A legal challenge against the long-term power trade agreement signed between Nepal and India has raised questions about whether the deal is really motivated by national interest or normal bilateral economic relations are being politicised.

Dispute over the agreement stems from the controversy over other water resources-related treaties signed with the southern neighbour such as Koshi, Gandak and Mahakali river treaties.

The two countries signed the 25-year power trade agreement in early January during Indian Foreign Minister S Jaishankar’s visit to Nepal. Under the agreement, India has promised to buy 10,000MW of power from Nepal in 10 years, guaranteeing a long-term market for Nepal’s electricity.

But former government secretary Surya Nath Upadhyay filed a writ petition at the Supreme Court arguing that the agreement was against Nepal’s interest as it would enable India to make unjustified use of Nepal’s water resources.

He sought an order from the court for the government to implement the agreement only after its parliamentary endorsement, arguing that as the matter involves the distribution of water, a natural resource, it calls for parliamentary approval as per Article 279 (2) of the constitution.

A bench of Supreme Court Justice Nahakul Subedi on Friday invited amicus curiae to represent each side on the day of discussion stating that the matter brings up constitutional and legal questions.

The bench also requested the Nepal Bar Association and the Supreme Court Bar Association to send an advocate or senior advocate to represent each side in the discussion.

The court also ordered the government to explain within 15 days why the court should not issue an interim order against the agreement’s implementation as demanded by the petitioner.

Stakeholders are divided over whether the power trade agreement signed with India serves Nepal’s national interests.

In a recent interview with the Post, Upadhyay said that the agreement undermined Nepal’s benefits, with India not paying for the regulated water it receives from Nepal following the development of reservoir-type hydropower plants.

“You cannot treat the value of naturally flowing water, and the regulated water after damming the river and inundating Nepal’s lands and human settlements, the same way,” he told the Post.

He also argued that the agreement allowing India to buy Nepal’s electricity on its own terms was against national interest as New Delhi continues to refuse to buy electricity from projects developed with the involvement of foreign companies, particularly Chinese ones.

Nepali officials said that the agreement has not barred projects, except those developed with Chinese and Pakistani involvement, from selling power in the Indian market.

But other stakeholders said a long-term power trade agreement with India was essential to lure investors interested in Nepal’s power sector as well as to reduce the widening trade deficit with the southern neighbour.

Electricity has emerged as one of the biggest export items with the country exporting Rs15.4 billion worth of it last year.

Though the Supreme Court will settle the question of whether this agreement with India requires parliamentary ratification, stakeholders supporting the agreement say such a deal was more important for Nepal rather than it was for India. This is because the country is already witnessing power spillage in the rainy season.

“I wonder why those opposing the long-term power trade agreement were mum when Nepal and India signed a similar agreement in 2014 paving the way for bilateral trade of power,” said former energy secretary Dinesh Ghimire. “Why don’t they also seek parliamentary endorsement for the ongoing trade of power?”

The 2014 agreement paved the way for cooperation in the power sector including construction of cross-border transmission interconnections and power exchange through both public and private entities. The deal also allowed energy producers to engage in cross-border electricity trade while providing Nepal an access to India’s energy market.

“I have not heard anybody demand parliamentary approval for the implementation of the 2014 power trade agreement, even after the adoption of a new constitution in 2015,” said Ghimire.

Politicisation of issues related to water resources are common in Nepal. An agreement with India gets more scrutiny irrespective of whether the dispute has any merit, according to stakeholders. Many experts consider Koshi and Gandak treaties as unequal and unjustified for Nepal, and the Mahakali Treaty signed in 1996 turned out to be controversial.

But projects like Arun-3 Hydropower Project, planned to be developed with the assistance of the World Bank, also became a victim of politicisation, leading to the bank’s pull-out in the mid-1990s.

The failure to develop this project was detrimental to the country down the road, as people had to suffer from prolonged load shedding for a decade starting late 200os.

Ganesh Karki, president of Independent Power Producers’ Association of Nepal, argued that protesting against the long-term agreement signed with India was to discourage export of Nepal’s excess power to its southern neighbour.

“Many countries have enriched themselves by exporting their products. Electricity is a similar exportable item for Nepal. Why should the country not export more of it?” Karki said.

He also raised concern about the possible need for parliamentary ratification for implementation of long-term power trade agreement signed between Nepal and India.

“Parliamentary ratification for a normal trade agreement for the purchase and sale of goods and services will only create more red tape,” he said.