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194 / International Watercourses Law and Its Application in South Asia Prospects and Problems of Nepalese Water Resources / 195the development of water resources for the common benefit ofher people, and according to the principles of equity. Thoseprinciples were incorporated in the Mahakali treaty, which wasable to accommodate the divergent needs and interests of bothriparian nations. Nevertheless, due to disputes over theinterpretation of Article 3 of the said treaty, which provides forexisting consumptive use, Nepal’s consumptive use has beenspecifically defined in the treaty, whilst India’s consumptiveuse was not defined, and in the later stages was disputed (Nepalrecognised 248 cusecs while India argued for another 201cusecs), against the spirit of the treaty. Thus, the finalisation ofthe Detailed Project Report (DPR) could not be agreed upon,irrespective of numerous meetings held on several levels. It wasenvisaged in the treaty that the DPR should be finalised withinsix months of the ratification of the treaty; however, due to theposition taken by both states, it seems that it may take eightyears to finalise the DPR, which demonstrates the complexitiesassociated with it.It should be understood that early arrangements concerning thesharing of the Mahakali river were carried out under the SaradaBarrage agreement of 1920, but that due to its possible nonfunctioning,the river’s management was embodied in theMahakali treaty which replaced it. Simultaneously, the secondcomponent was the Tanakpur Barrage, which must beconsidered separately; however, the treaty providesarrangements in relation to the sharing and allocation of itsbenefit. Thus, the Mahakali river is to be developed in anintegrated manner so as to maximise the total net benefit fromsuch development. Either party should be entitled to equalbenefits and will thus share the costs in proportion to the shareof benefit which they actually receive. 44 The treaty has44 F. Marty, “The Pancheshwar Multipurpose Project on the MahakaliRiver (India-Nepal)” in P. Lang, (ed), Managing International Rivers:Problems, Politics and Institutions, Bern, European Academic Pub.,2001, pp. 161-219; also see A. B. Thapa, “Pancheshwar ProjectDownstream Benefits” (2003) in 23 Spotlight, July 11-17, pp. 1-3.recognised that the Mahakali is a boundary river on majorstretches, and to conclude a treaty on a boundary river on thebasis of equal partnership, it has defined their obligations,corresponding rights, and duties with regard to utilisation of thewaters of the said river. 45It is argued that this treaty provides a false impression that thetwo governments have taken a 'basin approach', because infuture the only project work which will be carried out is thePancheshwar Multipurpose Project (PMP); furthermore, otheroptions are negligible, except the Pancheshwar Barrage. 46Basically, the treaty establishes four main principles for designand implementation of the PMP. 47 The first principle is that thePMP will be designed to produce the maximum net benefits forboth countries in the forms of power generation, irrigation use,and flood control. The second principle of the project is that itwill be carried out in an integrated manner and the benefits willbe shared equally. The third principle is that both countriesshare the cost equally in proportion to the benefits accruing toeach. Finally the fourth principle is that a share of Nepal'senergy (half of the 6,480 MW) will be sold to India and itsprice shall be mutually agreed upon between the parties basedon the avoided cost principle. Generally, avoided cost refers tothe replacement cost of alternatives (thermal or nuclear). Thisobviously sets the maximum price of the cost of generation andtransmission to the Indian border. A compromise suggested byNepal as a fair price is the sum of India’s current thermalreplacement cost and Karnali’s generation cost, divided bytwo. 4845 S. M. A. Salman & K. Uprety, "Hydro Politics in South-Asia: AComparative Analysis of the Mahakali and the Ganges Treaties"(1999) in 39 NRJ, p. 313; also see S. M. A. Salman & K. Uprety,Conflict and Cooperation on South Asia’s International Rivers: ALegal Perspective, the Hague: Kluwer Law, 2003, pp. 101-118.46 Article 3, 36 ILM, (1997), p. 537.47 Ibid. p. 533.48 D. Gyawali, Water in Nepal, Kathmandu: Himal Books, 2001, pp. 53-65.
196 / International Watercourses Law and Its Application in South Asia Prospects and Problems of Nepalese Water Resources / 197However, it has been argued that the treaty has attempted tofollow a model based on the principle of 'equitable utilisation'and 'no harm' principles. 49 Nonetheless, whether these conceptsare genuinely embodied is not clear, due to the ambiguityreflected in Articles 3 and 5 (1) as well as paragraphs 3 and 6 ofthe exchange of letters of the Mahakali treaty. The contentiouspart is the wording of 'respective consumptive use of the watersof the Mahakali River' without actually specifying the nature ofthe use. In the meantime the exchange of letters (exchange ofletters with this treaty), in paragraph 3 (b), contains somerestrictions as to the notion of equal entitlement, stating that:“it is understood that Paragraph 3 of Article 3 of theMahakali Treaty precludes the claim, in any form,by either party on the unutilized portion of theshares of the waters of the Mahakali River of thatParty without affecting the provision of thewithdrawal of the respective shares of the waters ofthe Mahakali River by each party under thisTreaty”.These provisions do not guarantee that equal entitlement ofwater, from a Nepalese standpoint, should be half of the totaluse for each country. The term “existing consumptive use” is akey phrase adding to the confusion, whereas Article 5.1, whichstates that the “water requirements of Nepal are to be givenprime consideration”, contradicts the other provisions andcreates ambiguity. It is obvious that India's consumptive use ishigher than Nepal’s which may impact on Nepal's plans toforgo part of her water entitlement in return for bearing aproportionately lower share of the costs of non-hydrocomponents. 50 That is to say, the treaty provides that the cost ofthe project will be shared proportionately to the benefits; ifIndia is able to define maximum existing use, the remainingwater use cost will be lower; this is the obvious reason for the49 Supra note 45, p. 111.50 Supra note 44, pp. 322-323.wrangling over the definition of consumptive use. However,Article V of the Helsinki Rules and Article 6 of the UNCIW,both state that existing use is only one of the factors to beconsidered in determining whether or not any specific use isequitable. Thus it seems, however, that the emphasis ondefining much quantum of water in terms of consumptive usemay not serve India’s interests as well as might have beenthought.The author had an opportunity to work as a member of aNepalese delegation to India in 1997 and 1998. In thenegotiations, Indian insistence on maintaining the existingvolume of water use at and beyond 160 km within herterritories was considered an illegitimate argument from thestandpoint of IWL, and Nepal has asserted this view. 51 Forinstance, 160 kilometres down from the Indo-Nepal border,India had diverted waters from the same river through anauxiliary canal, for which they (Indian) are claiming all existingconsumptive use, and expecting Nepal to recognise this. This isquestionable from a legal and political pointview. Nepal cannotbe expected to negotiate over issues so far from her border,within Indian territory, which is not part of the main Saradacanal, and could never raise the issues in time for theconclusion of this (Mahakali) treaty. On the contrary India wasalways raising the level of the aforementioned consumptiveuse, which Nepal has not debated; the dispute is about 201cusecs of water. 52 The argument put forward by Indiapertaining to the existing use 160 km below the border istantamount to supporting the absurd proposition that becausethe Farakka diversion of about 44,000 cusecs (although not forthe purpose of consumptive use) constitutes the consumptiveuse since 1975, that too must be guaranteed by Nepal.51 Nepal has insisted that she cannot negotiate with the resource which isnot in her jurisdiction or sovereignty.52 Supra note 10 p. 957.
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International WatercoursesLaw and I
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PrefaceIn this book, the author has
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International Treaties and other Do
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GlossaryMap of the Ganges BasinThe
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Chapter- ThreeEquitable Utilisation
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