Nepal's Supreme Court on Tuesday stayed the negotiations on the power development agreement (PDA) between the government and India's GMR Energy for the 900 MW Upper Karnali Hydropower Project.
Without the PDA, the project cannot move ahead.
Indian infrastructure major GMR and its consortium companies GMR Energy Ltd, GMR Infrastructure (GIL) and Italian-Thai Development Project Company has signed a Memorandum of Understanding (MoU) with the government for developing the project in west Nepal.
A single bench of Justice Bharat Bahadur Karki issued a stay order till July 31, when it would be decided whether a further stay is required.
The bench was responding to a petition filed by 20 individuals of the districts affected by the project. They also demanded that all past agreements reached with GMR and its survey licence were illegal. "All past agreements with GMR should be quashed," they demanded.
The petitioners argued that the MoU signed January 24, 2008, between the government of Nepal and GMR Energy to develop the Upper Karnali Hydropower has ignored the rights of locals of affected districts.
They claim that the Indian power developer failed to comply with the provision of starting the project within three months of signing the MoU and furnish a progress report every six months as per the Electricity Regulation. In such a situation, the MoU is supposed to be invalid. But, the survey license period has been extended time and again under various pretext, reads the petition.
They further claim that the government's decision to increase the capacity of the project to 900 MW is not transparent and has kept locals in the dark. When the MoU was signed between the government and GMR, the project's capacity was 300 MW. The petitioners have raised objection to the provision in the MoU that states the government acknowledges that due consideration may be accorded to GMR-ITD Consortium for the allotment of upstream/downstream project, if any.
"This may debar Nepalis from using the water resources without prior consent of the developer," reads the writ.
The defendant in the petition include the office of the prime minister and council of ministers, Ministry of Energy, Ministry of Environment, Ministry of Finance, Ministry of Forest, Nepal Investment Board, Department of Electricity Development, GMR Energy and GMR Ltd Consortium.