Reconsidering the Indus Waters Treaty: The Baglihar Dam Dispute

31 January 2005

Indian plans to go ahead with the Baglihar Hydropower Project on the Chenab River in the Indian state of Jammu and Kashmir (J&K) has evoked opposition from Pakistan which claims that the project puts the World Bank-brokered Indus Waters Treaty (IWT) of 1960, the only successful treaty between the two arch-rivals, at risk. While Pakistan claims the project to be in contravention of the IWT provisions, the J&K Assembly passed a resolution on 3 March 2003 asking New Delhi to reconsider the IWT to safeguard the interests of the State. The resolution stated that the IWT was discriminatory as the rights over waters of three rivers of the State - Jhelum, Chenab and Indus - were with Pakistan and India had to seek permission for any construction plans on these rivers. The failure of the recent three-day (4-6 January 2005) foreign secretary-level talks on the Baglihar project held in Islamabad led Pakistan to shoot a letter to the World Bank asking it to resolve the dispute with India. However, the World Bank responded on 19 January 2005 saying that though it is a signatory to the Treaty, it is not the guarantor for the IWT. The Bank has also said that it is for India and Pakistan to appoint a neutral expert for resolving the problem.

The Baglihar Project
Negotiations between India and Pakistan during 1951-1960 held under the supervision of the World Bank resulted in the signing of the IWT on 19 September 1960. This is the only treaty between the two arch rivals that has worked effectively for over four decades and is, at times, cited by international funding institutions, as an illustration of cooperation between the two hostile neighbours. The Indus system of rivers comprises three eastern rivers - Sutlej, Beas and Ravi - and three western rivers - Indus, Jhelum and Chenab. The Baglihar Hydropower Project (BHP) is being undertaken on the River Chenab in Doda, 160 km north of Jammu. Apart from objecting to the project design of the BHP, Pakistan has expressed opposition to the Tulbul navigation project, Sawalkote Hydroelectric Project and the Kishanganga Hydroelectric Project, all located in J&K.

Under the IWT, the waters of the eastern rivers are allocated to India and those of the western rivers, to Pakistan. The average annual flow of waters in the eastern rivers is estimated to be around 33 Million Acres Feet (MAF) whereas it is 135 MAF in the western rivers. The Pakistani contention over the BHP relates to the Article V of the IWT which relates to the compensation to be paid by India to Pakistan towards the latter's losses incurred during the construction of water drawing projects on the western rivers in lieu of water supplies for irrigation canals in Pakistan which were dependent on the water flow from the eastern rivers. The IWT allowed Pakistan to construct a system of replacement canals to carry water from the western rivers into those areas in West Pakistan that were earlier dependent for their irrigation supplies on water from the eastern rivers. The Indian contention in this regard is that since India has already paid its contribution of 62,060,000 pounds to the World Bank towards compensation to Pakistan under this clause, therefore, the Article V is no more valid. But Pakistani contention is that the IWT had imposed some restrictions on India over the usage of waters of the Indus, Jhelum and Chenab. Therefore, New Delhi cannot alter the flow on any of these rivers.

In the years after the IWT, Pakistan built the Mangla and Tarbela dams and several other storage facilities on Indus, Jhelum and Chenab. India also embarked on a series on construction projects including dams and barrages on the Ravi, Sutlej and Beas rivers. While these projects did not lead to any serious differences between the two neighbours, the BHP is opposed by Pakistan which claims that India is attempting to divert the water flow into Pakistan through this project.

J&K's Initiatives
The J&K government had sought counter-guarantees from the Centre for implementing major hydel power projects in the State. However, due to a delay in the sanctioning of such guarantees, the former Farooq Abdullah government signed a memorandum of understanding (MoU) with Jai Prakash Industries Ltd, Siemens and Hydro Vevey Ltd for completing the 450 (Megawatt) MW Baglihar hydel power project. The MoU was signed on 11 April 1999. The total cost of the project is estimated at about Rupees 3,800 crore and the project is expected to be completed by December 2004. The J&K government has already provided Rupees 150 crores for the project and work on the BHP began in May 1999.  On 29 August 2003, the then Indian Prime Minister Atal Behari Vajpayee promised his government's assistance for raising Rs. 2,200 crore for the completion of the BHP. Around Rs. 1,600 crore has already been allocated for the project by the J&K government and the remaining amount would be generated with the help of the Centre and financial institutions. Vajpayee also announced the sanctioning of the Rs. 665 crore Sea-II power project of 120 MW capacity to be undertaken in Kashmir by the National Hydel Power Corporation (NHPC).

The BHP will tap around 7,000 cusecs of water of Chenab for irrigation purposes in the short-term and once the project is completed, electricity would also be generated for meeting the shortfalls in the State's power demands. The BHP would meet around one-third of the total power requirements of J&K. The BHP project would also provide employment to thousands of people living in the Ramban, Banihal, Doda and Gulabgarh areas. Already, the BHP has generated employment to 5000 skilled and unskilled workers. The project will have an initial installed capacity of 450 MWs which could be increased to 900 MW by an expansion programme. The Baglihar Dam will be 144 metres high and the head race tunnel two km long and 10 metres in diameter.  

