James, Author at James D. Hekel, Esq.

ICIMOD on “Benefit Sharing” of Hydropower Projects in Nepal

The International Centre for Integrated Mountain Development (ICIMOD) published a report on a topic I have blogged about earlier this month: hydropower development. ICIMOD’s report, also published this month, is called “Benefit Sharing and Sustainable Hydropower: Lessons from Nepal.” In it, ICIMOD summarized their findings from data collected from 317 participants and identified five benefit sharing mechanisms for sharing the wealth of hydropower projects with local communities built:

The royalty mechanism
Equity investment: Local share offers in hydropower projects
Support for local livelihoods: Employment and training
Investment in community development and local infrastructure (including rural electrification and irrigation/water-related benefits)
Environmental enhancement activities

Interesting report so far. After I finish reading it, I will post a more in-depth critique. For now, I have two quick observations.

I. “Free Shares”

It seems that no private investors were interviewed about their thoughts on benefit sharing. This is concerning because most of the investors that I talked to at the Nepal Power Investment Summit earlier this month did not seem very pleased with the prospect of offering “free shares” to anyone. It was a non-starter for many of them and it greatly limits their ability to finance large projects. The idea of selling the government shares did seem attractive. Once the government has a stake in a project, it is easier for them to support the project. It is not until a project is in operation that there are investment returns. The government would almost necessarily need to borrow money to buy shares. But it is easier to lend to government than others without a credit history and good returns will service the loans.

Other investors seemed resigned to make certain investments in community development and local infrastructure as a cost of business. One, already operating in Nepal, even said that they are happy to do so. Indeed, it already had delivered far more to its local communities and even increased the number of local communities reached by its efforts. But managing director noted the project company did this largely without the help of, and sometimes in spite of, local government support, or even security. Which leads me to my next point.

II. Local Elections (or the lack thereof)

I have not yet identified a section of the report deals with the possibility that the reason local communities tend to seek certain benefits from projects might be because of the almost complete lack of any (local or national) government presence in their communities and the two-decade absence of local elections that, if in place, would help foster government accountability. Part of the reason local communities demand things like access to healthcare, roads, or education from hydropower projects in their backyard is because their government is not providing for them. When a big project comes to town, many see it as their only chance of someone actually taking an interest in the survival of their community. For many, the only prospect for government interaction is with an unelected official in a faraway district headquarters that speaks in a different language than they do at home. Nepal has not held local elections in more than two decades and many local posts, especially in earthquake-affected areas, remain unfilled because the existing backlog of recovery work scares underpaid civil servants. This absence of government can place a huge burden on the hydropower projects who effectively become the local government. This might seem like a libertarian’s dream, but Nepal is far from a libertarian country (indeed, its ruling coalition are two communist parties with names like Marx, Lenin, and Mao in their name). Even once the local communities and project agree on a benefit-sharing arrangement, it is not difficult to wonder what happens to all the communities not blessed by presence of nearby rivers suitable for bankable hydropower projects. Some benefit sharing, or rather wealth redistribution, may be in order. That takes the steady hand of a government. And the kind of accountability that only local elections can offer. For locally elected official, elections are a good reminder of who is the boss is that is looking over their shoulder: the local people who can vote them gone.

As I continue to read ICIMOD’s report, I hope it addresses my concerns, but I am sure that others will arise in their place. A lot of things have to come together to make a hydropower project work. In Nepal, agreement on benefit sharing may be one of them.

Freedom of Expression in the U.S. and Nepal: a Comparative Constitutional Analysis

Introduction

I am hardly an expert on U.S. constitutional law (“Con Law,” as we called it in law school). I have studied under several well-respected Con Law professors, I have some friends who are aspiring international Con Law experts, and I read a lot of blog posts written posted by some of the most renowned Con Law experts in the U.S. I am not in the same league as any of these people. As much as I am a novice in U.S. Con Law, I am even more in the dark about Nepal’s Constitution. It is fundamentally a different legal regime and here I will attempt to explain how.

