The Karnali River is older than the Himalaya, having cut its path over millions of years as the mountains rose. This phenomenon has created many wild and scenic gorges with rich biodiversity along Nepal’s longest river. In Nepal, the Karnali is still largely untouched by the development. But roads and hydropower plants are being built. At present, two dams in China upstream and one barrage downstream in India disturb its flow. This is the last of a five part series on The KarnaliRead also: <a href="https://www.nepalitimes.com/banner/the-karnali/" target="_blank" rel="noopener">The Karnali</a>, Ramesh Bhushal <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a226c9c7e80680e04178ajpeg.jpg" alt=""/><figcaption>Mapcha Khambab River in Tibet, China. Mapcha Khambab means peacock’s mouth in Tibetan and is named after a spring which is the spiritual source of the river. The river becomes the Karnali in Nepal and the Ghaghara in India. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a226f9c7e80680e04178bjpeg.jpg" alt=""><figcaption>Karnali River as seen in Yangar village in Humla. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22729c7e80680e04178cjpeg.jpg" alt=""><figcaption>Karnali River in Humla, the only district in Nepal yet to be connected with a road. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22769c7e80680e04178djpeg.jpg" alt=""><figcaption>At the altitude of 1,500m the river surprises with alpine forests and palm trees growing together on the river banks in Humla. Photo: NABIN BARAL</figcaption></figure><figure><img width="1000" height="1500" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22799c7e80680e04178ejpeg.jpg" alt=""><figcaption>A long exposure view of Karnali River below Shreenagar village in Humla. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a227c9c7e80680e04178fjpeg.jpg" alt=""><figcaption>Rice terraces on the flood plain of Karnali River below Shreenagar village. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a227f9c7e80680e041790jpeg.jpg" alt=""><figcaption>The first scientific expedition team on the Karnali River raft God's House rapids, one of the world class rapid in the world on Karnali River on the border of Achham and Surkhet districts of Nepal. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22829c7e80680e041791jpeg.jpg" alt=""><figcaption>The scientific expedition team camps by the side of Karnali River in Kailali district of Nepal. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22869c7e80680e041792jpeg.jpg" alt=""><figcaption>An old castle like structure carved into the rock along the Karnali River in Surkhet district of Nepal. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22899c7e80680e041793jpeg.jpg" alt=""><figcaption>Two one horned Rhinos are seen in Bardia National Park. The flood plains of the Karnali River are the source of water for endangered tigers and rhinos. The 968 square kilometres large park is the largest and the least disturbed national park in Nepal. Photo: NABIN BARAL</figcaption></figure><figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a228d9c7e80680e041794jpeg.jpg" alt=""><figcaption>The Karnali/Ghaghara River, few meters before meeting the Ganga River in India, and about 100 kilometers northwest of Patna. From India the Ganga then enters Bangladesh where it meets the Brahmaputra. Both rivers then reach the Bay of Bengal in the Indian Ocean. Photo: NABIN BARAL</figcaption></figure>Part 1: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/faith-to-reality/" target="_blank" rel="noopener">Faith to reality</a>Part 2: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/dams-and-dreams-a-journey-down-the-karnali/" target="_blank" rel="noopener">Dams and dreams a journey down the Karnali</a>Part 3: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/climate-denial-in-the-himalaya/" target="_blank" rel="noopener">Climate denial in the Himalaya</a>Part 4: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/dancing-with-the-river/" target="_blank" rel="noopener">Dancing with the river</a>

