Melamchi Project and Water Privatisation in Kathmandu Valley
Ratan Bhandari
Melamchi Water Supply Project (MWSP) is the one of the most controversial projects funded by Asian Development Bank (ADB) in collaboration with Japan Bank for International Cooperation (JBIC), Norwegian Agency for Development Cooperation(NORAD), Swedish International Development Assistance (SIDA), Nordic Development Fund (NDF) and Organization of Petroleum Exporting Countries (OPEC) Fund. MWSP aims to divert 170 million liters of water per day from a small Melamchi River to Kathmandu Valley through 26.5 Kilometer tunnel.
MWSP was proposed long ago saying that locally available water sources are not enough to fulfill present and future demands of Kathmandu Valley. Therefore, Melamchi was considered as the best options. However, no other better and cheaper alternatives have been considered properly available within the Valley before the MWSP.
Issues of Concerns in Melamchi Valley
Melamchi Valley is a highly populated area. Traditional agriculture is the main occupation of livelihoods. They produce crops and vegitables thrice a year virtually in all months. So for them, the Melamchi River is their lifeline. The made-backward communities such as the landless Majhi and Danuwar totally depend on fishing. Some families live their lives with incomes from traditional Pani Ghatta (water mill). There are a several dozens of small and large irrigations canals with running water in all seasons.
The local people have been campaigning for the guarantee of their shares of waters for about two decades before the river is diverted. They have been demanding for a comprehensive Environmental Impact Assessment (EIA), particularly as regards the present and future of Melamchi waters so as to determine the availability of waters for diversions if any. They are being organised to fight their case even before the Nepali courts as well as the ADB's accountability mechanisms to guarantee their regular water use right. The requests for such a complementary EIA and water right guarantee have not produced any results so far as to date.
Issues of Concerns in Kathmandu valley
One main issue for the residents of Kathmandu Valley is when they are going to get Melamchi water in their pipes. They know they have plenty of waters around the Valley in huge quantity but they are told the Melamchi water is still the best option. This dream has been sold to them for over two decases but with no significant progress as to date. They do not understand why the government, the ADB and other donors have been hesitant to invest in local water alternatives.
Kathmandu Valley has plenty of water alternatives ranging from hundreds of public water taps to wells, ponds, streams and rivers. But they all have either been ignored or undermanaged or destroyed with uncontrolled modern urban constructions and infrastructures. There has been no investment in huge rainwater that can easily be collected during the monsoon seasons in the months of May-August. So much groundwater could be utilised with proper recharge systems, for examples, by maintaining and conserving existing rivers and public lands. The existing leakage of at least 40% due to very old water supply infrastructures is another problem that has not been tackled. One big concern is that to government has not done enough to restore, rehabilitate and develop such infrastructures to be required as soon as the Melamchi water is brought to the Valley.
Experts say the drinking water could be made available in a much more cheaper and quicker manner compared to Melamchi. But this has not been happening due to the vested interests of the donors as well as those in the government who are largely behind the luxury of hug external money to meet their greed. The unexpectedly high cost of the Melamchi water is something that no the government and the donors have informed the Valley residents to be ready for.
Donors' Pre-conditions and Water Privatisation
One main lending conditionarity of the ADB mainly is the commercial privatisation of Kathmandu water supply and sanitation systems. Although called as the scheme of public-private partnership (PPP), the current arrangement of the water supply and sanitation systems is basically a total private management and operation in which the poors would have no easy access to. As this PPP is organised on the basis of the principle of full cost recovery, there would hardly be any subsidies for the about 40% of the lower income and landless families in a metropolitan city of over three millions.
As per the process, the government was first asked to transfer all assets, powers and operational authority from the already well-functioning Nepal Water Supply Corporation (NWSP) – a public utility. To prepare for this, Kathmandu Valley Water Supply Authority was established in 2000. The ADB, in 2003, then provided US $15 millions in the name of the institutional reform and preparation of management contract. After that Kathmandu Valley Water Supply Management Board (KVWSMB) was formed to takeover the NWSP assets and its power.
