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Analysis of the Indo - Nepal Mahakali Treaty

Info: 5432 words (22 pages) Dissertation
Published: 12th Dec 2019

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Tagged: International RelationsPolitics



Humans beings depend a lot on the natural resources provided by the nature for their survival. The recent period of human history differs with the earlier period in its strikingly high rate of resource utilisation. In the present environment, apart from energy the other important focus of any nation is in garnishing fresh water, one of the most precious natural resource. Water is required for the domestic use, industrial purpose and agriculture. With the increasing human population and depleting natural resources, as perceived by most, water is likely to be a source of major conflict in the near future. As per analysis, with the impact of global warming and population boom, by the year 2025 our world would be suffering from dramatic effects of hydrologic poverty. There would be great disputes and even war over water.

For a country, water is brought by two ways, either as precipitation over her national territory or as inflow from upstream countries in the same river basin. The use and misuse of water in the upstream countries affects its quality and usage in the downstream country.

South Asia is a region for both water abundance as well as water scarcity. The Hindukush – Himalayan region together with the ancillary mountains is one of the largest store houses of fresh water in the world with most of the nations of this sub continent depending on the same in one way or the other. However, water problem in Asia is already severe, with a large population not having access to safe drinking water.

Both India and Nepal share one of the largest geo hydrological region called the Ganga – Brahmaputra basin. Most of the major rivers of the sub basin of Ganges river originates from Nepal and thus are trans boundary in nature. Nepal occupies 13 percent of the total drainage of Ganges basin and in terms of annual water flow; it contributes up to 45 percent. In dry seasons, Nepal’s contribution to the total run off is almost 70 percent[1]. The hydrological features bind both India and Nepal geographically as far as water resource is concerned. There is considerable scope for joint endeavour between both the nations on issues pertaining to water resource development and water management. However various issues relating to the same has not been smooth .The geopolitical influence, big small country syndrome, failure to understand each other’s sensitiveness and negative approach has led to a situation which may become a source of future conflict and a major issue in shaping the eventualities between both the countries.


Statement of Problem

This dissertation attempts to analyse the genesis of the problem with regard to the Indo – Nepal Mahakali treaty and suggest measures to resolve the deepening divide.


The Mahakali treaty is formally operational. However, there is a disagreement over interpretation of the provisions. A negotiation based on equitable sharing, i.e. having equal rights on utilisation of the water resource and related benefits depending on each riparian states economic and social need can resolve the deepening divide.

Justification of the Study

Water insecurity is omnipresent in the region, visible in conflicts and tensions erupting within and across countries. As water is becoming a scanty and critical resource with every passing day, sharing and management of trans-boundary water continues to be a bone of contention in any attempts to build a common understanding, stability, peace and cooperation in the region. Though there are a numerous treaties as far as sharing of trans- boundary river is concerned, however in many places the bilateral treaties signed by different countries and India themselves have become sites of conflict.

For a fast developing economy and for a nation like India which believes in the principles of peaceful co existence, there arises a need to address issues which are of concern. As regards to the region is concerned, water governance specifically and ecological governance at large has never been as strong, nor as urgent as now with the growing impact of global warming and depleting fresh water bodies. There has always been the big versus small nation syndrome on many such issues.

The need to resolve issues pertaining to trans boundary water is very much essential for peace and cooperation in South Asia. Therefore there arises a need to institute a framework for water governance that is fair, equitable and environmentally sound and resolve such issues which when addressed appropriately could go a long way in the development of the region as a whole.


This study concentrates on the Mahakali Integrated Development Treaty under the backdrop of various principles of international law governing international rivers and thereafter advocates some suggestions to resolve the conflict. Although various other joint water resource development treaties currently in place between the two countries are inextricably linked with the subject, the same debate has been excluded from the subject.

Method of Data Collection

Information for this dissertation was obtained from documentary and non- documentary sources. Cyber media was adequately accessed to obtain the latest views on the subject. A bibliography is appended at the end of the text.