J&K is reported to have about 15,000 MW of power potential. In the past two decades, investments of over Rs. 4000.00 crores have already been made in the power sector. During 1997-98 to 2001-2002, investments of Rs. 1,400 crores were made which were markedly higher compared to previous years. Several debates over the BHP in the Jammu and Kashmir Assembly raised the issue that there is growing resentment amongst the people of the State over the government's failure to harness the enormous hydroelectric power potential. This is mainly because of the provisions of the IWT which deny India the right to exploit common water resources. The Mufti Sayeed government in J&K is keen on the Baglihar project as it would help meet the power shortages in the State and contribute to generating employment as well. With the growth in the population of the State which has led to an increase in the demand for water for irrigation and other purposes, officials of the J&K government are of the view that the practical decision would be to either amend, if not abrogate, the IWT.

Pakistani Opposition
Pakistan contends that the BHP would lead to a reduction in the downstream flow of water in the Indus as River Chenab is one of the important water source for Indus. Moreover, Pakistan is also opposed to the construction of the Wullar barrage which India is building on the River Jhelum. Both India and Pakistan are also planning to build a hydropower dam on the Neelum River (a tributary of River Jhelum). Pakistan says that the BHP would increase India's storage capacity (in J&K) to 1,64,000 acre feet which is much higher than that allowed under the IWT. The BHP will also allow India to control the flow of water to Pakistan's disadvantage. Pakistan further says that the construction of the controversial gate structure at Baglihar could deprive Pakistan of more than 7, 000 cusecs (cubic feet per second) of water a day from the Chenab. Clearly, the BHP has become the bone of contention between the two countries. Apart from the BHP, Pakistan is opposing India's other water projects on the Indus saying that these are in contravention of the IWT.

A three-member Pakistani team of water and power experts headed by Jamaat Ali Shah, Commissioner of the Permanent Commission on Indus Water (PCIW), had inspected the BHP in October 2003. Such annual inspections have been provided under the IWT. Following the inspection, the team presented a report to the Pakistani government saying that India was building the dam in contravention of the IWT clauses. Moreover, they also claimed that India had not redesigned the BHP in accordance with Pakistani conditions. In its report, the team stated that the BHP would deprive Pakistan of 26 to 28 per cent water in winter season thereby affecting Pakistan's irrigation water requirements especially during the Rabi crop season [The Nation, 25 November 2003]. 

Bilateral Talks
The recent foreign secretary-level parleys held in January 2005 failed to resolve the dispute as both India and Pakistan remained stuck to their respective positions. The talks were held between a 12-member Indian team led by Secretary (Water Resources) V. K. Duggal and a Pakistani delegation headed by Secretary (Water and Power) Ashfaq Mehmood. The discussions focussed on six technical areas identified including the pondage level, the gated spillway and the level of intake tunnels. While India stated its readiness to re-examine Pakistani objections to the design of the dam, Islamabad wants the project to be stopped as it fears that India may eventually manipulate the flow of water, which could affect agriculture in Pakistan. Moreover, a change in the water flow table from India to Pakistan could add to the ongoing water-related tensions between Pakistani provinces. With India showing no concessions on the issue, Pakistan stepped up its campaign against the project by briefing envoys from different countries, including US and China, on 12 January 2005. However, Islamabad also assured the foreign envoys that a failure in Baglihar talks would not affect the ongoing composite dialogue process with India. The IWT provides that  disagreements by the parties on the interpretation of the provisions of the Treaty are classified into three categories: questions are examined by the PCIW; differences by a Neutral Expert; and disputes by a Court of Arbitration. The fact that India and Pakistan have failed to resolve the disagreements means that it would now be referred to a 'Neutral Expert', either appointed by the two countries, or by a third party agreed upon by the two sides. In the absence of such an agreement, the appointment of the 'Neutral Expert' would be made by the World Bank, in consultation with the two countries. The decision of the Neutral Expert on all matters within his competence shall be final and binding. If the 'Neutral Expert' is of the view that the 'differences' between the two parties are to be treated as a 'dispute', then a Court of Arbitration would be established to resolve the matter.

The Way Out
The PCIW, established under the IWT, includes experts on water and power from both countries who meet annually in India and Pakistan alternately for exchanging documents relating to the sharing of common water resources of the Indus. Article IX of the IWT provides that if the two sides are unable to resolve any dispute bilaterally at the level of the PCIW, then a team of neutral experts or arbitration should be used to resolve the problem. For India, there are two options. First, India can go ahead with the project after settling the dispute with Pakistan either bilaterally or by involving the role of neutral experts for the first time in 42 years to resolve the problem. The second option for India is to go ahead with the BHP in accordance with its own designs and if met with opposition, New Delhi should walk out of the IWT. The J&K Assembly debates over the issue have reflected support for the second option. Though it is clear that the IWT's greatest achievement is that it is the only treaty that has withstood India-Pakistan hostility and also depoliticised the water issue to a large extent, the treaty needs to be amended taking into consideration the present requirements of the Indian state of J&K. The Baglihar project will significantly benefit the Kashmiri people by generating employment opportunities as well as meet the power shortages in the state. Also, the Indian leadership has reaffirmed that the project is not intended to either dam the rivers or affect the flow of waters to Pakistan. Observers therefore say that Pakistan's opposition to the project is unwarranted and indicates that Islamabad is playing with the aspirations of the Kashmiri people.