India had decided to set up a run-of-river, 450MW hydroelectric plant at Baglihar in its Jammu & Kashmir State, utilizing the waters of river Chenab, a tributary of the mighty Indus. Since the time that India informed Pakistan of that fact in 1992, the two countries had gone through prolonged negotiations, based on Pakistan’s objections to the project as the lower riparian state. The talks having not succeeded, a World Bank-appointed ‘neutral’ expect is currently engaged in the task of finding a solution. His decision is expected in early-November.

To understand the imbroglio, it is necessary to look at the bigger picture. The Indus river system, one of the major systems in the world, comprises the main Indus and its five important tributaries: Jhelum, Chenab, Ravi, Beas and Satluj rivers. For the sake of convenience and geography, Indus, along with Jhelum and Chenab, are referred to as the ‘Western rivers’, while the other three tributaries are termed ‘Eastern rivers’. The common features of all of them is that they originate in the Himalayas, pass through Indian territory and, after Indus has received the waters of its five tributaries in Pakistan, it flows through Pak provinces of Punjab and Sind and falls in the Arabian Sea, south of Karachi.

After the British had colonised India in the 19th century, they built a large network of dams, barrages and canals, over eight decades, utilizing the Indus river system. The command-area so created of about 105M ha was the largest such irrigated tract in the world and turned the Indian province of Punjab (literal meaning Five Waters) and its contiguous areas from a mainly arid zone into a prosperous agrarian state that grew both food grains and cash crops.

Britain granted independence to India in 1947 by partitioning the sub-continent into two separate political entities of India and Pakistan. The process of partition (and its aftermath in Kashmir) led to an arbitrary split of the Indus river system, with its parts divided between the two Countries. The rivers’ sources and headworks of some major canals remained in India, and the latter drew plans to further develop the water resources which remained on its side. Pakistan, as the smaller state, located downstream of these rivers, felt threatened that India could well manipulate the flow of those waters to the former’s disadvantage.

A temporary accord was signed between the two Countries in 1948 to regulate the usage of the Indus System. This was followed by prolonged negotiations for a more durable settlement. However, by 1951, there was an impasse in those talks. Realising the importance of the matter, the World Bank offered its services, first as facilitator and later as a participant in those talks so as to reach a fair and equitable solution. Still, it was to take another nine years before the Indus Waters Treaty was signed on 19 September 1960. Its signatories were the governments of India and Pakistan and the World Bank. Incidentally, it was the first time that the World Bank had intervened to settle an international river waters dispute.

The Treaty’s main provisions included the following:

1. The usage of waters of the three Eastern rivers was given exclusively to India.

2. The usage of waters of the three Western rivers was given exclusively to Pakistan. However India, as the upper riparian state, was allowed a restrictive use of their waters for domestic, agriculture, ‘non-consumptive’ and hydro generation purposes. One of these three rivers was Chenab.

3. To replace the loss of waters as at (1) above, Pakistan was to construct a system of ‘replacement works’, to be funded internationally.

4. To oversee implementation of the Treaty, a Permanent Indus Commission was to be set up, to meet periodically. It comprised one Commissioner each from the two countries, appointed by their respective governments.

Conflict resolution under the treaty: role of the World Bank

Under the Treaty, disagreements between India and Pakistan about its provisions have been put under a three-fold classification :

(a) Questions, to be examined by the Commission.

(b) Differences, to be decided by a ‘Neutral Expert’.

(c) Disputes, to be decided by a Court of Arbitration (CoA).

Under the Treaty, the first step is for the Commission itself to resolve any ‘question’ that arises between the two parties. If it were not so resolved, it becomes a ‘difference’ to be considered and decided by a Neutral Expert. The Expert is to be appointed by the two parties, or a third party (as agreed by the latter), or by World Bank in consultation with the two parties.

If the difference does not fall within the mandate of the Expert (as laid down in detail under the Treaty), on if the Expert treats it as a dispute, it goes before a CoA. Of the seven members of the Court, two each are appointed by either party, while the remaining three (including Chairman) are selected with the assistance of the World Bank, among others.

While the World Bank had been a signatory to the Treaty, it has been making it clear that (a) this was for certain ‘specified’ purposes, (b) that many of those purposes had since been completed, and (c) that the Bank is not a guarantor of the Treaty.

In its press release relating to the appointment of the Neutral Expert in the Baglihar case, the World Bank reiterated that its ‘remaining responsibilities’ under the Treaty were only three :

(1) The appointment of a Neutral.

(2) Management of a Trust Fund to meet the Expert’s expenses.

(3) A limited role in the constitution of CoA.

