In Kashmir, Pakistan and India race to tap the Himalayas with hydroelectric projects

This photograph taken on October 31, 2017, shows a general view of the Neelum-Jhelum Hydropower Project in Nosari, in Pakistan-administered Kashmir’s Neelum Valley. (AFP)
Updated 17 December 2017

In Kashmir, Pakistan and India race to tap the Himalayas with hydroelectric projects

MUZAFFARABAD: Several hundred meters underground, thousands of laborers grind away day and night on a mammoth hydroelectric project in contested Kashmir, where India and Pakistan are racing to tap the subcontinent’s diminishing freshwater supplies.
The arch rivals have been building duelling power plants along the banks of the turquoise Neelum River for years.
The two projects, located on opposite sides of the Line of Control — the de facto border in Kashmir — are now close to completion, fueling tensions between the neighbors with Pakistan particularly worried their downstream project will be deprived of much-needed water by India.
The Himalayan region of Kashmir is at the heart of a 70-year conflict between the nuclear-armed foes, with both sides laying claim to the conflict-riven territory.
The rivalry on the Neelum is underlined by both countries’ unquenchable need for freshwater, as their surging populations and developing economies continue to stress already diminished waters tables.
This situation represents a serious challenge to Pakistan’s food security and long-term growth, its central bank recently warned in a report.
The geography of the wider region only exacerbates the problem.
The Indus River — into which the waters of the Neelum ultimately flow — is one of the longest on the continent, cutting through ultra-sensitive borders in the region.
It rises in Tibet, crosses Kashmir and waters 65 percent of Pakistan’s territory, including the vast, fertile plains of Punjab province — the country’s bread basket — before flowing into the Indian Ocean.
The Indus Water Treaty, painfully ratified in 1960 under the auspices of the World Bank, theoretically regulates water allocation between the countries and is considered a rare diplomatic success story amid a bitter history.
It provides India with access to three eastern rivers (the Beas, Ravi and Sutlej) and Pakistan with three in the west (the Indus, Chenab and Jhelum), while setting the conditions for water usage.
As a tributary of the Jhelum River, the Neelum theoretically falls into Pakistan’s sphere, which launched the Neelum-Jhelum power plant project a quarter of a century ago to counter the legal, but competing Kishanganga project in Indian Kashmir.
At the confluence of the Neelum and Jhelum, the gigantic underground cathedral of concrete and steel is near completion — the four generators are in place, waiting for the transformers and the network to be connected.
More than 6,000 Pakistani and Chinese workers busy themselves in the 28 kilometers (17 miles) of underground tunnels or in the power station itself, buried under 400 meters of rock in the heart of the Himalayas.
After completion, the dam is expected to churn out 969 MW of electricity by mid-2018.
“It is a fantastic feeling to see the outcome of such a historic project,” enthused Arif Shah, an engineer working on the site for eight years.
“We hope to finish our hydroelectric plant before the Indians,” he smiles, while acknowledging that the real pressure comes from Islamabad, which has promised to end the debilitating power cuts nationwide ahead of the the 2018 elections.
On the Indian side, the Kishanganga power station is also in its final phase, but has delayed its late 2017 completion date, according to an official, in part because of ongoing unrest in the Kashmir valley.
Pakistan has filed cases at the World Bank against India and the Neelum dam, which it says will unfairly restrict the amount of water headed downstream.
According to the plant’s director Nayyar Aluddin, the production of electricity could shrink by 10-13 percent because of the Indian project.
But the hydroelectric projects on the Neelum River are only one of several points of friction between the two countries as the Indus Treaty faces increasingly pressing disputes.
Beyond the technical bickering, Islamabad is especially afraid of India cutting into its precious water supplies during strategic agricultural seasons that are key to feeding the country’s 207 million residents.
The possibility of hitting Pakistan’s food supply is regularly amped up by both Indian and Pakistani media, stretching perennially taut relations.
India’s Prime Minister Narendra Modi hinted at such reprisals following an attack in Indian Kashmir blamed on Pakistani insurgents in September 2016.
“Blood and water can’t flow together,” he said.
However, a blockade of any significant magnitude is not really technically feasible, while neither party has seriously sought to challenge the Treaty of the Indus.
“The disputes over the barrages are mostly symptoms of poor bilateral relationships,” said Gareth Price, a researcher at Chatham House.
The problem is that the rival countries conceive water as a zero-sum game — if one taps the resource, it means they are lost to the other.
But Islamabad must do its part, wrote Neil Buhne, UN coordinator in Pakistan, in an op-ed calling for the country to diversify “its water resources” while reigning in inefficiencies that wastes water.

Record budget spurs Saudi economy

The budget sets out to lift spending and cut the deficit. (Shutterstock)
Updated 19 December 2018

Record budget spurs Saudi economy

  • “It is a growth-supportive budget with both capital and current expenditure set to rise.”
  • Government spending is projected to rise to SR 1.106 trillion

RIYADH: Saudi Arabia on Tuesday announced its biggest-ever budget — with spending set to increase by around 7 percent — in a move aimed at boosting the economy, while also reducing the deficit. 

However, analysts cautioned that the 2019 budget is based on oil prices far higher than today — which could prove an obstacle in hitting targets. 

Government spending is projected to rise to SR 1.106 trillion ($295 billion) next year, up from an actual SR 1.030 trillion this year, Minister of Finance Mohammed Al-Jadaan said at a briefing in Riyadh. 

The budget estimates a 9 percent annual increase in revenues to SR 975 billion. The budget deficit is forecast at SR 131 billion for next year, a 4.2 percent decline on 2018.

“We believe that the 2019 fiscal budget will focus on supporting economic activity — investment and wider,” Monica Malik, chief economist at Abu Dhabi Commercial Bank (ADCB), told Arab News.

“It is a growth-supportive budget with both capital and current expenditure set to rise.”

A royal decree by Saudi Arabia’s King Salman, also announced on Tuesday, ordered the continuation of allowances covering the cost of living for civil sector employees for the new fiscal year.

“The continuation of the handout package will be positive for household consumption by nationals,” said Malik. “We expect to see some overall fiscal loosening in 2019, which should support a further gradual pickup in real non-oil GDP growth.”

World oil prices on Tuesday tumbled to their lowest levels in more than a year amid concerns over demand. Brent crude contracts fell to as low as $57.20 during morning trading.

Malik cautioned that the oil-price assumptions in the Saudi budget looked “optimistic.”

“We see the fiscal deficit widening in 2019, with the higher spending and forecast fall in oil revenue,” she told Arab News.

Jason Tuvey, an economist at London-based Capital Economics, agreed that the oil forecast was optimistic, but said this should not pose problems for government finances.

“The government seems to be expecting oil prices to average $80 (per barrel) next year,” he said. 

“In contrast, we think that oil prices will stay low and possibly fall a little further to $55 … On that basis, the budget deficit is likely to be closer to 10 percent of GDP. That won’t cause too many problems given the government’s strong balance sheet. 

“Overall, then, we think that there will be some fiscal loosening in the first half of next year, but if oil prices stay low as we expect, the authorities will probably shift tack and return to austerity from the mid-2019, which will weigh on growth in the non-oil sector,” Tuvey said.

John Sfakianakis, chief economist at the Gulf Research Center, based in Saudi Arabia, said that the targets of the budget were “achievable” and the forecast oil price reasonable. 

“It is an expansionary budget that should spurt private sector activity and growth,” he said. 

“With Brent crude averaging around $68 per barrel for 2018 and $66 per barrel for 2019, the authorities have applied a conservative revenue scenario.”