is made up of hardwood species like sal, sisau and khayar that have high commercial value. <a href="https://archive.nepalitimes.com/news.php?id=17226">Illegal logging</a> by timber smugglers on the Indian border is now thinning the jungle. &nbsp; An on site investigation earlier this year confirmed what was seen on Google Earth Pro satellite images. We saw more than 30 tree stumps deep inside the forest with scars in the undergrowth showing where the logs had been dragged away from the once-healthy stands. &nbsp; Comparing satellite images of the forest in 2008 and 2021 show a significant loss of forest area as well as reduction in canopy cover in the last 13 years (pictured, above). Read also: <a href="https://nepalitimes.com/here-now/the-cost-of-peace-in-post-conflict-countries-forest-cover">The cost of peace in post-conflict countries: forest cover</a>, Dilrukshi Handunnetti “Our staff have not been able to adequately monitor the forest because of the presence of <a href="https://nepalitimes.com/multimedia/better-nepal-china-connectivity-helps-wildlife-smugglers">smugglers </a>in the Sonbarsha and Koilabhar Bindabasini regions,” says Gadimai Forest Management Committee chair Shahrum Gaddi. “We have seen a rise in illegal logging since the pandemic.” &nbsp; The annual report of Parsa’s Division Forest Office cites smuggling of timber to India from Gadimai and two other community forests in the district.&nbsp; Community forestry is considered Nepal’s biggest conservation success story and is internationally acclaimed. It was the main reason Nepal’s forest cover which at present is 46% <a href="https://nepalitimes.com/banner/tree-mendous">doubled in 25 years</a>. Communities have managed forests relatively better in the mountains, but in the Tarai it has been less successful because of the abundance of expensive hardwood timber and proximity to India.&nbsp; Forest cover could be further undermined by <a href="https://nepalitimes.com/news/not-out-of-the-woods-yet-in-nepal">an amendment of the 1973 National Parks and Wildlife Conservation Act in Parliament this week.</a> Global Land Analysis and Google Earth Pro images show deforestation of the 13,512 hectares of Sagarnath Forest Development Project in Mahottari, Sarlahi and Rautahat districts. The project began in 1978 and involved planting fast-growing saplings of sal, sisau, and eucalyptus to increase timber production, but much of the sal and khayar stands have been logged from within these forests. &nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20240914140936_c9a32b23ff453bce7bd9be53de61b9c43f185a45941df8711a8490f345511b9f.jpg" data-media-id="editor_5" data-image-id="20240914140936_c9a32b23ff453bce7bd9be53de61b9c43f185a45941df8711a8490f345511b9f" data-rendition-name="original" width="961" height="640" loading="lazy" alt="Nepal's Forest Cover in 1992"> </figure>  Sarlahi resident Rajnikanth Jha, who is a central member of the Federation of Community Forestry Users Nepal (FECOFUN) blames collusion between Sagarnath Forest Development Project staff, government agencies, politicians and the “forest mafia”.&nbsp; In March 2024, Brahmapur Community Forestry User Committee president Manoj Tamang was arrested on charges of smuggling sal logs. The Division Forest Office (DFO) also charged Tek Bahadur Basnet, Aashish Tamang and Heralu Pemba Tamang of the committee.&nbsp; Another community forest in Lalbandi of Mahottari, which was once just 2km from Jha’s house has now receded 6km away due to encroachment and illegal logging. He says that Nepal’s forest cover may have doubled, but the eastern Tarai has lost half the area of national forests.&nbsp; “From the highway the forest may look thick and lush, but if we go deeper into the forests most of the trees have been stripped bare,” says Jha. Forest researcher Nagendra Prasad Yadav estimated eight years ago that the Tarai jungles were being destroyed at the rate of 0.96%, equal to 1,756 hectares per year. Given the evidence on the ground, that rate is sure to have increased.&nbsp; Read also: <a href="https://nepalitimes.com/banner/nepal-must-save-nijgad-forest-to-receive-climate-funds">Nepal must save Nijgad Forest to receive climate funds</a>, Kashish Das Shrestha In Parsa alone, one estimate said illegal timber worth over Rs5 million was smuggled out every month. The DFO does nab smugglers from time to time, and cases were filed against 66 loggers, but it is the tip of the iceberg and those caught are mainly the hired workers. The Madhes Province Forest Directorate says 931 illegal logging cases were filed in the courts last year, and 523 were arrested – mostly in Bara, Parsa and Rautahat districts which have more forest cover than other eastern Tarai districts. Global Forest Watch estimates Nepal lost 4,570 hectares of ‘biologically important’ dense forest between 2002 and 2023 due to encroachment and smuggling.&nbsp; “There is inadequate protection and not enough rangers and police to guard the national, community, and partnership forests,” says Parsa-based journalist Ram Mandal. The reason is lack of budget and often collusion between local politicians and their criminal cronies. In Gadimai Forest, Shahrum Gaddi says he receives frequent death threats after timber smugglers are caught, and elected local government officials pressure him to release them.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20240914140936_53d1bc3e84dabe6294f8b9b39175f28342ad46c24b4651b6cb33eaf28e230e10.jpg" data-media-id="editor_7" data-image-id="20240914140936_53d1bc3e84dabe6294f8b9b39175f28342ad46c24b4651b6cb33eaf28e230e10" data-rendition-name="original" width="655" height="504" loading="lazy" alt="Madhes Province illegal logging districts NT"> </figure>  “The police do nothing while logging and smuggling is happening right under their noses, they only show up after we have been assaulted by smugglers and after all the timber has been taken across the border,” adds Gaddi, who says he has written to the CIAA, Hello Sarkar, DFOs, as well as the Ministry of Forests. There has been no response from any of them.&nbsp; In 2021, timber traffickers injured four forest staff and looted their weapons during a clash in Bara’s Pipara, and were arrested soon after. Former FECOFUN president Bharati Pathak says smugglers set off fires in forests, steal logs and poach wildlife, by pretending to put out wildfires. “There is an established but under-the-radar network involved in illegal activities that must have smuggled millions of cubic feet of timber from the forests by now,” says Pathak. &nbsp; Read also: <a href="https://nepalitimes.com/banner/safeguarding-the-soul-of-sal">Safeguarding the soul of sal</a>, Lila Nath Sharma This network takes the logs to sawmills near the Indian border under the cover of night, then transports the wood planks across to Bihar. Trafficking gangs also use bicycles, tyre carts, tractors, vans, and trucks full of sand to smuggle timber, even modifying the vehicles to fit the logs in many cases. Sometimes, the logs are also floated down river into India.&nbsp; Says Rajnikanth Jha of FECOFUN: “Infrastructure, expansion of settlements and timber smuggling are destroying our trees. If this continues there will be no forest left outside national parks in the Tarai.” &nbsp;&nbsp; This article was written in collaboration with The Environmental Reporting Collective.