Baglihar project

Located on river Chenab in the north Indian State of Jammu & Kashmir, Baglihar hydroelectric project is based on a 144.5m high concrete gravity dam, affording a live storage capacity of 15Mm3. In its first stage, the project would have an underground power house with three 150MW Francis turbines, generating around 2.8B units in a 90% dependable year. The salient features of the project are listed in Table 1.

The project promoters, state-owned J&K Power Development Corp. had signed an EPC contract with the Indian construction major, Jaiprakash Associates, in April 1999, giving a completion schedule of five years. The project has however been delayed for more than one reason and the latest date being mentioned for its completion is February 2007.

Pakistan had raised objections to the project after India gave notice of undertaking it way back in 1992. These were raised more vehemently subsequent to the construction contract being signed in 1999. Referring to them, Syed Shahid Husain, a former Secretary in Pakistan’s Ministry of Water & Power, explained in an article in South Asian Journal (April- June 2005 issue): “The basic dispute between the two Governments arises more out of mistrust by Pakistan of India’s intention because, at some point in future, once it acquires the capacity to store water, India can easily withhold it during shortage and release it during excess, the precise opposite of what the lower riparian state would want. India answers to the Pakistan fears by saying that the first installation which would disappear would be [India’s] Salal project, which is downstream [of] the Baglihar project, and if they were to flood Pakistan, they would endanger Salal project”.

Husain also quoted India’s Foreign Secretary as denying the validity of Pakistan’s apprehensions and mentioning that the Treaty had no solution to offer for such fears!

Differences over the scheme

Discussions over the last ten years or so between the two sides over Baglihar have led to a crystallisation of their differences. These relate in the main to the design of the project, the extent of pondage to be created by it, and the necessity and placement of the spillway gates on the dam. Pakistan asserts that all the three are in violation of the provisions of the Treaty as given in its Annexure D, Part 3 which deals with new run-of-river power plants to be set up by India on any of the Western rivers. These differences between the two countries are examined as under :

(1) As per the Treaty, the works at such a project shall not be capable of raising the water level in the operating pool artificially above the ‘Full Pondage Level’ specified in the design. The maximum pondage in the operating pool shall not exceed twice the pondage required for firm power. However, the design shall take due account of the requirements of Surcharge storage and of secondary power. Pakistan feels that the planned pondage of 37.7mcm in the project is violative of the Treaty provisions. India denies this based on its own calculations. Full Pondage Level is defined in the Treaty as the level corresponding to maximum pondage allowed under it. Pakistan asserts that in the Baglihar design, the space between the maximum water-level and top of the dam is unduly large and would enable India to have a greater storage than full pondage level. India says that this space, known as FreeBoard is for safety reasons and any misuse by it to store more water would be against dam safety and thus counter-productive.

(2) The Treaty provisions also regulate the setting up of outlets in the dam. Any such outlet, if considered necessary for technical reason shall be of minimum size and located at the highest level consistent with design and operational parameters. Thus, where gated spillway is considered necessary in the context of the conditions at the plant-site, the bottom level of the gates (in normal closed position) shall be located at the highest level ‘consistent with sound and economical design and satisfactory construction and operation of the works’. Baglihar design includes six submerged radial gates on the main spillway and 2 crest radial gates on the chute spillway. Pakistan objects to their number and placement as being violative of the above provisions. India has responded through detailed technical calculations to assert that it is doing what the Treaty allows.

(3) As per the Treaty, the water intakes for the turbines shall be located at the ‘highest level consistent with satisfactory and economical construction and operation’ of the run-of-river plant and ‘with customary and accepted practice of design for the designated range of the Plant’s operation’. These being generalised terms, each side has interpreted the existing Baglihar design to suit its own case.

Pakistan had also wanted India to stop further construction on Baglihar project until their differences were finally settled. India declined this for various reasons, including the fact that there was no provisions in the Treaty for such a stoppage. All that was required under the Treaty was for India to intimate to Pakistan, at least six months before beginning its construction, the location of the proposed plant along with a set of technical data specified in the Treaty (Appendix II to Annexure D of the Treaty).

Chronology of the dispute

India had given advance notice (with data on the project) to Pakistan back in May 1992 of its intention to take up Baglihar. Following Pakistan’s objections in August 1992, the next seven years saw an exchange of letters between the two countries regarding the data etc. to be given by India. In the meantime, in mid-1999, an important step was taken by India with the signing of agreement to construct the project.

Consequently, the first structured discussion between the two countries on Baglihar took place in May 2000 at the 84th meeting of the Permanent Indus Commission. Further discussions and exchange of letters not having yielded results, in May 2003 Pakistan gave notice to move the World Bank for appointment of a neutral expert, as provided under the Treaty. India responded with a request for bilateral discussions. Pakistan put forward three pre-conditions in August 2003 for doing this: (a) stoppage of work at Baglihar, (b) facility to it to make a site-inspection and, (c) a time-bound resolution of the differences between the two sides.

