There is another issue that arises with West Seti, also crucial in the case of the Karnali-Chisapani Project, referred to as “downstream benefits.” Described as “the most contentious issue in water resources cooperation between Nepal and India,” these are mediating effects on water levels, incurred in India, that result from massive storage-type hydroelectric projects such as West Seti and Karnali-Chisapani. Water is collected during monsoon season, preventing floods, and later released to provide irrigation benefits in the dry season. Whereas India clearly profits from this arrangement, in Nepal large swaths of land are submerged, displacing thousands of inhabitants [34]. In terms of dollar value, Thapa writes that “the net irrigation benefit of the West Seti project could be much greater than the net power benefit,” although this benefit is typically ignored in calculations [20]. A similar discrepancy arises in the case of Karnali-Chisapani [35]. In the latest deal, according to a “highly placed DoED official,” the government will “settle” this dollar value issue with India, leaving “the private sector to take care of the rest,” notably including “rehabilitation and compensation for inundation of land in Nepal” [30].

A Possible Deal

The importance of Chairman Prachanda’s political influence, given the recent convergence of interests in Nepal’s vast hydroelectric potential, becomes clear in light of the fact that the populations by far most affected by the mega-dam projects are among his strongest supporters. The west of Nepal, notably encompassing the Karnali-Chisapani (10,800 megawatts), Pancheswore (6,480 megawatts), and West Seti (750 megawatts) proposed project sites, is truly the mother load for the corporate hydropower developer: abundant low-cost, high-output sources, and a government that has consistently “promulgated a hydropower policy considered to be very private sector friendly,” this according to the former managing director of the NEA, Janak Lal Karmacharya [36], also a former consultant to the World Bank and Bechtel [37]. The fact that the west of Nepal is also a Maoist stronghold, controlled by Prachanda and his now “capital-friendly” entourage, is rarely mentioned by the press in the context of hydropower discussions; surely, however, the issues of Maoist arms reduction and hydropower development are strongly linked.

Recently described at as “emerging from a decade-long holding pattern” [38], the global hydropower industry is on the verge of taking off, with Nepal a central focus. Prachanda has reiterated that he favors “the initiation of small and big hydroelectric projects” [39], yet obstacles such as Clause 126 of the current constitution, as well as Maoist armed resistance, pose a serious problem for implementing large-scale projects. Given this situation, it seems reasonable to speculate that Prachanda’s recent ideological change-of-heart — reassuring corporate investors that Nepal is “open for business” — has been triggered by corporate or political offers of some kind; recent overtures by the Indian ambassador present one possible avenue for such deal-making.

Nor would such a connection be as unprecedented as one might think. The communist leader once worked for USAID, the American government agency with a notorious record of co-opting grassroots movements — particularly in poor South American countries — with disastrous consequences. He may have learned from this experience a valuable lesson. As Rajinder Puri keenly observes: “All politics today, including revolutionaries and NGOs, has become corporate activity. It matters little if money comes from governments, agencies or business houses. What matters is the agenda that is followed” [40]. Yet as Prachanda’s “agenda” has increasingly narrowed, so too has he lost sight of the real people of Nepal. Pablo Sanchez, a Marxist, notes, “Maoist realpolitik means that removal of the monarchy becomes an end in itself, no matter who you ally with. This is a very risky policy indeed” [41].

Nepal’s Other Jewels: Oil and Water

In controlling three-quarters of Nepal’s territory, the Maoist leadership, with Prachanda at its helm, holds a valuable bargaining chip. While hydropower resources figure prominently in this picture, other potential jewels abound, particularly when one considers the worldwide resource shortages looming on the horizon. Oil, surprisingly perhaps, is a big one. The U.K.’s Cairn Energy, recently catapulted to fame with big finds in India’s Rajasthan, signed contracts two years ago giving it exclusive rights to explore 5 of 10 petroleum exploration blocks along the Nepalese side of the Nepal-India border. Initially reported to be holding back from the oil search due to “deepening unrest” [42] — that is, Maoist resistance — recent restructuring indicates that exploration may yet soon commence [43].

Sir Bill Gammell, CEO of Cairn Energy and reportedly an old friend of U.S. President George W. Bush [42], is joined in his petroleum venture by another businessman hailing from Texas, Max Mazy, president of the U.S. company reportedly holding two other exploration blocks, Texana. Mazy has claimed to have “strong indications that the potential exists for world-class hydrocarbon resources in Nepal” [44], a claim supported by experts, who say, “the Ganga Basin has ideal geomorphological conditions for oil deposits,” as well as samples proving “there is something down there” [45]. Like Cairn, Texana too has backed out in the past due to resistance from the Maoist rebellion [46].

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