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The Tarai’s shrinking forests

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109101120/636b713c9c7e80680e0600bfjpeg.jpg" alt="" width="1500" height="1340"/><figcaption>Photo : MANISH PAUDEL</figcaption></figure>On 10 January, 24-year-old Dilip Mahato was killed for opposing the ‘Crusher’ industry in Dhanusha that was illegally mining sand from a river. This week, another Dhanusha native, former president Ram Baran Yadav, spoke to Nepali Times about the Chure conservation program he initiated.Nepali Times: Dilip Mahato was murdered in your home district, and your former constituency. What does his killing tell us?This is a grave crime. Dilip had been mobilising the villagers and talking about Chure conservation. The people were responding to it positively. Those who were earning millions from illegal mining of the river beds were alarmed. So they murdered him.Read also: <a href="https://www.nepalitimes.com/editorial/crushers-of-justice/" target="_blank" rel="noopener">Crushers of Justice</a>, EditorialWhy does the trade in boulders and sand have to lead to murder?The price of aggregate and sand for construction is sky-high right now. The materials are even exported to India. Money is at the crux of the matter. Everyone wants to become rich quickly by selling natural resources. Businessmen, mafia dons, police, local administration, and elected representatives are all complicit. One river is contracted out for Rs50-70 million. Malpractice increased after the practice of allocating money for Chure development shifted to the local administration.The crusher industry is also influential in politics: many have parliamentarians on their pay roll, and some owners are even MPs themselves. They do not care what the exploitation of rivers will do to the environment, or what kind of earth we are leaving behind for future generations. Dilip was fighting to protect our future, and he paid for it with his life.What environmental impact does this river extraction have on the Tarai? More than half of the Chure’s forests have been destroyed in my lifetime. <a href="https://www.nepalitimes.com/editorial/flood-of-recrimination/" target="_blank" rel="noopener">Rivers and wetlands are drying</a> in the Tarai, and the groundwater table has receded. Water scarcity is increasing in the eastern and central Tarai. In summer, people come to the highways carrying drums on bullock carts to fetch water. Fewer migratory birds winter here now. Human-wildlife conflict is increasing. The Tarai used to be our breadbasket, and we used to export grain till 40 years ago. That is no longer the case.Read also: <a href="https://archive.nepalitimes.com/page/crushing-tale-of-Chure" target="_blank" rel="noopener">Crushing tale of the Chure</a>, Sameen Raut and Dinesh PanthiWhile you were President, you established the President Chure Conservation Program, and there is also a Chure Conservation Master Plan. But the present government has not heeded the reports.The 20-year Chure Conservation Master Plan outlines activities to conserve the Chure. The government has included it in its National Pride Projects, but Parliament has not made any laws pertaining to it. That shows that the government is not serious about it.All the construction projects in the Chure negatively impact its natural resources, for example the East-West Highway that was built right across the jungles. An east-west railway is being constructed at a distance of 20-30 km from the highway. The proposed mid-hill highway runs parallel to it, and the postal highway is under construction too. Another proposed highway, the Madan Bhandari Road, is being built from Jhapa to Dadeldhura. The impact of these 4-lane highways on the environment was not considered. That shows the government is not serious about the environment.What do you say about the proposed Nijgad airport? The government just wants to destroy our last remaining jungles. It wants to chop down the forest to build a new capital in Kailali. <a href="https://www.nepalitimes.com/banner/does-nepal-need-a-4th-international-airport/" target="_blank" rel="noopener">Do we need a fourth international airport</a> when international airports are already under construction in <a href="https://www.nepalitimes.com/from-the-nepali-press/sick-airport/">Bhairawa</a> and <a href="https://www.nepalitimes.com/banner/pokhara-nepals-new-aviation-gateway/">Pokhara</a>? This is just immature. If we don’t listen to conservationists, the Tarai will become a desert in a few decades.Laws should be made to implement the Chure Master Plan, and an environment-friendly policy drawn up. But this subject is never raised in the federal Parliament. All three levels of the government should be active, and the government should understand that once you tamper with nature, the effects are irreversible.Read also: <a href="http://archive.nepalitimes.com/news.php?id=19811" target="_blank" rel="noopener">Help save the Chure Hills</a>, Tirtha B Shrestha

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“Business, bureaucracy and politicians all plundering the Chure”

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a218d9c7e80680e041748jpeg.jpg" alt="" width="1400" height="1052"/><figcaption>Photo: KUNDA DIXIT</figcaption></figure>After degraded forests were leased out to local communities to protect and manage 40 years ago, <a href="http://archive.nepalitimes.com/news.php?id=7116#.XC7zVFUzaUk" target="_blank" rel="noopener">Nepal’s community forestry program</a> has won international praise for restoring the country’s tree cover.Barren hillsides have been replaced by thick forests, wildlife has returned, and farmers have prospered because of ample fuelwood and fodder. The 2015 Forest Resource Assessment showed that Nepal’s canopy cover increased from 29% in the 1990s to 45%, representing more than 1 billion tons of carbon stock.Although depopulation of rural Nepal due to migration played a part in reducing the pressure on forests, much of the credit goes to the 22,000 or more Community Forest User Groups across the country.