Organisation of the Dissertation

It is proposed to study the subject in the following manner:-

  1. Chapter II: Background of the Treaty. This chapter tries to examine the various issues and treaties pertaining to water sharing between the two countries which had a direct impact on the course of the Mahakali water treaty.
  2. Chapter III: The Provisions of the Treaty This chapter deals with the twelve mutually accepted articles of the Mahakali water treaty concerning the integrated development of the Mahakali barrage between the erstwhile His Majesty’s government of Nepal and the government of India.
  3. Chapter IV: Issues of Conflict Though the treaty is formally operational, however the implementation of the provisions has been slow due to disagreement over interpretation of the provisions. This chapter tries to analyse the differences that had emerged between both India and Nepal on various issues pertaining to the treaty.
  4. Chapter V : Principles of International Law Governing International Rivers In this chapter the four basic theories with regard to the water rights of various riparian states are dwelled upon.
  5. Chapter VI : Possible Measures to Mitigate the Conflict. Though steps have been initiated to resolve the conflict still there are differences over the treaty. In this chapter an endeavour has been made to study various methods to mitigate the deepening divide.



Both India and Nepal share many rivers such as Kosi, Gandaki, Karnali and Mahakali. In order to harness the benefits of the Mahakali river between India and Nepal, a multipurpose project was planned. The Mahakali treaty though provides for a construction of a project on the Mahakali river however it has its background to various historical events, which led to the conclusion of these agreements.

As regard to the Indo Nepal water treaty, the water resource development dates back to 1920 when the British Indian government decided to build the Sarda barrage to irrigate the United Province. As per the treaty, Nepal government agreed to transfer 4093.88 acres of her land on the eastern banks of Mahakali river to build a barrage. In exchange Nepal received an equal amount of forest land from the British Indian government to the east[2]. In addition the British Indian government also agreed to give 50,000 rupees, a supply of 4.25 cubic meters per sec (cumsecs) out of an annual flow of 650 cumsecs during dry season and 13 cumsecs of water in the wet season which could be further increased to 28.34 cumsecs if water was available[3].

The project was undertaken by the British Indian government for its own benefit and at her own cost in addition to an equitable transfer of land with some benefits as regard to sharing of water is concerned, being provided to the Nepal government.

In 1954 India and Nepal signed the Kosi agreement which entailed construction of a dam on the Kosi river for the use of the river water. The Kosi river is one of the major rivers of Nepal. One of the peculiarities of the river being that it shifts its course frequently and used to flood the plains of Bihar. The Kosi project agreement was signed with the aim of preventing floods in Bihar, diverting the confined water for irrigation and hydropower generation (20,000 KW)[4]. The 1.15 km barrage was completed in 1962. The barrage was entirely in Nepal with the eastern main canal in India[5]. the project was seriously criticised at all levels in Nepal, the complaint being that it was a sell out of national property for India’s benefits and that nothing had been obtained for Nepal in return for a huge expenditure of resources. Subsequently on Nepal’s insistence, talks were held to revise the agreement in 1966. Later in 1982 the western main canal was completed of which 35 km stretch of the canal passed through Nepal which was designed to irrigate 356000 hectares of land as far as Darbhanga in India towards the west and 11000 hectares of land in Nepal[6]. Though the project was completed; however there arose a discontented feeling in Nepal. Nepal’s concerns were that the project gave limited benefit to her compared to India. Though India adjusted to the concerns of Nepal, the agreement created a rift in the relations between the two countries and Nepal became cautious for initiation of any new agreement.

In 1959 India and Nepal signed the Gandak Irrigation and Power Project Agreement. As per the agreement, Nepal government allowed India to construct a barrage at her own cost. The barrage was designed to irrigate 920,000 hectares of land in the state of Bihar and 37,000 hectares in western Nepal from the eastern main canal and similarly 930,000 hectares in Uttar Pradesh and 20,000 hectares in Nepal from the western main canal[7]. The barrage was constructed on the Indo – Nepal Border. The agreement met similar criticism as had the Kosi project.

The discontented feelings arising from the Kosi and the Gandak irrigation project were the reasons which inhibited any progress on the projects to include the Pancheswar and Saptakosi to name a few later on. Furthermore a constitutional amendment made Parliamentary ratification necessary by two third majorities for any treaty or agreement relating to natural resources which affect the country in a pervasively grave manner or on a long term basis.