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A Karnali portrait

<figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a21f99c7e80680e041767jpeg.jpg" alt=""/><figcaption>Gurla Mandhata mountain (7,700 metres) south of Mount Kailsh. Locals in Tibet say that mountains are getting less snow in recent years. Photo: NABIN BARAL</figcaption></figure>“It isn’t as cold as it used to be a few years ago at this time of year,” says our Tibetan guide Mingmar Tashi as we walk near Mt <a href="https://en.wikipedia.org/wiki/Mount_Kailash">Kailash</a> to the source of the Karnali, Nepal’s longest river. This is the biggest tributary of the Ganga by volume, and Nepal’s longest river. It originates in Tibet’s Burang county where in late September residents were all busy harvesting and moving livestock down valley for winter.But winters are changing. Chinese studies show the Tibetan plateau is warming <a href="https://uk.reuters.com/article/us-china-climatechange/temperatures-significantly-rise-on-chinas-qinghai-tibetan-plateau-state-media-idUKKCN1N10E5">three times faster</a> than other parts of the world. In southwestern China the mean annual temperature <a href="https://www.sciencedirect.com/science/article/pii/S1674927813500347">increased 0.12 degrees Celsius per decade</a>from 1961 to 2010. Other <a href="http://www.icimod.org/?q=20533">studies</a> project that by 2050, the mean temperatures in the Hindu Kush Himalayas will increase by 1-2o Celsius, even 4-5o in some places. Read also:Part 1: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/faith-to-reality/" target="_blank" rel="noopener">Faith to reality</a>Part 2: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/dams-and-dreams-a-journey-down-the-karnali/" target="_blank" rel="noopener">Dams and dreams a journey down the Karnali</a>“Snow in the mountains in Tibet is declining and I can see that clearly,” says Mingmar Tashi. A recent Lanzhou University <a href="https://www.researchgate.net/publication/312168748_Impact_of_climate_and_elevation_on_snow_cover_using_integrated_remote_sensing_snow_products_in_Tibetan_Plateau">study</a> confirms this: snow-cover in Tibet has decreased at altitudes above 2,000m above sea level, but increased at lower altitudes. <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a21fd9c7e80680e041768jpeg.jpg" alt=""><figcaption>Aitan Bhandari from Mohoti, Bajura harvests paddy. This area was hard hit by drought in last few years but due to adequate rainfall this year the production was good. Photo: NABIN BARAL </figcaption></figure>Rising temperatures will lead to more rapid snowmelt, with severe impacts on people living in the region. Flow of rivers that originate in the Tibetan Plateau will be affected, impacting agriculture and hydropower projects. Changes in hydrology in high altitude areas are poorly understood due to high meteorological variability, lack of accessibility and complex interplay between climate, glaciated areas and hydrological processes. Nevertheless, available research shows that seasonal snow cover impacts the water storage capacity of glaciers in a warming climate. Read also:Part 4: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/dancing-with-the-river/" target="_blank" rel="noopener">Dancing with the river</a>Part 5: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/a-karnali-portrait/" target="_blank" rel="noopener">A Karnali portrait </a>“Global warming may lead to either rising or decreasing river flows, depending on the state of glacier retreat,” stated a <a href="https://www.pnas.org/content/113/33/9222">recent study</a> published in the proceedings of US National Academy of Sciences , comparing glacier melt and river flows in Nepal and Chile.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a22009c7e80680e041769jpeg.jpg" alt="" width="1500" height="1061">Map: STEFANO WROBLESKIA 2015 <a href="http://lib.icimod.org/record/32006/files/StatKraft_Review_final.pdf">report</a> by the <a href="http://www.icimod.org/">International Centre for Integrated Mountain Development</a>(ICIMOD) reviewed the impacts of climate change in the Hindu Kush Himalayan region, including Nepal: ‘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.’  It added that since most of the agriculture in mountains is rain-fed it makes farmers highly vulnerable to rainfall variability. Devi Fadera, from Srinagar village in Nepal’s <a href="https://en.wikipedia.org/wiki/Humla_District">Humla</a> district bordering Tibet, was in a rush in early October to harvest golden fields of ripening rice. “The weather is becoming more uncertain every year, so I have to harvest during these sunny days. Who knows what will happen tomorrow,” he says. <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a22029c7e80680e04176ajpeg.jpg" alt=""><figcaption>A woman collects yak dung to be used as cooking fuel in Kardung village in Tibet. This is the first village on the bank of Karnali River in Tibet and is also called Mapcha Khambab. Photo: NABIN BARAL</figcaption></figure>There has been very little rainfall in the region over the last three years. The drought of 2016 was the worst in the last three decades, but there was sufficient rainfall this year. “Rain was sufficient this year, so the paddy was good,” adds Fadera, whose harvest only feeds his family for six months in a good year. From Fader’s farm, the Karnali can be seen at the bottom of a deep gorge, and there is no way to bring any of that water up for irrigation. Most of the villages along the river depend on monsoon rains. When the food runs out, mule trains bring supplies from elsewhere in the country, but that doesn’t really help much. People in this region have the <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.663.3552&amp;rep=rep1&amp;type=pdf">lowest purchasing capacity</a> in Nepal. Malnutrition is common, and only 0.9% of the land in Humla is <a href="http://bora.uib.no/bitstream/handle/1956/16997/dr-thesis-2017-Yograj-Gautam.pdf?sequence=1&amp;isAllowed=y">arable</a>. Most men migrate to cities or India to work to supplement their income.Dirgha Shahi was hurrying to Kermi in Upper Humla to get some flour transported from Tibet’s Burang county. The only way to get food from the southern plains of Nepal is via air, and that is expensive. The abundant rainfall in 2018 brought only misery to Shahi. “It was