“Community forestry under the 1993 Forest Act was an exemplary participatory model and a highly democratic exercise that gave villagers a clear mandate to protect, manage and utilise their forests,” says Bharat Gotame of WWF Nepal. “This gave local communities a sense of ownership, and they put in a lot of effort to protect and expand Nepal’s forest cover.”Read also: <a href="https://www.nepalitimes.com/?p=19200&amp;preview=true" target="_blank" rel="noopener">Fixing what ain't broke</a>, Editorial<a href="https://www.nepalitimes.com/?p=19252&amp;preview=true" target="_blank" rel="noopener">Nepal's silent emergency: springs going dry</a>, Ajay DixitNow, as the trees mature into commercially valuable timber, the emphasis has shifted from forest protection to its management. The question is: who should manage the forests in Nepal’s federal structure?<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a21909c7e80680e041749jpeg.jpg" alt="" width="2544" height="1222"><figcaption> </figcaption></figure>Some forestry experts believe not enough was done to train local communities in the scientific management of trees to prevent degradation and fires, and picking suitable tree species.“We focused solely on preservation, and as a result forest coverage increased without contributing to the economy,” says Krishna Acharya, joint secretary at the Ministry of Forests and Environment. “Our next step should be to see how natural resources can yield economic benefit for local communities.”However, environmentalists argue that nature should be protected for its own sake, and to look for narrow economic returns from conservation is myopic. If the contribution of new growth forests to eco-system services for water supply, tourism and as a carbon sink are calculated, they say the economic contribution of Nepal’s community forestry is vast.Read also: <a href="https://www.nepalitimes.com/banner/municipalities-want-to-manage-annapurna/" target="_blank" rel="noopener">Municipalities want to manage Annapurna</a>, Yuvaraj Shrestha<a href="https://www.nepalitimes.com/?p=19229&amp;preview=true" target="_blank" rel="noopener">Hiking up the benefits of tourism</a>, Sangmin KimThey also add that forest management works well in countries with greater transparency. Given the level of corruption in Nepal, especially after many <a href="https://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener">contractors got themselves elected</a> mayors, rural municipalities have been exploiting natural resources. Allowing community forests to be ‘managed’ would destroy the forests.The 2015 Constitution placed national forests under the authority of the provincial governments, but it also listed national forests as the common right of federal, provincial and local governments. Then the Local Government Operation Act of 2017 provided rural municipalities the right to protect, use, manage, monitor, regulate as well as formulate and implement laws. These contradictory provisions have created confusion about who now owns forests.To make matters worse, the recently drafted Forest Bill curtails the rights of Community Forest User Groups, the very elected local committees that were responsible for protecting the forests under the 1993 Forest Act.For example, the new bill purposes that local user groups cannot sell extra forest products without permission of the government, unlike in the past when they could independently fix prices, sell timber and other products from their protected forests.“Greater accountability at the local level helped us save the forests, but the new bill attempts to undermine that very foundation of our success,” says Bharati Pathak, chair of the Federation of Community Forestry Users Nepal (FECOFUN). She warns that the bill will result in widespread deforestation, with negative impact on the environment, biodiversity, tourism and local livelihoods.Community forests have been threatened ever since local and provincial elections last year. Many contractors, loggers and quarry owners got themselves elected to local councils, and cases of poaching, <a href="http://archive.nepalitimes.com/news.php?id=17226#.XC7zVlUzaUk" target="_blank" rel="noopener">illegal logging</a> and encroachment into community forests have shot up.Back in Singha Darbar, joint secretary Krishna Acharya says forests will actually thrive under federalism because elected governments will be closer to community forests, and thus have better oversight over its protection.In theory, that makes sense. But activists argue that stricter laws have never translated into conservation. Federalism has decentralised corruption, and the forests do not stand a chance.The reason Nepal’s community forestry program worked was because of local user committees. Transferring ownership and management to municipal or provincial councils, or interference from Kathmandu, will invite corruption and destruction of forests.Activists say such confusion over jurisdiction could wreck Nepal’s achievements in community-based forest conservation, and add that some things ought to be left alone.“Whoever ends up managing the forests, the functional modality of the community forestry program that transcended political and administrative boundaries should not be dismantled,” states the former Director General of the Department of Forests, Bijaya Paudel. “If we do, all our efforts and investment will come to naught, and the very thing we take pride in, our green forests, will be lost once again.”Paudel recommends that the government include local communities for consultation in decision making, because without user groups there will be no preservation, let alone sustainable management for economic benefits.The advice of the WWF’s Bharat Gotame is similar: “Give credit to local people for the protection of forests for the last four decades, and build on that with better management and ensure communities are accountable.”Read also: <a href="http://archive.nepalitimes.com/article/editorial/climate-climax,3651" target="_blank" rel="noopener">Climate climax</a>, Editorial<a href="https://www.nepalitimes.com/opinion/climate-for-change/the-great-himalayan-thaw/" target="_blank" rel="noopener">The great Himalayan thaw</a>, Ajay Dixit

Sonia Awale

Who now owns Nepal's forests?