In the meantime, in 1983, India began constructing the Tanakpur Project. The project was started unilaterally on the land which was transferred to India under the Sarda agreement[8]. Problems started on the eastern afflux bund that required tying the barrage to the high ground on the left bank in Nepal. India needed about 2.9 hectares of Nepalese land to construct an embankment to prevent back water effects due to the barrage. In lieu Indian agreed to provide 25,000 cusecs of water as well as supply 25 MW of electricity. Nepal however demanded 50 and 59 percent share in water and electricity respectively. Nepal’s public stand was that India never consulted or brought to notice any prior information on the issue. The project arrived at a political stale mate. In December 1991 during the visit of Nepalese Prime Minister to India, it was concluded that Nepal government would allow construction of the 577 meters left afflux bund in its territory so as to prevent a recurrence and to ensure poundage of water at the dam site. In return India agreed to provide 1000 cusecs of water annually with 10 million units of electricity. However the issue led to a political turmoil in Nepal. The opposition in Nepal wanted the Tanakpur project understanding to be treated as a treaty and thus requiring ratification. In October 1992 under a new Memorandum of Understanding (MoU), India agreed to provide 20 million units of electricity against the previous figure of 10 million units to Nepal[9].

The Supreme Court of Nepal affirmed its verdict on a petition filed on the issue that the MoU between the governments was indeed a treaty but left it to the government of Nepal to decide whether a simple majority or a two-third majority would be required for its ratification[10]. The political turbulence on the issue led to the Prime Minister of Nepal dissolving the parliament and in the fresh polls in 1994 none of the party received clear majority to form a government. Subsequently a new government under Communist Party of Nepal United Marxist – Leninist (CPN – UML) was formed being in majority. Under the new government renegotiations were sought on the Tanakpur project. The Nepalese government demanded increase in quantum of electricity as well as water and construction of a storage high dam at Pancheswar upstream of Tanakpur site on the Mahakali river[11].

The Mahakali Treaty

The flow of the Mahakali river is through the districts Danchula, Baitadi and Dadeldh in the hills and subsequently the river flows through the Kanchanpur district in the plains. After the river arrives into the plains it turns into a border between both the countries. The river joins the Ghagra river in the Indian territory. In 1971, Nepal began her Mahakali Irrigation project. Under the 1920 Sarda agreement, Nepal was permitted to utilise its share of river water. For the project, World Bank provided the assistance[12].

In 1977 both India and Nepal agreed to jointly investigate the possibilities of harnessing the Mahakali river further between the two countries. It was the fourth major water treaty being considered between the two countries. The treaty concerned the development of Mahakali river for the benefit of both the countries. The treaty was signed between India and Nepal in 1996. The treaty was signed under the back drop of previous treaties which had led to a feeling of mistrust as far as water agreements were concerned and to a great extent shaped the outcome of the Mahakali treaty. The treaty tried to bring within its fold other treaties and tried to arrive with principle of cost benefit sharing. The treaty provides for the construction of and use of a giant, multipurpose project on the Mahakali river called as the Pancheswar project.

In January 1996 the Mahakali treaty was ratified in Nepalese parliament by more than two third majorities. However prior to ratification, the Nepalese parliament unanimously passed a ‘stricture’ on the treaty which redefined the water rights. The features of strictures were as under[13]:-

  1. The electricity generated by Nepal would be sold to India as per the avoided cost principal.
  2. Constitution of Mahakali Commission on agreement with the main opposition party in the parliament as well as with the recognised national parties.
  3. Equal entitlement in the usage of the waters of the Mahakali river.
  4. The saying that Mahakali is a boundary river on major stretches between the two countries implies that it is basically a border river.



