Upreti, Trilochan, International Watercourses Law and Its Application ...

230 / International Watercourses Law and Its Application in South Asia Prospects and Problems of Nepalese Water Resources / 231is considered the foundation of the principle of equitableutilisation. Furthermore, being an indispensable part ofequitable utilisation, the issues of sharing the costs and benefitsin a shared river, lake or stream, has been dealt with in severalresolutions of conflicts between states. 150Nepal and India have agreed in principle to share the cost inproportion to the benefits in the Mahakali River Treaty, 1996.Article 3 (3) states:“The cost of the project shall be borne by theParties in proportion to the benefits accruing tothem. Both the Parties shall jointly endeavour tomobilize the finance required for theimplementation of the Project.” 151This arrangement entails the acceptance of the principle thatmust be applied in future co-operation in the area of waterresources development between two states. Besides this, twoprojects, namely the Gandak and the Kosi projects wereimplemented by India at her own cost. These projects do notprovide examples of downstream benefits. However, they areinstances of providing some irrigation and hydroelectricbenefits for Nepal as a matter of Nepal’s entitlement to suchshared resources. 152150 G. William Sherk, Dividing the Waters: The Resolution of InterstateWater Conflicts in the United States, the Hague: Kluwer Law, 2000, p.60.151 37 ILM (1997), p. 700.152 Article 5 of the Gandak project states “(iii): the Government of India agrees toprovide locking arrangements for facility of riverine traffic across the barragefree from payment of any tolls whatever, provided that this traffic will beregulated by the project staff in accordance with the rules mutually agreedupon between His Majesty’s Government and the Government of India.Similarly Article 7 provides irrigation facilities to Nepal at their cost. The Kosiproject agreement Article 4 provides that Nepal would be entitled to 50% ofelectricity generated from the project and that a huge irrigation network wouldbe provided at India’s cost, and that some irrigation benefits would also beprovided. These benefits would also be provided as a share of Nepal’sownership in the resources.”Nonetheless, putting the theory into practice is a verycomplicated task, as experience shows, which suggests thatwithout co-operation between the riparian countries concerned,the task is not feasible. The real issue in the development ofNepalese water resources is the sharing of costs and benefitswith her lower riparian states. Evidently, the sharing andallocation of benefits from Nepalese water resources is not onlybilateral in nature: it has crossed over into the sphere ofregional management. The fact is that Bangladesh would, likeIndia, benefit from water works in Nepal. From experience inthe international arena, downstream benefits could becategorised as follows:Power BenefitsThese should be evaluated by comparison with otheralternatives available for generating power. This obviously setsthe maximum price that Nepal might seek for the cost ofgeneration and transmission to the Indian border, i.e. theaverage of the two ‘costs’, and if it goes on to other countriesadjoining India, some of the costs for such facilities could bepaid by Nepal to India. It is understood that Nepal hassuggested to India that her current thermal replacement cost,plus the Karnali generation cost, divided by two, would lead toa fair price. That could provide a basis for negotiation, but itshould not be forgotten that there could be a cut-off price whichIndia would not be willing to exceed, as she would then find itprudent and economic to develop her own hydroelectric,thermal or nuclear options. 153 The Columbia River Treaty hasprovided a method for calculating flood benefit, and alsoregulated flow in the downstream state for extra generation ofpower. 154 Likewise, the Ycetra and Itaypu Project in the BorderRiver Panarma, the Columbia River experience, and the Laos-153 Supra note 22, pp. 344-345.154 R. W. Johnson, “The Columbia Basins” in A.H. Garretson, et.al (eds),The Law of International Drainage Basins, New York: Oceana Pub.,1967, pp. 167-241.