It was 30 years ago this month that investment into ‘Baby Arun’, the 201MW first phase of the run-of-river Arun III project, was brought to a screeching halt when the World Bank officially withdrew its support. This brought about profound and fundamental changes in the way Nepal’s power sector subsequently developed. Nepalis suffered debilitating power outages between 2008-2016 due to shortages attributable to the cancellation. At the same time, the gap left by Baby Arun was filled by private sector investment in ways that were not obvious in 1995. It took 30 years, but in many ways Nepal’s power sector is more healthy today than it has ever been, and likely better than if the project was built as planned. At a projected budget of $1.08 billion, Baby Arun would have cost the equivalent of Nepal’s entire annual government expenditure in 1995. It was to be funded by concessional grants and loans from multilateral and bilateral funders, including the World Bank, Asian Development Bank (ADB), KfW, and investment by the government itself. At the time, Nepal’s total electricity generation capacity was only 230MW, and the trajectory of the power sector changed dramatically following the cancellation. In the past 30 years, $5.4 billion has been invested in the power sector led by private investors, and much of it from domestic banks and pension funds (table, right).  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0.jpg" data-media-id="editor_0" data-image-id="20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0" data-rendition-name="original" width="984" height="521" loading="lazy" alt="30 years after Baby Arun"> </figure>  Nearly 70% of the new megawatts generated were by private independent power producers (IPP) in the past 30 years, while the Nepal Electricity Authority (NEA) and its subsidiary companies added 30% of new capacity. Almost 80% of total debt financing came from domestic banks and employee retirement funds. International assistance for power generation dropped dramatically over this time, accounting for only about 15% of investment. Before 1995 new power projects used to be entirely dependent on foreign aid. Since 1995, 63% of new generation came from 171 small hydropower projects with an average capacity of 12MW, while 4% was from 21 solar photovoltaic and biomass projects developed by local IPPs.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097.jpg" data-media-id="editor_1" data-image-id="20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097" data-rendition-name="original" width="988" height="503" loading="lazy" alt="30 years after Baby Arun"> </figure>  Over three decades, investment in Nepal’s power supply came primarily from new actors that had never before been involved in this sector. The rate of electrification rose from 10% to close to 100% -- sufficient to meet domestic needs during most of the year, and in 2024 made Nepal a net exporter of power to India for the first time in its history. As practically all the new investment in this period went into run-of-river hydro and solar projects, rather than into hydropower reservoirs with seasonal storage, Nepal continues to rely on imports from India during the dry winter months. Surplus electricity generation for export during the monsoon is slated to grow rapidly as another 200 solar and hydro projects are nearing completion of construction, with over 5,000MW of power capacity. Private Power The cancellation of Baby Arun inadvertently accelerated the entry of the private sector into Nepal’s power generation. The government enacted the Electricity Act in 1992 to attract private IPPs and diversify away from total dependence from international aid, but had been struggling for several years to conclude the first agreement with the 60MW Khimti Project. There remained a large gap between the tariff that the government thought was reasonable versus what was demanded by the Norwegian investor Statkraft, and the private sector arms of the World Bank and ADB that were financing the project. The shock of World Bank withdrawal from Baby Arun put tremendous pressure on the government, then led by the UML as it is now. The Bank’s decision to terminate its involvement was ostensibly, at least partially, taken in response to a letter critiquing the project sent by the UML while it was in the opposition.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347.jpg" data-media-id="editor_2" data-image-id="20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347" data-rendition-name="original" width="949" height="446" loading="lazy" alt="30 years after Baby Arun"> <figcaption>BAD NEWS: Newspaper clippings from the early 90s on tender announcement ahead of loan approval (left) and secrecy surrounding environmental assessment (centre) of Arun III before its eventual cancellation in August 1995.</figcaption> </figure>  The government was forced to soften its position and agree to the investors’ terms following the cancellation of Baby Arun. It directed NEA to sign a power purchase agreement (PPA) with Khimti. It was concluded in January 1996, and this was followed by a second PPA in July 1996 with Panda Energy, the American developer of the 45MW Upper Bhotekosi project. The expensive USD-denominated agreements to buy power from two international private producers, with price escalation clauses tied to the New York Consumer Price Index, sent alarm bells ringing. There was worry that the country was heading towards unaffordable tariff rates for the consumer and potential bankruptcy for NEA as a result of inevitable future weakening of the Nepali Rupee. The government had strong-armed NEA into signing these agreements, and realised that concessionary financing terms that Nepal was used to receiving for public sector projects such as Baby Arun and Kali Gandaki A, that included below-market interest rates and 40 years repayment period with a 10 year grace period before starting repayment, were not the norm for private sector investors. Nepal’s status as a less than attractive destination for foreign investment meant that the country had few options but to accept expensive dollar PPAs from international developers with the high commercial interest rates and short repayment periods imposed by their banks because of high investment risks. In the end, the government ended up having to additionally provide a sovereign guarantee in order to close the deal at the insistence of the lenders – committing it to repayment in case NEA defaulted on paying the IPPs. It is reasonable to assume that the extraordinarily high political cost of agreeing to the PPA terms would have meant that no government would have willingly agreed to them in 1995 had it not suffered the trauma of the loss of concessionary-financed public sector projects as large as the Baby Arun. It has taken NEA 25 years to consider offering dollar-denominated PPAs again: to cover the foreign exchange portion of the investment in the 216MW Upper Trisuli-1 and 120MW Rasuwa-Bhotekosi Hydropower projects. It seemed unlikely at the time, but it turned out that the dire