These were discussed in yet another round of meetings, both at technical and official levels. The last such meeting was held in the first week of January 2005 between the two Governments at Secretary-level. While India thought that progress was being made, this view was not shared by its neighbour. Thus on 15 January 2005, Pakistan formally moved the World Bank for the appointment of a ‘Neutral Expert’ to decide on the differences between the two Countries regarding the Baglihar project.

After examining the previous correspondence on the subject (to satisfy itself that the two sides had taken all preliminary steps) and in consultation with both Governments, the World Bank in May 2005 decided in favour of appointing such an expert. Its choice fell on Prof. Raymond Lafitte, a Swiss Civil Engineer, then working on the faculty of Swiss Federal Institute of Technology at Lausanne.

The procedure to be adopted by the Nuclear Expert is specified in Appendix F (paras 6-13) to the Treaty (Table 2). In October 2005, Lafitte paid a visit to India to view the project site in Baglihar. Apart from the Indian side, a delegation from Pakistan’s Ministry of Water & Power accompanied Lafitte. That enabled him to closely question the two parties on the issues raised and to understand them. He also visited the Indian Institute of Technology at Roorkee, north of Delhi, where a live and scale model of Baglihar project had been set up in a laboratory.

Since, then, Lafitte has had more than one round of talks with India and Pakistan. As per the present schedule, a penultimate meeting has been fixed with the two sides in Paris in the first week of October 2006. In that, Lafitte would discuss his draft findings on the Baglihar ‘difference’ with both the sides. The latter would then have an opportunity to make written submissions relating to those findings to him, during the course of that month.

During 6-8 November 2006, Lafitte will be in Washington, DC, where both the sides would again meet him prior to the finalisation of his report. The report, after being signed by him, would then be delivered to the Commissioners on both the sides and to the World Bank (which had appointed him).

Post-decision scenario

So what could happen after Raymond Lafitte gives his decision? There could be varying scenarios. The ideal scenario would be if both the parties agreed to accept the award as ‘final and binding’, as envisaged under the Treaty, and proceeded to give effect to it.

To help in that process, the Treaty’s Appendix F, para 12 allows Lafitte to suggest for the consideration of both the Parties, ‘such measures as are, in his opinion, appropriate to compose a difference or to implement his decision’. That could happen if he were asked by the Indus Commission to do so, and the provision appears generally to relate to a situation where his decision may contain any ambiguity or technicality.

What would happen if Lafitte’s decision, even though clear-cut, were found not acceptable by one of the two Parties for extraneous reasons ? Such a scenario could well arise from the context in which the Neutral Expert was appointed last year, and the subsequent developments. As it happens, the Treaty does not include any provision to ensure implementation of the Neutral Expert’s ‘decision’.

The political relations between India and Pakistan in the current millennium have led to both positive and negative results. On one side a series of ‘confidence building’ measures in the various areas have been put into effect through periodic rounds of official-level talks between the two countries. As stated earlier, even a last-minute agreement on Baglihar was attempted through these talks in early-January 2005, prior to Pakistan approaching the World Bank to appoint a neutral expert under the Treaty.

Water Resource is a live and sensitive issue in Pakistan, both internally between its provinces and externally with India. To add to this, federal elections are due to be held in Pakistan any time over the next twelve months. Thus an adverse finding by Lafitte may be difficult for the Pakistan Government to sell to its people.

In India, the public view on Baglihar issue is related to the perceived intransigence of its neighbour generally in settling most issues between the two countries without seeking third-party intervention. As it happens, the already-delayed project is due for completion in early-2007. Thus, if Lafitte were to uphold any or all of Pakistan’s case, it would be very difficult technically – as well as in terms of time and cost – to make consequential modifications in the design and construction of the project, at that stage.

So what could either Party do in the event of its finding Lafitte’s decision adverse to it and thus hard to accept? A number of possibilities could arise.

The two parties could return to the negotiating table (as they did prior to Lafitte’s appointment). This could be for two reasons. One could be a bona fide desire to finally resolve the ‘difference’ (hopefully narrowed through Lafitte’s decision), in a spirit of mutual goodwill.

The other is if one of the Parties were to assert that a question had arisen out of Lafitte’s decision which he could not resolve. That could also happen if Lafitte were to decide that the whole or part of the issues before him was not a ‘difference’ between the Parties but was in fact a ‘dispute’, which required settlement under the procedure prescribed in Article IX of the Treaty. Normally, such a determination, if made by the neutral expert, is expected to be done during the early stages. However, there is nothing in the Treaty to bar him from doing so even after he has heard both the parties at length and received their written submissions.