I am not a Nepal-qualified attorney, so my understanding of Nepal’s Constitution can only be incomplete. I suspect, from my conversations with Nepalese lawyers and law students, that as I continue to carefully read Nepal’s Constitution this will inspire me to write other posts as well. I urge my readers to use the comments section below to suggest any necessary corrections or to ask me specific questions. I also encourage healthful debate. If you do not like that I have written about Nepalese laws, then read no further. By reading on, you hereby consent to my right to express myself here (this website’s server is in Texas).

I wrote this post after some instigation by interested legal scholars in Nepal and I thank them for their insistence. I fully intend this post as comparative and not judgmental. It begins with a word on comparing constitutions, then it briefly introduces the concepts of negative and positive rights, examines natural law as part of U.S. constitutional law and positive rights as found in Nepal’s constitution, then it attempts to analyze these two legal philosophies with regard to constitutional protections of the freedom of expression of people in the U.S. and Nepal, and briefly concludes with a word about the enormous changes that are quietly underway in Nepal’s rapidly developing legal system.

The Tailored Suit: Comparative Constitutional Law

When comparing the U.S. Constitution with Nepal’s, we must first accept that one document is not necessarily better than the other. My law school colleague and adjunct professor of law at Howard University in Washington, DC, Waris Hussein, is currently writing a doctoral thesis comparing supreme court judicial review in the U.S., India, and Pakistan. Recently, Waris came to Nepal as a guest of the U.S. State Department to give a several lectures, both in English and Hindi, about Nepal’s new charter. Waris explained the uniqueness of these documents to me in this way: a constitution is like a tailored suit.

Just like people come in all different shapes and sizes (fat, skinny, tall, short, etc.) so do nations come with different needs for its governing document. Ask any tailor, or well-dressed man for that matter, and they will tell you that one size does not fit all. This is not a simple statement about the physical features of a country’s land, but it is a grander statement on the uniqueness of each country in the world. Each has its own needs and must balance the people’s hopes and desires with existing societal norms, military prowess, economic interdependence, and international realities. Pakistan, for example, has had three constitutions. After the first two did not fit, these were sent back for alterations; perhaps even the fabric changed. A well-fitting constitution requires careful measurement, trial-fittings, and—above all—alterations from time to time. Maybe even you have noticed how your pants feel a bit tighter after the holidays are well-celebrated. So it is with countries and their constitutions.

In short, this means that there are no easy answers when it comes to such important documents. There is no constitutional expert in this world, foreign or otherwise, that can present to Nepal an off-the-rack constitution that would fit Nepal perfectly. All the measurements, the very fabric of the constitution, and its alterations must come from the Nepalese people themselves to ensure the best fit. Nepal must try it on. If one arm is too tight, if the buttons do not reach, or if one leg is slightly longer than the other, then alterations must be made. To take this analogy a step further than even my friend Waris, I will add that these alterations must be made while the country is still wearing the suit. If this sounds difficult that is because it is.

Some Background on a Legal Regime that is Familiar to Me

The United States of America is a former colony of the British Empire. Indeed, the American colonies formed part of the imperial holdings of the first British Empire while India, an area much more familiar to Nepal, formed a part of its second. It is out of this context that our own country was born and is best understood. The colonists had serious grievances with the British king and how he was ruling the American colonies. In 1776, these grievances were most articulately expressed in the Declaration of Independence: independence that was successfully defended both during the American Revolutionary War and the War of 1812.

The newly liberated colonists failed in their first attempt to set up a working central government. Each colony became a “state” and essentially governed as an independent country. So upset were these early Americans with the absolute power of the king and so distrustful of centralized power as wielded by their former king, that our first organizing document—the Articles of Confederation—gave almost no power to its central government. It could not raise its own army, it could not raise taxes, and it could not issue currency. It was a disaster.