situation Nepal found itself in 1995 planted the seed to mobilise investment for affordable power from within the country. Double Whammy After the dual shock of first losing investment in Baby Arun and having to sign expensive power purchase agreements with international IPPs, the first proposal for an alternative strategy to mitigate the risk of foreign currency investment into hydropower projects came from a group of engineers within the Arun III team at NEA. Led by <a href="https://archive.nepalitimes.com/news.php?id=4900">Deputy Director Damber Bahadur Nepali,</a> engineers convinced the leadership that NEA needed to invest in a subsidiary company to build a series of locally-designed and domestically-financed projects that would have lower cost with rupee-denominated PPAs. They registered the Chilime Hydropower Company Limited (CHCL) in October 1995 with 51% shares from NEA, 25% from its employees, and 24% available for the general public, 10% of which was prioritised for local residents at the project site. The 22.1MW project is in Rasuwa on a tributary of the Trisuli, and mobilised debt financing from the Employee Provident Fund, which manages retirement savings for employees of the government, public enterprises, and private sector institutions. CHCL’s experience showed that NEA employees themselves believed that individual hydropower projects with operational independence from NEA could be developed profitably in Nepal by its own engineers -- and they were willing to put their own money on the line. Chilime also demonstrated that there was money in the country, particularly with retirement funds, looking for opportunities for long-term investments. Following completion of Chilime in 2003, CHCL led the formation of three other NEA subsidiary companies that completed construction in 2023 and 2024, producing 168.3MW using fully rupee-tied investment. NEA’s largest subsidiary, the Upper Tamakosi Hydropower Limited, completed construction of its 456MW plant in 2021.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3.jpg" data-media-id="editor_4" data-image-id="20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3" data-rendition-name="original" width="3000" height="1571" loading="lazy" alt="30 Years after Baby Arun"> <figcaption>DAMNED: The $700 million 456MW Upper Tamakosi built entirely with domestic funds before it was destroyed by the September floods last year. </figcaption> </figure>  There were some delays and cost overruns on this run-of-river project, the largest in the country with a final cost of over $700 million -- all of it sourced domestically. The five subsidiary companies launched by NEA have produced almost two times as much new power as NEA has over the past 30 years. Seven other NEA subsidiaries are currently constructing projects to add another 474MW to the national grid. But even more important than NEA subsidiaries have been local IPPs: Nepali companies which have over the past three decades enthusiastically entered the hydropower sector. From a regulatory perspective, the credit for mobilising domestic private investment to engage in power generation goes to Minister of Water Resources Shailaja Acharya, who in 1998 offered a flat feed-in-tariff of Rs4/kWh for hydropower projects under 10MW. This upfront offer removed a major barrier that early developers had faced of having to spend money to carry out a detailed feasibility study before they could even start tariff negotiations with NEA. She had laid the foundation stone of the Chilime project, and proved to be the champion of opening up the sector for domestic IPPs. The guarantee of a PPA with a fixed tariff, irrespective of project specifications, gave small power developers the confidence to apply for survey licenses and invest in feasibility studies so they could directly approach commercial banks and make a case for their project producing required revenue to repay loans. Domestic IPPs started adding power to the national grid in 2002. Their contribution was initially modest, and first projects were small and commercial lenders who took time to be confident about providing debt financing to a sector which had previously not been considered suitable for private sector investment. While the first 10 years were slow, with less than 10MW being added to the grid each year, this increased twenty fold over the following ten years, resulting in the equivalent of a Baby Arun being added by Nepali IPPs to the grid each year. A total of 84 IPPs added 232MW, 328 MW, 454MW, and 400MW of new generation to the grid in 2021-2024 (graph). There was explosive, exponential growth as domestic developers have surged ahead to account for 76% of the new megawatts added to the grid since 2020, compared to 24% by NEA and its subsidiary companies. The megawatts that IPPs are adding have followed the classic ‘hockey stick curve’ with the ‘breakout point’, signaling the rapid growth phase in 2020. Private producers are expected to accelerate new generation in the coming years with 300 solar and hydropower projects adding 11,000MW. Another 166 hydropower and 96 solar projects are currently in the survey stage, and are in line to add another 11,000MW to the construction pipeline. One major challenge is finding financing required for the projects. Domestic investment will no longer be sufficient to finance this ambitious pipeline of renewable energy projects. Project developers as well as NEA and the Electricity Regulatory Commission will have to leverage their substantial experience accumulated through the construction of over 200 projects to attract regional and international investment and hedge the risks of dollar-denominated PPAs. Following the cancellation of Baby Arun, <a href="https://nepalitimes.com/opinion/people-power/decentralising-power-in-nepal">Nepal developed a highly distributed power sector</a>. The national electricity grid is currently supplied with power from a remarkably decentralised array of hundreds of hydropower and solar photovoltaic projects spread across 43 districts and all seven provinces.