MIN RATNA BAJRACHARYA

India's Water Resources Minister Saif Uddin Soz let the cat out of the bag last week when he ended an interview with the BBC Nepali Service by saying: "Our main interest (in Nepal's rivers) is flood control and irrigation. Those are our first and second priorities. If we get hydroelectricity as a by-product, that will be a bonus for us." ( 'Flood-control, irrigation, hydropower', #418)

If 70 per cent of the water in the Ganges flows down from Nepal and 80 per cent of that water falls in the three monsoon months, the Indians would be foolish not to want to regulate it. The Kosi embankment collapse and the floods in western Nepal and Uttar Pradesh this week have added a sense of urgency to this issue. But Soz was the first senior Indian politician to put it quite so bluntly.

Sadly, Nepali officials still don't seem to get it. If India's interest is really 'augmented flow', what is our negotiation strategy? The prime minister goes to India and all he talks about is energy. The third Power Summit organised this week in Kathmandu by the Independent Power Producers Association of Nepal and the Power Trading Corporation of India focuses on electricity.

Calculating an annual compensation package to Nepal for submerged valleys and putting a cost on regulated flow is fraught with political and technical complications. The first test cases will be West Seti and Naumure, the two reservoir projects that are in the immediate pipeline. Kathmandu is so convinced it'll get a raw deal on regulated rivers, it just doesn't dare agree to anything.

However, we shouldn't wait around twiddling our thumbs just because we are convinced the Indians are going to arm-twist us. First, we must work out a formula to calculate annual reparations for submergence and a tariff on regulated flow. Second, we shouldn't let delays on water negotiations set back energy projects. Third, look for alternatives to high dams like Kosi with smaller inter-basin transfers like the Kamala Diversion.

The Maoist-led government wants to "think big" and increase present generating capacity from 600MW to 10,000MW in 10 years. This will cost Rs 1.4 trillion. There's no harm in dreaming, but even if we manage to generate that amount of electricity by 2018, our domestic demand will have risen to 3,000MW and India's generation capacity will be 300,000MW. Our exports will make up only two per cent of India's electricity needs in 10 years, so they can do quite well without our power. We need it much more here.

Nepal needs to generate more electricity to meet rising domestic demand and then sell the surplus to balance our Rs150 billion annual trade deficit with India. The most prudent course of action for us therefore is to fast-track hydroenergy projects by turning Nepal into an investment-friendly destination.

For this, the new government must get serious and streamline licensing, respect the sanctity of contracts and temper militant labour. If that isn't done, forget about 10,000MW in 10 years.