Governance failure created hurdles in benefit sharing in hydro

Lalitpur, June 27: Chronic governance failure has become a serious impediment to the benefit sharing of hydropower development, stated a recent study.

 The study entitled 'the Benefit sharing and sustainable hydropower in Nepal' pointed out that the lack of elected local government hampered in achieving good governance, which it turn hit the overall hydropower development.

The study was conducted by the International Centre for Integrated Mountain Development (ICIMOD) and Niti Foundation.

It concluded that although it would be inappropriate to create a 'one-size-fits-all' policy, time has come to establish more comprehensive policy framework in order to address the concerns of all stakeholders.

"Lack of clear benefit sharing framework has exposed the hydropower developers to the just and unjust demands of local population who feel that their voices have long been ignored," read the summary of the report.

The study has suggested five types of benefit sharing mechanisms: royalty, equity investment, support for local livelihoods, community development and environmental enhancement.

"The royalty mechanism is the single most formalized benefit sharing policy in the hydropower sector and is applied uniformly across all projects generating electricity in Nepal but issues arise due to a lack of clarity in the redistribution of royalties to project affected villages and uneven distribution when the project is located in two or more adjoining districts," it said.

In recent years, several hydropower companies have conducted equity or 'share' offers allocating a percentage of these shares to local citizens while one of the most articulated local demands during the construction of hydropower project is employment.

The study suggested conducting training as one of the most important feature of benefit sharing programmes. "Support local livelihoods over the long term by preparing locals for more skilled jobs with the hydropower project, promote new kinds of economic opportunities within the local economy and allow trainees to enter new markets beyond the project area," read the report.

According to the study, for the community development aspects, local infrastructure, electrification and water-related benefits could be offered.

Speaking at the report launching ceremony on Monday, vice-chairman of the National Planning Commission Dr. Yuba Raj Khatiwada underscored the need to set up a clear mechanism to allocate share and other benefit, as well as compensation, to the people affected by the hydropower project.

"Shares distribution empowers local people and they will have their say on the project. It minimizes hassles in the project implementation," he said.

Dr. Khatiwada urged the developers to use local materials in the construction of the hydropower projects to help the local economy grow.

Narendra Prajapati, treasurer of Independent Power Producers Association of Nepal (IPPAN), remarked that the benefit sharing should be relative to the capacity of the hydropower project.