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b.jpg" data-media-id="editor_6" data-image-id="20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b" data-rendition-name="original" width="1228" height="867" loading="lazy" alt="30 years after Baby Arun"> </figure>  This presents a sharp contrast to the pathway of a few large public sector hydropower projects with a sprinkling of private sector projects that was envisioned as part of NEA’s investment planning when Baby Arun was being considered the front runner for investment. The strategy then was to allow public sector investment in a few large hydropower projects with thermal plants to fill the gap. Knowing what we know now about acceleration of climate change impacts and increased extreme weather events, following this path would have made Nepal’s power sector highly vulnerable. Decentralised generation greatly improves the resilience of Nepal’s power supply as damage to power plants in one part of the country need not affect other areas that have their own generation. Following the investment plan where over two thirds of the country’s power supply would have come from power plants on the Arun River, would have greatly imperiled Nepal’s energy security. All rivers in Nepal are susceptible to flooding from cloudbursts made more frequent by climate change. The Arun River which is fed by glaciers in Tibet is also at risk to glacial lake outburst floods. Bikash Pandey is Director of Clean Energy and Circular Economy at Winrock International. People Power is his regular column in Nepali Times on global energy issues relevant to Nepal. <h2>Decentralised and Diversified</h2> In the 30 years since the cancellation of ‘Baby Arun’: Hydropower projects constructed cover capacities ranging from less than 1MW to 456MW and developed by IPPs from across the country with strong local involvement in purchasing equity shares. Renewable energy sources contributed to the generation mix through solar IPPs that further contribute to climate resilience, and cover shortfalls during low rainfall. The government is committed to solar contributing 10% of the power on the grid. Increasing solar beyond this target and providing incentives to project developers to invest in utility-scale battery storage would further improve resilience. BIG ARUN: The 900MW Arun III project under construction since 2018 at Num in Sankhuwasabha (pictured, below) is a separate initiative by a different project developer using a different financing modality. The ‘Baby Arun’ version of Arun III was cancelled in 1995.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb.jpg" data-media-id="editor_7" data-image-id="20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb" data-rendition-name="original" width="1750" height="1312" loading="lazy" alt="30 Years after Baby Arun"> </figure>

30 years after Baby Arun

This is the 72nd episode of Diaspora Diaries, a Nepali Times series in collaboration with Migration Lab providing a platform to share experiences of living, working and studying abroad. My father ran a store and that is where I spent all my time till Grade 6. Doing my homework. Serving customers. I then moved to my maternal grandparents’ house because I used to get along with my cousin who was a year older than me. We did everything together, and were best friends. We took turns studying: I was a night owl, and he was an early riser. Before I went to bed after studying all night, I woke him up. My mother was 44 when I was born, the same year my eldest brother got married. My sister-in-law becoming a part of our family was how my mother referenced my age. I liked making money, and was always a hustler. In Grade 7, I learnt to handle a tractor and helped my brother-in-law to plough, earning Rs10 a day. As I got better, he paid me more. By Grade 9, I was already making Rs500 per day, but had to slow down to prepare for my exams. From an early age I knew I did not want a 9-5 job. There just wasn’t enough money in it. I wanted to get into business, and compared my brother who worked in the post office and what businessmen made. It did not help that my brother was honest, and never took bribes. A friend and I made money selling cheap Chinese phones at a premium to our friends. We blasted music on the phones and pretended that we were giving them a discount. After SLC, I started teaching math and other subjects. I was soon a shareholder in the same school and in the evening I was involved in our family’s floriculture business, growing amaranth and marigold for garlands.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020844_1b54b999d67122a50c4c7e6204cc737bcc99bf2a68db6499a4566a7f61a880b4.jpg" data-media-id="editor_0" data-image-id="20250831020844_1b54b999d67122a50c4c7e6204cc737bcc99bf2a68db6499a4566a7f61a880b4" data-rendition-name="original" width="955" height="1314" loading="lazy" alt="Diaspora Diaries 72"> </figure>  It was then that a friend suggested we learn the Korean language. We could be earning significantly higher in Korea for similar efforts. I had no plans to go abroad but he convinced me. I did not know anything about Korea, and was scolded at the language institute when I asked someone to point Korea on the map.&nbsp; It was only there that I learnt you had to pass an exam for the Korean Employment Permit System (EPS), and pay for language classes. After a week, I decided it was not for me and dropped out. But my friend convinced me to give it one more try. I did not prepare much for the exam, and it was no surprise that I failed. But it was just by one mark, and people would pity me for failing “just by one mark”. It was a brand of failure. It hurt my ego. I had to turn things around by taking the exams seriously, and locked myself up to study hard.&nbsp; Even when we had visitors, my wife told them I was not home. If I was not in my room learning Korean, I would be with a group of ten of us test-takers comparing notes and practicing late into the night. The exam was difficult, but this time I passed, the only one in my group who did.&nbsp; As someone who never liked the idea of doing a job, I still had my doubts about going to Korea. It did not help that one of my acquaintances had returned a month after he had left, and he discouraged me from migrating given that I was already making good money in Nepal.&nbsp; But my wife suggested that I give it a shot since I had worked so hard for it. And if it really turned out not to be my cup of tea, I could always return. What did I have to lose, I thought, at least I would get to visit Korea. My job there was in an electrical company that made circuit boards. I worked all day, earned good money. In the evenings, I kept myself busy with my real estate business back in Nepal. I had learnt the tricks of the trade from fellow real estate agents back home, but at the time did not have the capital to invest.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020848_941e961e2045058f255ad89884b51faa7d2365c68236e5cbe573d63d769ac6c5.jpg" data-media-id="editor_1" data-image-id="20250831020848_941e961e2045058f255ad89884b51faa7d2365c68236e5cbe573d63d769ac6c5" data-rendition-name="original" width="1500" height="1000" loading="lazy" alt="Diaspora Diaries 72"> </figure>  In Korea, it helped that I had salary records that allowed me to get loans from financial institutions both in Korea and in Nepal. Ultimately, I started earning more from my real estate deals in Nepal than from my job in Korea. This was all thanks to my ability to take loans because of the EPS scheme. My wife has been managing the flower business while I was away. My finances grew stronger over the eight years I was in Korea. I paid off the loans that I had borrowed to buy land. But real estate did not satisfy me entirely. I wondered: what is my brand? What will I be known for? What is my contribution to society? Real estate is for wealth, but that is about it. I needed to sell one piece of land and use the revenue to start a venture. I took classes in business, and returned to Nepal six months ago and got back to my family’s ancestral roots in floriculture. In Nepal too, I am continuing the entrepreneurship training I had started in Korea with the Bridge International. Such exposure helps us reflect on our business such as our branding, vision, and proactive aspects like the importance of strong recordkeeping.