continuous from July and August. Too much water destroyed our vegetables, especially beans,” he says. <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a22069c7e80680e04176bjpeg.jpg" alt=""><figcaption>Rangmal Thapa of Sarkegadh in Humla takes out rice stored two years ago from underground. Locals store rice by digging a hole nearby their homes for emergency use in the case of famine or other disasters. Photo: NABIN BARAL</figcaption></figure>Maheshwar Dhakal, chief of the Climate Change division at Nepal’s Ministry of Forests and Environment admits that it is difficult for the government to integrate climate change into its plans. “However, we have been providing support to several vulnerable communities through local level adaptation projects like <a href="http://www.np.undp.org/content/nepal/en/home/projects/nccsp.html">Nepal climate change support programme</a> which has its major focus in the Karnali region,” he adds. Roads construction was the most visible development activity during our 1,100 km journey down the Karnali from Tibet via Nepal to India. But in Nepal the roads are poorly planned, poorly constructed, and there is thought to the debris as it tumbles down the mountains. In Tibet there is a massive construction spree of huge embankments, highways and urban infrastructure. In Nepal, addressing environmental concerns during construction is not a priority. The government’s project to link the southern plains in <a href="https://en.wikipedia.org/wiki/Banke_District">Banke</a> district to the northern border in Humla has cut through the mountains. Dynamite blasts were a constant menace as we walked, drove and rafted for down the Karnali River. Geologist Karen Bennett who was a member of our team is shocked to see the unnecessary level of destruction.  <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a22089c7e80680e04176cjpeg.jpg" alt=""><figcaption>Rampant road construction along the Karnali river. Karnali corridor highway which is under construction will link Nepal's Dailekh to Hilsa in Tibet border. Photo: NABIN BARAL</figcaption></figure>“Roads are necessary, but the situation is worrisome,” she says. Most of the settlements along the river corridor are built on landslide-prone areas, and people have built over previous landslides. These are inherently unstable, and improper road construction increases their vulnerability. Incremental investment during construction would have saved the billions that will be needed for future maintenance. Bennet says: “If such haphazard construction continues, villages along the Karnali will suffer badly.”Rampant road construction has already led to <a href="https://thehimalayantimes.com/nepal/haphazard-road-construction-increases-landslide-risk-in-bajura/">serious problems</a> in recent years. The Karnali Highway linking Nepal’s western border with Tibet was on the drawing board for two decades but moved forward after 2015 when the job was given to the Nepal Army. One of the biggest projects in the country, the 500-km road will link India and China. But it is being built with no attention to basic principles of road engineering in mountain regions. <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a220d9c7e80680e04176djpeg.jpg" alt=""><figcaption>Construction of Karnali Coridor in Nepal's Bajura. Haphazard construction has increased vulnerability of the communities in the fragile landscape. Photo: NABIN BARAL</figcaption></figure>All rural municipalities in Nepal have a mission to link each village ward with roads in the next few years. “In the next three to five years we will have all the villages linked with rough roads,” boasts Devraj Devkota, mayor of Panchadeol rural municipality in Nepal’s Accham district. As the hills and mountains are excavated, most of the debris is thrown directly into the river. “This will create geological instability and will have severe impacts on aquatic species,” warns Deep Narayan Shah of the Central Department of Environmental Science, Tribhuvan University. Blacktopped highways from Tibet have reached the Nepal border, and Nepal is also focusing on enhancing road connectivity with its northern neighbour and all the main corridors are along the major rivers: Sun Kosi, Trisuli, Kali Gandaki and the Karnali. The Indian states of Bihar and Uttar Pradesh are already connected with Nepal by road. Experts say there is also a need to connect people and governments to be prepared for disasters and the impact of climate change.  <figure><img width="1500" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101132/636a22109c7e80680e04176ejpeg.jpg" alt=""><figcaption>Chudari Village in Bajura sits on the landslide debris on the bank of Karnali River. Several villages along Karnali river are on similar kind of old landslides. Photo: NABIN BARAL</figcaption></figure>Rajan Kotru, from the <a href="http://www.icimod.org/">International Centre for Integrated Mountain Development</a>, headed the <a href="http://www.icimod.org/?q=9456">Kailash Sacred Landscape</a> conservation program, the first of its kind involving all three countries in the region. Asked about what he had achieved over the last five years, his answer was diplomatic: “We were able to lay the foundation for dialogue between countries and people at local level. There is also a greater realisation that coming together will benefit all and is necessary.”  Despite this realisation cooperation between Nepal, India and China on river basins is negligible. Nepal shares a 1,400 km border with China and Nepal’s Foreign Ministry has several bilateral mechanisms to talk with China, but none of them involve water resources, even though Nepal’s rivers originate in Tibet.Nepal’s relationship with India on water issues is also sensitive. There is no real cooperation, just formalities, and even so there is no mention of the impact of climate change on shared water resources. The story is jointly published by Nepali Times and <a href="https://www.thethirdpole.net/en/" target="_blank" rel="noopener">The Third Pole</a>. Subsequent instalments of this five-part series will appear from 8-11 January.

Climate denial in the Himalaya

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>?

river-system

A Karnali portrait

Climate denial in the Himalaya

30 years after Baby Arun

The flower guy

Big, beautiful Bills

Size does not matter