The said Article IX (paras-3-5) requires both the Governments to follow a serialised procedure. The first step is to try and resolve the dispute through a mutual agreement. This is done by nominating negotiators by either side and, if agreed, one or more ‘mediators’ acceptable to both. If the ‘dispute’ still continues, then under certain specified conditions, it would need to be referred to a seven member Court of Arbitration appointed to deal with it. The whole process of the creation, deliberations and decision of the Court is likely to be time-consuming, even through at the end of it, the ‘award’ of the Court (like the neutral expert’s decision) is termed as ‘final and binding’ on both the Parties to the Treaty.

To sum up, therefore, the entire thrust of the Indus Waters Treaty is for India and Pakistan to themselves resolve any differences over the use of those waters in a spirit of mutual goodwill and accommodation. Only in rare cases may a neutral expert or arbitrators be needed to help in the process. It is no surprise that Baglihar was the first case, in over four and half decades since the Treaty was signed, that this had to be done.

Author Info:

I.M. Sahai is an independent consultant in hydro power, and is based in New Delhi, India

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Table 1: Features of the Baglihar hydro project

Type: Concrete gravity
Height: 144.5m
Length: 317m long at the top
Main spillway: six submerged radial gates, 10m wide x 10.5m high
Chute spillway: two crest radial gates, 12m wide x 19m high
Reservoir : Live storage capacity of 15Mm3
Gross head : 130m
Two horseshoe shape diversion tunnels, 939m long
10.15m diameter circular headrace tunnel, 2070m long
Tailrace tunnel – 160m long, 10m wide, 19-27.5m-high, D-shaped
Power house
Underground cavern, 121 m x 24 m x 50 m
3 Francis Vertical axis turbines of 150 MWs each
Rated discharge per stage: 430 cubic metres/sec.
Installed capacity: 450 MWs, in Stage I.
Generation: 2.804 billion units in a 90% dependable year.
Underground transformer hall having 10 transformers of 11kV/400kV single-phase.
Outdoor 400kV switchyard.
1) Jaiprakash Associates Ltd., for all civil and hydromechanical works, on EPC basis.
2) Siemens/VA Tech Hydro Vevey for Electro-Mechanical works.
3) Lahmeyer International for design and contracts review, construction supervision and contract management.
Source: Jaypee Group / Lahmeyer International

Table 2: Procedure to be adopted by the neutral expert (Extracts from the Indus Water Treaty, 1960 : Annexure F)

6. The procedure with respect to each reference to a Neutral Expert shall be determined by him, provided that :
(a) He shall afford to each Party an adequate hearing;
(b) In making his decision, he shall be governed by the provisions of this Treaty and by the Compromise, if any, presented to him by the Commission;
(c) Without prejudice to the provisions of Paragraph 3, unless both Parties so request, he shall not deal with any issue of financial compensation.
7. Should the Commission be unable to agree that any particular difference falls within Part I of this Annexure, the Neutral Expert shall, after hearing both Parties, decide whether or not it so falls. Should he decide that it so falls, he shall proceed to render a decision on the merits; should he decide otherwise, he shall inform the Commission, that, in his opinion, the difference should be treated as a dispute. Should the Neutral Expert decide that only a part of the difference so falls, he shall at his discretion, either;
(a) Proceed to render a decision on the part which so falls, and inform the Commission that, in his opinion, the part which does not so fall should be treated as a dispute, or
(b) Inform the Commission that, in his opinion, the entire difference should be treated as a dispute.
8. Each government agrees to extend to the Neutral Expert such facilities as he may require for the discharge of his functions.
9. The Neutral Expert shall, as soon as possible, render a decision on the question or questions referred to him, giving his reasons. A copy of such decision, duly signed by the Neutral Expert, shall be forwarded by him to each of the Commissioners and to the Bank. …..
11. The decision of the Neutral Expert on all matters within his competence shall be final and binding, in respect of the particular matter on which the decision is made, upon the Parties and upon any Court of Arbitration established under the provisions of Article IX (5).
12. The Neutral Expert may, at the request of the Commission, suggest for the consideration of the Parties such measures as are in his opinion, appropriate to compose a difference or to implement his decision.’
13. Without prejudice to the finality of the Neutral Expert’s decision, if any question (including a claim to financial compensation) which is not within the competence of a Neutral Expert should arise out his decision, that question shall if it cannot be resolved by agreement, be settled in accordance with the provisions of Article IX (3), (4) and (5).
Source: Indus Waters Treaty, 1960.