The treaty came into existence in 1996 and is called as the Mahakali Integrated Development Treaty. The treaty is designed by India with the aim of mutual sharing of the river as well as the electricity generated therein. The treaty comprises three projects as under:-

  1. The Pancheswar Multi Project[14] It is a major project entailing construction of a 315 m high dam across the Mahakali river between Pithoragarh and the Baitadi district of Nepal. This project contains the most important content of the treaty. It proposes a joint indo – Nepal hydroelectric project on the river on the basis of 50 percent cost benefit split.
  2. The Tanakpur Hydropower Project[15] As per the treaty, Nepal to continue to have sovereignty over the 2.9 hectare which was needed to build the eastern afflux bund, as well as a hectare of pondage area. In return India would provide 1000 cusecs of water in the wet season and 300 cusecs of water in the dry season. Also India would provide 70 million units of electricity to Nepal and construct an all weather road to connect Tanakpur barrage to Nepal’s East West highway.
  3. The Sarda Barrage[16] As per the treaty Nepal has a right to supply 1000 cusecs of water from the barrage during the wet season i.e. between May 15 to October 15 and 150 cusecs in the dry season from October 16 to May 15. Also India is bound to maintain a flow of minimum 350 cusecs of water to preserve the river ecosystem.
  • The project tries to develop a principle of sharing cost benefit. It recognises Mahakali as a border river on major stretches between the two countries. The agreement also covers flood management and irrigation aspect apart from power generation.
  • The treaty was signed on 12 February 1996 by the Prime Ministers of India and Nepal at Kathmandu. The treaty comprises twelve articles excluding the preamble as given in succeeding paragraphs[17].

Article 1

As per the Article 1, Nepal would have the right to a supply of 28.35 cu m/s (1000 cusecs) of water from the Sarda barrage in the wet season (i.e. from May 15 to October 15) and 4.25 cu m/s (150 cusecs) in the dry season (i.e. from October 16 to May 14). Also India has to maintain a flow of not less than 10 cu m/s (350 cusecs) downstream of the Sarda barrage in the Mahakali river to maintain and preserve the river eco system. Moreover in case the Sarda barrage became non functional due to any cause, the following would be adhered:-

  1. Nepal shall have the right to a supply of water as mentioned above by using head regulators as mentioned in Article 2. The water that is supplied would be in addition to the water to be supplied as mentioned in that paragraph.
  2. India shall maintain 350 cusecs of water flow from Tanakpur Power Station downstream of Sarda barrage.

Article 2

As per the joint communiqué of 21 October 1992, for the construction of the eastern afflux bund on the Tanakpur barrage, at Jimuwa and subsequently tying it up at EL 250 m in Nepal, Nepal gave consent to about 577 m i.e. 2.9 hectares of land. However Nepal proposed to have her sovereign control on the land including the pond age area which falls in Nepalese territory and thus free to exercise all attendant rights thereto. Also in return to the land for construction of the eastern afflux bund, Nepal would have the right to the following:-:

  1. A supply of 1000 cusecs of water in the wet season and 300 cusecs during the dry season from the date of agreement and for which India would construct the head regulator(s) near the Tanakpur barrage along with the waterways of the required capacity up to the border which would be operated jointly.
  2. India would construct a 132 kV transmission line up to the Nepal-India border from the Tanakpur Power Station so as to supply 70 million kwh (unit) of energy on annual basis free of cost from the day the treaty is in force.

In case of any development of any storage project(s) including Pancheswar Multipurpose Project, the under mentioned arrangements would be made at the Tanakpur Barrage: –

  1. Additional water ways and head regulators would be constructed to supply additional water to Nepal up to the Indo-Nepal border which would be operated jointly.
  2. Nepal shall have additional energy which would be equal to half of the incremental energy generated from the Tanakpur Power Station, on a continuous basis from the date of augmentation of the flow of the Mahakali river and shall bear half of the additional capital cost at the Tanakpur Power Station for the generation of such incremental energy.

Article 3

As per Article 3, Pancheswar Multipurpose Project would be constructed on a stretch of the Mahakali river where it forms the boundary between the two countries thereby both the nations would have an equal entitlement in the utilization of the water of the river without prejudicing to their respective existing consumptive use of the waters of the river. The countries would agree to implement the project on the Mahakali river in accordance with the Detailed Project Report (DPR) being jointly prepared by them. The project would be designed and implemented on the basis of the following principles: –

  1. The project would be designed to produce the maximum benefit. All benefits accruing to both the countries would be assessed accordingly.
  2. The project shall be implemented in a way to include power stations of equal capacity on each side of the Mahakali river. Both the power stations shall be operated in an integrated manner and the net energy generated shall be equally shared.
  3. The cost of the project shall be borne proportionately by both the countries in terms of the benefits accruing to them. Both the countries shall endeavour to mobilize the finance required for the implementation of the project.
  4. A portion of Nepal’s share of energy shall be sold to India and the quantum and cost of the energy would be as mutually agreed.