&nbsp; I am now working to upgrade and expand my floriculture business. With a friend who is still in Korea I am building a cooling room to increase the shelf-life of flowers and other produce and set up a market in my village where others can sell their produce. Floriculture is our primary business, but it is seasonal and earns good money only during festivals like Tihar.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250831020848_a008ffeba13896e6918f68ff6e687c8fe11140d86a96f1ec11690547f2bcd415.jpg" data-media-id="editor_2" data-image-id="20250831020848_a008ffeba13896e6918f68ff6e687c8fe11140d86a96f1ec11690547f2bcd415" data-rendition-name="original" width="1280" height="720" loading="lazy" alt="Diaspora Diaries 72"> </figure>  So, I grow tomatoes to ensure year-round earnings. I also am engaged in other businesses like real estate and online shopping. I work round the clock in Nepal — a strong work ethic is something I picked up in Korea.&nbsp; My Korean bosses would work alongside us, that motivated us. I work just as hard in Nepal as I did in Korea. People here often ask me why I am pushing myself so hard. But making garlands comes easy to me, it is work my forebears were involved in. My childhood memories are about plucking flowers with my sister. I have a comparative advantage in this work. It comes naturally to me, it is easy and I enjoy it. And sometimes, if there are too many garlands to make, I can multitask while holding meetings. My fingers just fly. I am good at this job, but my wife is even better and faster.&nbsp; When there is too much load, we can also outsource the work. To be known as the flower guy would be great personal branding. The मखमली guy. Or the सयपत्री guy. I decided to come home for just this with a one-way ticket. “अब पासा: जाँदैन ल्हासा!” &nbsp;

The flower guy

It cannot be a coincidence that after pushing bills to constrict freedom of expression and allow greater <a href="https://nepalitimes.com/news/security-or-espionage">surveillance of citizens</a>, Nepal’s government is now tightening controls on civil society.
In a <a href="https://nepalitimes.com/opinion/guest-editorial/command-and-control">series of recent moves</a> journalists have been sued for contempt of court, imprisoned for YouTube videos, or ordered by courts to desist from investigating corrupt officials.
An amendment to the Print and Publications Act that would hand the power to shut online media to the Chief District Officer (CDO). Another draft Bill would allow a political appointee to head a new Media Council with the power to revoke a journalist’s license. The draft counter-intelligence Bill would let random officials to arbitrarily tap phones, read emails and trail citizens.
Now comes yet another draft Bill that would replace the <a href="https://archive.nepalitimes.com/news.php?id=10675">Social Welfare Council (SWC)</a> with direct government control over registration, regulation, and management of non-governmental organisations, nonprofits and charities. There are more than 54,000 NGOs, 200 international NGOs registered with the SWC.
The draft makes civil society organisations needlessly jump through hoops to carry out work that complements the government in the social sector. Critics say the Bill was drafted without any consultation with <a href="https://nepalitimes.com/opinion/comment/nepal-s-rights-groups-must-step-up-4r4z6ck4">civic groups</a>.
“This Bill’s content is questionable whether it intends to allow for civil society organisations in Nepal a free space to operate,” concludes Dr SP Kalaunee, Country Representative of BlinkNow Foundation and Chair of the Association of International NGOs in Nepal (AIN). “The draft seems oriented towards controling rather than facilitating the work of civil society organisations.”
The Bill will be open for feedback from the public, and integrates the National Directives Act (1961), Association Registration Act (1977), and the Social Welfare Act (1992) and proposes dissolving the SWC and replacing it with a new Social Welfare Department under the Ministry of Women, Children and Senior Citizens.
Non-government groups will now be required to get approval from the Registrar Office, the CDO or the provincial government depending on their area of operation. Those working across provinces will have to get permission from the federal government. &nbsp;
The government says the Bill is intended to vet organisations to see if they are engaged in espionage, violate national security, assist a foreign state, commit treason, cause strife between federal units, or incite communal violence.&nbsp;
CSOs working in Nepal have long called for legislation to better facilitate their work, minimise administrative and bureaucratic red tape which have posed operational challenges. But they are opposed to such drastic control.&nbsp;
Read also: <a href="https://nepalitimes.com/banner/the-crow-and-the-scarecrow">The crow and the scarecrow</a>, Om Astha Rai
The NGO Federation of Nepal also issued a statement this week calling the Bill ‘retrograde and cumbersome’. It added: ‘Most of its provisions are intended to further constrain and control civil society organisations rather than facilitate and strengthen them, and reduce the role of citizen participation … it is an attack on our civil liberties, inclusivity, and transparency, and curtails our <a href="https://archive.nepalitimes.com/news.php?id=5156">democratic values and constitutional rights</a>.’ &nbsp;
<a href="about:blank">Nepal’s graduation</a> from least-developed country status next year may mean less aid for Nepal, and higher interest rates on loans from multilateral creditors. The <a href="https://nepalitimes.com/news/how-usaid-cut-affects-nepal">closure of USAID </a>and reduction in bilateral grants means the work of INGOs will be even more vital – especially to meet its <a href="https://nepalitimes.com/here-now/target-2030-for-maternal-and-newborn-health">SDG targets by 2030</a>.&nbsp;
“We are competing with other countries at a time when the global aid environment is shrinking, so the support we receive is directly dependent on a conducive environment for INGOs to operate and function,” says Kalaunee. “INGOs follow regulations of the nations they operate in, they will not protest or wait around for governments to change their minds or policies.”
Social safety net
Since 1977, the work of non-governmental actors in Nepal has been regulated by the Social Service National Coordination Council (SSNCC) chaired by Queen Aishwarya.
After the <a href="https://nepalitimes.com/banner/one-moment-30-years-ago-today">1990 People’s Movement</a>, King Birendra set up the Social Welfare Council (SWC) as an autonomous body in 1992 through the Social Welfare Act. But since then the SWC has been dogged by controversy and allegations of corruption and extortion.
