Pancheshwar Multipurpose Project (PMP)

General Studies Paper -2

Context: Despite the recently held high meeting between India and Nepal, the consensus over sharing benefits of the Pancheshwar project is not resolved.

About Pancheshwar Project

• PMP is a bi-national hydropower project to be developed in Mahakali River bordering Nepal and India.
• Development of PMP, is a mutual interest project between two countries, and is covered under integrated Mahakali Treaty signed between Nepal and India in 1996.
• The project is aimed at generating around 6,480 MW energy (to be divided equally between two sides), along with water for irrigation of 130,000 hectares of land in Nepal and 240,000 hectares of Indian territory, respectively.

Areas of Differences

• While electricity is divided equally, India gets the lion’s share of irrigation and flood control benefits.
• On the other hand, Nepal  feels water is ‘white gold’ and India should pay Nepal for it.
• India cannot accept this claim as it challenges India’s understanding of other water-based treaties, including the Indus Waters Treaty with Pakistan.

Overview of India – Nepal Relations

• Shared Border:The country shares a border of over 1,850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand.
• Land-locked Nepal relies heavily on India for the transportation of goods and services and access to the sea is through India.
• The India-Nepal Treaty of Peace and Friendship: Signed in 1950, it forms the bedrock of the special relations that exist between India and Nepal. 
• Nepalese citizens avail facilities and opportunitieson par with Indian citizens in accordance with the provisions of the Treaty.
• Defence Cooperation: India has been assisting the Nepal Army (NA) in its modernisation by supplying equipment and providing training. 
• Both countries conduct Joint Military Exercise SURYA KIRAN’ alternately in India and in Nepal.
• Since 1950, India and Nepal have been awarding each other’s Army Chief with the honorary rank of General.
• The Gorkha regiments of the Indian Army are raised partly by recruitment from hill districts of Nepal. 
• Connectivity and Development Partnership:India has been assisting Nepal in development of border infrastructure through upgradation of 10 roads in the Terai area; development of cross-border rail links and establishment of Integrated Check Posts.
• Water Resources Cooperation: Cooperation in water resources from the common rivers is among the important areas of bilateral relations.
• A three-tier bilateral mechanism established in 2008,to discuss issues relating to cooperation in water resources has been working well.
• Energy Cooperation: India and Nepal have had a Power Exchange Agreement since 1971 for meeting the power requirements in the border.
• India is currently supplying a total of about 600 MW of power to Nepal.
• Trade and Economic: India remains Nepal’s largest trade partner Nepal is India’s 11th largest export destination.
• In FY 2021-22, it constituted 2.34% of India’s exports. Infact exports from India constitute almost 22% of Nepal’s GDP.
• Mahakali River bridge: A MoU was signed between India and Nepal for the  construction of a motorable bridge across the Mahakali River connecting Dharchula  (India) with Darchula (Nepal), under Indian grant assistance.
• Operation Maitri & post-earthquake reconstruction assistance: In the wake of the 2015 earthquake in Nepal, GoI was the first responder and carried out its largest disaster relief operation abroad (Operation Maitri). 
• Cultural Ties:The leaders of the two countries have often noted the age-old ‘roti beti’ relationship, which refers to cross-border marriages between people of the two countries.

Issues between India & Nepal

• Treaty of Peace and Friendship of 1950: It was an effort to “strengthen and develop these ties and to perpetuate peace between the two countries”.
• As time passed, Nepal believed the treaty was “incompatible with national self-respect”.
• Kalapani dispute: The area is in India’s control but Nepal claims the region because of historical and cartographic reasons. The area is the largest territorial dispute between Nepal and India consisting of at least 37,000 hectares of land in the High Himalayas.
• Susta Border dispute: Susta is a disputed territory between Nepal and India. It is administered by India as part of West Champaran district of Bihar.
• Nepal claims the area a part of West Nawalparasi District under Susta rural municipality, alleging that over 14,860 hectares of Nepali land in Susta has been encroached upon by India.
• Political Interference:Nepal has at times accused India of interference in its internal political affairs, particularly during periods of political instability or transition.
• Security Concerns:Both India and Nepal have shared security concerns, including issues related to cross-border terrorism, trafficking, and border security.
• Perception of Unequal Relationship:Some segments of Nepalese society have expressed concerns about what they perceive as an unequal relationship with India, with allegations of economic dependence and a lack of reciprocity in the bilateral relationship.

Way ahead

• The discussion to kickstart the Pancheshwar project will require political consensus and bureaucratic foresight on both sides, which is yet to emerge.
• Despite these challenges and disputes, India and Nepal have historically maintained close ties and continue to engage in dialogue and diplomatic efforts to address bilateral issues.
• Both countries recognize the importance of their relationship and are committed to finding mutually acceptable solutions to their differences while promoting cooperation and friendship for the mutual benefit of their peoples.