Article 4

India shall supply 350 cusecs of water for irrigation of Dodhara -Chandani area of the Nepalese Territory. The technical and other details would be mutually worked out.

Article 5

The water requirement of Nepal would be given prime consideration in the utilization of the waters of the Mahakali River.

Both the countries would be entitled to draw their share of water of the river from the Tanakpur Barrage and/or other mutually agreed points as provided for in the treaty and any subsequent agreement between the countries.

Article 6

Any project, other than those mentioned in these articles, to be developed on the Mahakali river, where it is a boundary river, shall be designed and implemented by an agreement between the countries on the principles established by this treaty.

Article 7

As per Article 7, to maintain the flow and desired level of the water of the Mahakali river, each country undertook not to use, obstruct or divert the water of the river which might adversely affect the natural flow and level except by an agreement between the countries. However, this would not preclude the use of the waters of the Mahakali river by the local communities living along both the sides of the river, not exceeding five percent of the average annual flow of the river at Pancheswar.

Article 8

Article 8 stipulates that this treaty should not preclude planning, survey, development and operation of any work on the tributaries of the Mahakali river, to be carried out independently by either of the country in their own country without adversely affecting the provision of Article 7.

Article 9

As per Article 9, there shall be a Mahakali river Commission guided by the principles of equality, mutual benefit and no harm to either of the country. The Commission would be composed of equal number of representatives from both the countries. The functions of the Commission would be as under:-

  1. To seek information, inspect all structures included in the treaty and make recommendations to take steps for implementation of the provision of the treaty.
  2. To make recommendations to both the countries for the conservation and utilization of the Mahakali river as envisaged and provided for in the treaty.
  3. To provide expert evaluation of projects and recommendations.
  4. To co-ordinate and monitor plans of actions arising out of the implementation of the treaty.
  5. To examine any differences arising between the nations concerning the interpretation and application of the treaty.

The expenses of the Commission would be borne equally by both the countries. The Commission once constituted would submit the rules of procedure as drafted to both the countries for their concurrence and both the nations’ shall reserve their rights to directly deal with each other on matters, which may be in the competence of the Commission.

Article 10

Under Article 10, both the countries could form project specific joint entities for the development, execution and operation of new projects including Pancheswar Multipurpose Project on the Mahakali river for mutual benefit.

Article 11

Article 11 states that if the Commission fails under Article 9 of the treaty to recommend its opinion on any dispute relating to the matter within a span of three months or if either of the countries disagrees with the recommendations of the Commission, then it would be deemed that the dispute has arisen and would be submitted to arbitration for decision. In such a case also the country going for such a stand would give a minimum of three months notice to the other.

Arbitration would be conducted by a tribunal composed of three arbitrators. One arbitrator shall be nominated by Nepal, one by India and the third jointly by both the countries. However neither of the arbitrator should be a national of either of the country. The third arbitrator would preside over the tribunal. In case both the countries fail to agree upon the third arbitrator, then, in a time period of three months after receipt of a proposal, either of the nations can request the Secretary-General of the Permanent Court of Arbitration at the Hague to appoint such arbitrator who should not be a national of either country.

The procedures of the arbitration would be determined by the arbitration tribunal and the decision of a majority of the arbitrators would be assumed as the decision of the tribunal and would be accepted as final and binding.

For the provision for the venue of arbitration, the administrative support and the remuneration and expenses of its arbitrators would be as agreed upon by exchange of notes between the nations and in that, both the countries can decide on alternative procedures for settling differences which would have aroused in the treaty.

Article 12

Following the conclusion of the treaty, the earlier understanding arrived at by both the countries concerning the utilization of the waters of the Mahakali river from the Sarda and the Tanakpur barrage, which had been incorporated in the treaty was to be deemed to have replaced by this treaty.