Then was established Kathmandu Valley Drinking Water Limited or Kathmandu Upatyaka Khanepani Limited (KUKL) to takeover the responsibility of the Valley's water supply management and operation. Various laws are enacted by the Parliament for the establishment of all the above institutions. Although, these laws were challenged before the Supreme Court under the leadership of Water and Energy Users' Federation-Nepal (WAFED) arguing for the guarantee of the right to water as a public service, the case was lost. Later on, WAFED together with other Nepali advocacy groups and the London-based World Development Movement to force the withdrawal of the Birmingham (UK)-based Severn Trent Water International, a notorious multinational company, but stopping the domestic privatisation through KUKL could not be stopped. KUKL is given the license for 30 years by the KVWSMB with the payment of Rs. 10 millions as per the annual fees. In the KUKL, the shares have been divided as the government 30%, Kathmandu Metropolis 30%, Lalitpur Sub-Metropolis 10%, Bhaktapur, Kirtipur and Madhyepur Thimi Municiplaties 10%, private organisations (15%), Federation of Nepalese Chamber of Commerce and Industries 3%, Laitpur Chamber of Commerce 1.5%, Nepal Chamber of Commerce 9%, Bhaktapur Chamber of Commerce 1.5%, and employee trust to be paid by the government (5%).
Regarding the administrative management, rour directors are nominated by shareholders and three appointed as independents. The chairpersons is selected from among the Board of Directors. In addition, KUKL also has provisions for three international experts for the positions of General Management Advisor, Operational and Technical Management Advisor and Financial Management Advisor. Their job is to handle operating structure, business processes, financial management and administration. The NWSC was sent out of the Kathmandu Valley for to continue its services. But gradually the government is expanding its privatisation schemes in other cities and municipalities as well despite protests and court actions. The chart below shows the division of work among these institutions and the human resources:
KUKL was to provide qualitative and quantitative water service at an affordable cost but it has not happened. The quality, quantity, distribution, management and operating systems have worsened further. One of the main reasons is its inefficiency caused due to internal controversies over appointments of and allowances for the bosses as well as salaries and benefits for the employees. Financial irregularities and corruptions have gone rampant leading to official investigations in recent months.
Increasing water tariff has become another serious problem. ADB has already forced for 30% increase even though there is now water flowing in the pipes. Consumers are protesting the minimum tariff they are oblised to pay even when there is no water supply at all. TheWater Supply Tariff Fixation Commission (WSTFC) is also found lost as regards setting proper standards for those who consume more commercially and those who use only for the households. Unequal distributions of available water among the residents have become another example of institutionalised corruptions.
WAFED's Campaign against Water Privatisation
WAFED as to date is one of the very organisaitons in Nepal championing the cause of water as a human right. It has been doing all it can to prevent the privatisation of water supply. WAFED campaigners felt a big shock when they found the Maoist government endorsing and enforcing the privatisation of Kathmandu water supply in 2009 which it was opposing before coming to power. Its main campaign was for the strengthening of the NWSP with same treatment as in the case of KUKL, but with no KUKL, in terms of its autonomy and budgetary investment. Although the NWSP was criticised for becoming a platform of political appointments, over-staff, inefficiency and corruptions, KUKL has gone to worse for the same reasons. WAFED still believes that still the best option is the reorganisation of the water supply system in the country through the NWSP. The PPP has simply become a mega failure already.
WAFED's additional campaign is the utilisation of local water resources in the Valley as mentioned above through the NWSP as well as the five municipalities and communities as co-operatives. If done so, there would be no need of Melamchi water diversion at the high cost of the loss of local livelihoods. Experts suggest that more water could be collected and supplied in half of the price and at half of the time than the Melamchi. The current Melamchi project cost is estimated as around $464 millions. This is a cost that will force Kathmandu residents to pay for their shares of water almost in bottled water price when it comes. The rehabilitation of old and outdated water supply infrastructures is another area that WAFED is campaigning for so as to control the huge leakage of up to 70% in some areas as it has at the moment.
Therefore, WAFED's call for the government and the ADB is to revert the scheme of water privatisation in any part of Nepal. It has already been proved as a gross failure. The ADB has not been able to show that there are cases of successes in other countries, and the Manila privatisation disaster in its own backyard is one clear example. The cooperative and community approach is what Nepal has to promote for the better sustainability of our scarce water resources for the growing populations in the Valley. Removal of high-water-consumption facilities and industries, e.g. carpets, hospitals and so on, outside the Valley is something Nepal must act in the near future. Kathmandu simply has no capacity to adjust unlimited numbers of population and associated economic activities, including housings.
Finally, the ADB and Nepal's other donors and lenders at present and in the future must take into consideration that the country is going through a process of new constitution writing. The recognition of water supply and sanitation as a fundamental human right has already become an accepted concept there at the Constituent Assembly. Therefore, no any external forces of commercial and global interests should impose upon Nepal the scheme of externally managed, fundd and guided water supply systems for this country of very traditional and agro-based small societies in transition. Even if imposed, it simply does not work, and KUKL has already proved that it would not work. They should extend their support in grants and loans in areas which Nepalese themselves can manage properly and easily without any burden of foreign debt burden.
Bhandari is coordinator of WAFED.
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