In 2018, the Commission for the Investigation of Abuse of Authority (CIAA) filed a Rs315 million corruption case against 14 individuals, including the Minister of Women, Children and Social Welfare and SWC chair Badri Prasad Neupane and other officials for violating public procurement laws to rent out three hectares of its property around Bhrikuti Mandap.
Civil society groups have for years called for reforms in the SWC, and a report was drawn up to restructure it before this Bill proposed its dissolution. INGOs in particular will now have to go through the Social Welfare Department and multiple ministries for permissions.
A particularly objectionable provision in the draft stipulates that NGOs must have a Board of Director made up almost entirely of secretaries of various ministries. The NGO Federation has urged the government to take a civil society-friendly approach and not tangle its work in red tape and control. It says the government has no option but to revise the bill in its current form.
“Civil society organisations need an open space to operate, and an autonomous body to oversee them,” says Kalaunee. “Non-government organisations support in the areas prioritised by the government but by definition they cannot be a part of government.”

Big, beautiful Bills

Nepal’s leaders often make grandiose promises that they will turn the country into Switzerland within a decade. We will be lucky if Nepal could even attain the per capita GDP of Swaziland.
Becoming another Switzerland or Singapore is the boastful fantasy of <a href="https://nepalitimes.com/editorial/politics-as-usual">incompetent serial politicians</a> who keep getting themselves elected again and again.&nbsp;
So, what has to change?&nbsp;
It has to be <a href="https://nepalitimes.com/here-now/looking-ahead-to-nepal-s-2027-elections">through elections</a>, but there is spreading distrust of the democratic system bordering on nihilism among Nepalis. The three main parties must have sensed by now that they are doomed if they do not get their act together and inject new untainted blood into tickets in 2027.&nbsp;
One election will not clean up the muck that has accumulated over the past 35 years, but we have to start with the next one. Politics cannot be business as usual any more, voters are fed up with what is on offer.&nbsp;
Over <a href="https://nepalitimes.com/news/push-factors-driving-nepalis-out">one-third of young Nepalis are not even in Nepal</a>, and they are not allowed to cast their ballots. But we saw in 2022 that the diaspora can have an impact on how their folks vote back home, and this trend is bound to increase in 2027. It would finally break the vote banks on which the established parties have relied on to perpetuate misrule.
Nepal needs solutions urgently to address snowballing crises on multiple fronts: social inequity, joblessness and low purchasing power, failing agriculture, breakdown of services, a pandemic of corruption feeding mal-development, low capital formation, environmental woes, and to top it all off — a runaway climate emergency.&nbsp;
Yet, there are bright spots, many of which happened despite political instability: falling poverty rate, improved health and education status, increase in forest cover, conservation successes, growth in hydropower.&nbsp;
Just imagine how much further ahead Nepal would be if it was not plagued with chronic mismanagement, <a href="https://nepalitimes.com/opinion/higher-corruption-in-high-places">corruption and conflict</a>.
It is because of these modest gains that <a href="https://nepalitimes.com/news/not-poor-but-not-rich">Nepal will graduate</a> from a ‘least-developed’ to a ‘developing country’ in November 2026, and transition to middle-income status by 2030 — even though it still has an annual per capita income below the $1,306 threshold.
The driving force for this growth comes almost entirely from remittances which make up 26% of the GDP — the third highest in the world. Inflows officially hit $12.54 billion last year, and nearly 65% of households depend on money <a href="https://nepalitimes.com/editorial/the-new-equaliser">family members send home</a>, spending most of it on basic needs.
A recent discussion at the Institute for Integrated Development Studies (IIDS) titled Diaspora Dialogue: Innovation, Identity and Global Influence looked at leveraging the 4 million Nepalis who live and work abroad to spur investment and growth.
IIDS has been involved since 1979 in policy advocacy to propose sustainable solutions to governments under at least four different political systems. The fact that we are in the state we are in now must mean that not many of the policy priorities the IIDS put forward in the past 40 years have been properly implemented.&nbsp;
For decades, we’ve heard that Nepal’s path to economic growth lies in <a href="https://nepalitimes.com/opinion/people-power/nepal-can-level-up-tourism-with-electricity">hydropower and tourism</a>, but that narrative has to change, noted IIDS Executive Director Biswash Gauchan.&nbsp;
“Forget falling water, forest and forex,” he said. “Nepal has to move to a knowledge economy, boost investment and look beyond our neighbours to the diaspora.”&nbsp;
There is an artificial bubble in real estate and banking due to remittances. Even if Nepal gets 3 million tourists a year and exports most its hydropower it will not be enough to take the annual per capita income to $6,000 by 2050.
A knowledge economy means thinking beyond enrolment rates and basic literacy to quality education relevant to the <a href="https://nepalitimes.com/opinion/investing-in-people">human resources the country needs</a>. This will ensure jobs at home in import-substitution agriculture, value-added manufacturing and export of services.
And that is where global Nepalis come in. Connectivity means the end of geography, and diaspora talent and capital can be harnessed for investment and involvement in innovation to take Nepal into a <a href="https://nepalitimes.com/here-now/smart-ageing-is-nepal-s-next-frontier">digital future</a>.&nbsp;
This needs a paradigm shift away from a rent-seeking state to a ‘whole-of-government’ strategy that can only come from a new crop of competent technocrats with integrity and vision to seize the moment. They have to see migration not as 'brain drain' but as 'brain circulation'.
Those Nepalis exist. In Nepal and all over the world. Swaziland’s anuual per capita income is $4,000 — think we can do it <a href="https://nepalitimes.com/here-now/nepal-in-2050-wk6r5r1j">by 2050</a>?