Kathmandu, June 9: The Supreme Court has issued a six-point directive to the government, instructing authorities to ensure that the interests of local communities are adequately protected during the implementation of the Phukot Karnali Hydropower Project.
The directive was issued in response to a writ petition that challenged the project agreement as being against Nepal’s national interest. Following an interim order issued on December 27, 2023, construction activities on the project were halted, leaving the project in limbo.
The Court directed the government to revise the memorandum of understanding (MoU) to increase the amount of electricity Nepal will receive free of cost in proportion to its investment. It also ordered that Nepal’s legal framework be strictly followed in the registration and regulation of the joint venture company established to implement the project.
Emphasizing the rights of affected communities, the Court instructed authorities to clearly define resettlement and rehabilitation plans for project-affected households. It further directed the government to formulate a long-term strategy for the multipurpose use of water resources in accordance with the Water Resources Act while operating the hydropower project.
The Court also ordered concerned agencies to address issues such as access to safe drinking water, poverty reduction, and employment generation in the remote project area. It stressed strict compliance with existing laws and equitable distribution of project benefits to local communities.
Although the verdict was delivered on September 1 last year, the full text of the judgment was published only recently after delays caused by the reported loss of court documents during the Gen Z movement, which allegedly resulted in the destruction of records at the Supreme Court.
While rejecting the petitioners’ demand to annul the agreement, the Court issued directive orders aimed at improving livelihoods and safeguarding the welfare of affected residents.
Located across Raskot, Sani Triveni, Khandachakra and Pachaljharana areas of Karnali Province, the Phukot Karnali project is a 480 MW semi-reservoir hydropower scheme. The design includes a 180-metre-high dam at Sisnegada, with water to be diverted through a 12-kilometre tunnel to an underground powerhouse.
During the visit of then Prime Minister Pushpa Kamal Dahal to India on May 31, 2023, an MoU was signed between NHPC and Vidhyut Utpadan Company Limited to develop the project.
Under the agreement, a joint venture company worth an estimated Rs 92 billion would be established, with NHPC holding a 51 percent stake and Vidhyut Utpadan Company Limited holding 49 percent. Nepal would receive 21.9 percent of the generated electricity free of cost, while ownership of the project would be transferred to Nepal after 25 years of operation.
The writ petition was filed by local residents, including Eshuda Kumari Baral and Ajay Bahadur Shahi, who argued that Nepal should develop the highly profitable project using domestic resources rather than handing it over to a foreign company.
The petitioners also contended that international agreements involving Nepal’s natural resources should be ratified by Parliament and criticized the decision to award the project to an Indian company without parliamentary approval. Construction of the project has remained suspended since the Supreme Court’s interim order. #nepal