In 1787, with the mandate of only making some necessary revisions to the Article of Confederation, the Continental Congress instead formulated an entirely new document: the U.S. Constitution. This document contemplated a strong federal government constrained by carefully delineated powers and an internal check and balance system between three different branches of government. The strongest branch was the legislative branch, or Congress, which was split into two houses. The upper house had an equal number of senators from each state (two) and the lower house had a number of representatives from each state according to that state’s proportion of the entire country’s population. That required a census. It could also run a postal service, regulate commerce between the states, raise an army, and make war. The executive branch, a directly-elected president, was given control of the army, foreign affairs, and enforcing the laws made by Congress. Finally, the Constitution vested judicial power in a supreme court. You can read it yourself in the first three articles of Constitution. These are so concise that you can read all three in one sitting.

In 1791, after a national campaign for its support and the inclusion of the first ten amendments, known as the “Bill of Rights,” ensuring the rights of the individual states and the people, enough states ratified the Constitution that it became the supreme law of the land.

AC/DC: Positive or Negative Rights

The United States Constitution is a negative rights charter, whereas Nepal represents a positive rights charter. By negative rights, I mean the Bill of Rights essentially lists what the government cannot do. By positive rights, I mean Nepal’s Constitution affirmatively grants rights to its citizens. Again, one view is not superior to the other. They may even reach similar conclusions despite the different paths they take before arriving there. However, one is more familiar to me as an attorney than the other, so I am biased. By way of illustration let us compare the freedom of expression in the two charters.

The text of U.S. Constitution’s First Amendment regarding free of expression is short:

Congress shall make no law . . . abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Here, the Constitution is not bestowing any rights on the people or even powers on the government for that matter. If anything, it seems the Constitution is actually taking power away from the government to legislate in particular areas. But there is more to it than that; it necessarily assumes that the people already have certain rights that are independent of the Constitution. The First Amendment is merely acting as a safeguard against governmental encroachment on preëxisting rights.

This then is what people mean when they talk about First Amendment freedom of expression. Step one in any legal analysis of whether someone’s freedom of speech has been violated is: has there been government action? If the government is not acting, then it is not a First Amendment issue. Has Twitter deleted your anarchist tweets? That sucks, but it is not a First Amendment issue. Twitter is not the government.

Thus the American people are not dependent on the Constitution to give them their rights. Instead they are dependent on the Constitution to constrain the state from taking away rights that they already have. Where then, do the people’s rights come from?

The answer is found in the other seminal document from the founding of the country: the Declaration of Independence:

We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness . . .

(emphasis added). This and the reference to the “Laws of Nature” in the previous paragraph give us a pretty good sign of where these rights come from. Black’s Law Dictionary (9th ed.) defines “natural law” as:

A philosophical system of legal and moral principles purportedly deriving from a universalized conception of human nature or divine justice rather than from legislative or judicial action; moral law embodied in principles of right and wrong.

That means the people’s rights come from God. In more secular terms, this means either the laws of nature as best understood by humans or as the unwritten rules, traditions, and customs that humans have developed over time.

Now let us take a look at Nepal’s Constitution on the freedom of expression:

17. Right to freedom:

(1) No person shall be deprived of his or her personal liberty except in accordance with law.

(2) Every citizen shall have the following freedoms:

(a) freedom of opinion and expression,

(b) freedom to assemble peaceably and without arms,

(c) freedom to form political parties,

(d) freedom to form unions and associations,

(e) freedom to move and reside in any part of Nepal,

(f) freedom to practice any profession, carry on any occupation, and establish and operate any industry, trade and business in any part of Nepal.

Section 17 goes on to qualify these freedoms by allowing the parliament to legislate in a way that will prevent the undermining of the sovereignty, territorial integrity, nationality, and independence of Nepal and the harmonious relations of its people.

