Report

Nepal, hydropower and geopolitics: balancing interests in the Tibetan Plateau

4 Dec 2014
Description

Nepal, endowed with perennial rivers and mountainous topography, has enormous scope to generate hydroelectricity, but only one per cent of that potential has been realised.

Summary

The Himalayan river basins in the Tibetan Plateau Region provide a key source of water to the populations of China, India, Nepal and Bangladesh. Water availability in this region is expected to decline significantly in the near future, threatening the water security of the riparian states. Further, all four states suffer from an energy deficit that hinders economic development.

Nepal, endowed with perennial rivers and mountainous topography, has enormous scope to generate hydroelectricity, but only one per cent of that potential has been realised. The country’s hydropower could potentially supply electricity for both domestic and regional consumption. The financial gains for Nepal, if predicted energy generation is realised, is expected to lead to broader water development outcomes, including increased irrigation efficiencies and the construction of much needed infrastructure. In this way, energy and water security, both in Nepal and in the wider Himalayan region, are closely interrelated.

Nepal is dependent on foreign investment for hydropower development. Both China and India have negotiated with the Nepalese Government to invest in large-scale hydropower projects. While this investment is positive for the Nepalese economy, China’s and India’s investment interests have wider geopolitical implications for the region. Economic development in both China and India requires more energy than either country can produce domestically. Competition over access to the Nepalese energy sector has the potential to create conflict between the two powers as they compete for regional hegemony.

The rapid development of hydropower projects, without sufficient risk mitigation, also threatens Nepal’s natural environment and long-term water security. Nepal has already been affected by climate change: glacial melt and seismic activity have created a high degree of topographical instability. The development of large infrastructure, if not properly maintained, risks further destabilising the landscape.  

Key points

  • Less than one per cent of Nepal’s enormous hydropower potential is currently utilised.
  • Large-scale hydropower projects could generate enough power to satisfy domestic demand and enable the Nepalese Government to export surplus electricity, creating significant opportunities for economic growth in Nepal.
  • As the Nepalese hydropower sector opens to foreign investment, an interesting power play is occurring between India and China, with each country vying for financial control of the proposed developments.
  • The potential for poorly planned or executed hydropower projects is high, however, especially given the foreign investment currently being invested in the sector.
  • A strategy for development that will cause minimal environmental damage in Nepal is essential if hydropower development is to be sustainable in the longer term.
Publication Details
Published year only: 
2014
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