The treaty would be subject to ratification and would enter into force on the date of exchange of instruments of ratification and would remain valid for seventy five years from the date of its entry into force.

The treaty would be reviewed after every ten years or earlier as required by either of the country and make amendments if required.



The treaty came into existence on 12 February 1996. The articles lacked specificity which led to ambiguity over the interpretation of the treaty. The differences which emerged out after the treaty came into existence are given in succeeding paragraphs.

The Issue of Border River and Prospect of Equal Sharing[18] As far as border river is concerned, the river acts as boundary river on major stretches (refer Appendix P put sketch as per pg laid water of hope). Nepal argues that the river is a border river where both the countries differ as far as the interpretation of treaty is concerned. As far as equal sharing is concerned, Nepal argues that as the river belongs to both the countries therefore each country owns 50 percent water. The river flows as a boundary river between Pancheswar and Banbassa. As Nepal has interpreted the issue of equal entitlement, it claims half of the share of the river water between the locations. However India’s stand is that equal sharing implies that the river per se does not belong to either of the country and can be used by either as per the requirement. Upper riparian country cannot own any water and subsequently sell it to lower riparian country where the lower riparian country as such would receive the water due to natural flow. For India, equal sharing implies that both the countries equally share the incremental benefit and cost that is attached to the Pancheswar project.

Existing Consumptive Use[19] Another major difference that exists is regarding the protection of consumptive use. Nepal’s concern is that in the treaty, only Nepal’s existing consumptive usage has been quantified and not of India. Furthermore as per the treaty (Article 3), the sharing of the capital cost of the Pancheswar project would be proportionate to the relative incremental benefit which have to be considered after protecting existing consumptive use of water of the river. Nepal’s concern is that the 2 mha land irrigated from lower Sarda barrage is outside the scope of the agreement as it is mostly dependent on the water from Ghagra or Karnali river for most part of the year and is dependent on the Mahakali river only from July to October. However India’s stand on this issue is that the system is very much under the treaty.

The Kalapani Issue Kalapani as experts feel is a disputed area. It is roughly a 35 sq km area at the junction of India, Nepal and China[20]. Indian troops have been stationed there since 1962. There is though no relation between the boundary issue at Kalapani and the Pancheswar project but one of the strictures passed along on Mahakali in Nepalese Parliament states Mahakali as well as the location of its sources basically as a border river[21]. A Parliamentary committee took up studies to clarify the status of the Mahakali river and the issue of Kalapani emerged. As per the 1816 Segauli Treaty between Nepal and British India, Mahakali river would mark as the border between India and Nepal. The issue of contention is as to which of the stream actually constitutes as the source of the river. Nepal’s stand is that the Lipu Gad rivulet should mark as the border which implies that the area of Kalapani which is to further east should be part of Nepalese territory, however Indian experts feel that the Mahakali river beings much downstream where the stream from Kalapani spring and Lipu Gad meet. India however reiterates that the issue should be settled based on old records, documents and survey reports.

Site for Re regulating Structure.[22] A site was needed below the main dam to store and subsequently make controlled release of water passing through the Pancheswar dam and then meet the irrigation requirements further downstream.

There were two locations which rose for discussion for construction of re regulating structure. First was at Rupaligad which Nepal preferred during the negotiation of the treaty. A re regulating structure at Rupaligad would generate about 240 MW of electricity owing to low height, of about 60 m. Also due to the low height, it would have limited storage capacity. For India, the site did not offer much benefit owing to lower production of energy and offers little of her irrigation demand. Indian experts feel that the site further downstream at Poornagiri would enable construction of a re regulating structure of 180 m height which would produce up to 1000 MW of energy as well as provide adequate storage. Nepal’s concern on this issue is that a dam at this site would inundate 2, 50,000 hectares of agricultural land and also displace 56,000 people from Nepal hills. Nepal looks at the proposal as a project designed by India to irrigate vast tracts of agricultural land in Uttar Pradesh.

The Question of Power Tariff With the project in place a maximum of 6480 MW of electricity can be derived. As per Article 3 of the treaty, the power stations of equal capacity should be constructed on eithe

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