Section 17(1) is written in the negative. Although it does not expressly mention the government, we can assume it. According to Black’s Law Dictionary (9th ed.), “personal liberty” means “one’s freedom to do as one pleases, limited only by the government’s right to regulate the public health, safety, and welfare.” The text’s qualification, “except in accordance with law,” seems to bear out this meaning. Unlike Section 17(2), it does not use the word “citizen.” The protection against deprivation of personal liberty seems to apply to equally to everyone in Nepal. This is certainly case in the U.S. with regard to personal liberty. The Fourteenth Amendment applies to all persons “without regard to any differences of race, of color, or of nationality.”

By contrast, Section 17(2) is written in the positive. It says “every citizen shall have . . .” (emphasis added). This is “positive law,” defined in Black’s Law Dictionary (9th ed.) as “a system of law promulgated and implemented within a particular political community by political superiors . . . .” But who is the “political superior” here and how did they derive their authority to say which rights Nepali citizens should have?

The answers are that (1) the political superior is the Constituent Assembly and (2) it is the Nepali citizens themselves that granted it the power to decide their rights. This we can see from the Constitution’s Preamble:

We, the Sovereign People of Nepal, . . . Internalizing the people’s sovereign right and right to autonomy and self-rule, . . . Do hereby pass and promulgate this Constitution, through the Constituent Assembly, in order to fulfil the aspirations for sustainable peace, good governance, development and prosperity through the federal, democratic, republican, system of governance.

Thus the Nepalese people, through their Constituent Assembly, enabled the Constitution to grant certain rights to citizens.

Section 17(2) uses the word, “citizen,” when listing their rights It does not mention which rights, whether these rights or others, allowed to non-citizens. It is silent in this regard. It also does not say whether citizens of Nepal have other rights not specifically mentioned here. It is unclear where the margins are.

Contrast this with the language of the U.S. Constitution’s Ninth Amendment:

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

The U.S. Bill of Rights is not an exhaustive list of all rights accorded to people in the U.S.

Finding out where the margins is a task left to the courts in Section 128(2): “the Supreme Court shall have the final authority to interpret this Constitution and laws.” This includes other enacted laws as we can see from Section 1 of Nepal’s Constitution: “Any law inconsistent with this Constitution shall, to the extent of such inconsistency, be void.”

Closing Thoughts: Thinking Beyond the Constitution

When asked, most Nepalis that I talk to understand that all of Nepal’s laws are being rewritten so that the laws will conform to the new constitution. Yet I still wonder how many know exactly who is writing their new laws. Perhaps the people think that their Constituent Assembly is busily drafting the statutes. While it is true that the CA or a parliament will eventually have to vote on these laws, the people’s representatives are not writing them. I hope at the very least that they will read them: something that is even lacking in the U.S. Congress at times.

Whenever the laws of the United States stray so far from the founding document that a dispute ends up at the Supreme Court, some justices like to remind us what the document likely originally meant. They offer us an illustration of how the Constitution should be interpreted as protecting the people from the unrestrained power of the central government and not read as increasing the power of the central government until it becomes like a king. Other justices argue instead that the document must be interpreted according to modern societal needs.

It is not a shame to amend a constitution to make it a more inclusive document. The U.S. Constitution has been amended twenty-seven times. Some amendments were necessary for its ratification by the individual states, some amendments repealed earlier amendments, and some amendments were necessary to help advance the vision of equality enshrined in the Declaration of Independence. The Preamble of the U.S. Constitution lays this out as one of its primary goals: “to form a more perfect Union.” The U.S. is far from perfect and it has never claimed to be so. It is our sincere hope as Americans, however, that we have made some significant strides in the right direction.

The Future Battery of South Asia: Nepal Power Investment Summit 2016

There are a lot of people interested in ending load-shedding in Nepal and a lot of people interested in making money in Nepal’s hydropower sector once it gets off the ground. For those uninitiated to the realities of living in Nepal, each part of the Kathmandu valley faces 12-14 hours, sometimes more, without electricity as the National Electricity Authority (NEA) attempts to share the load of this precious resource evenly among the area of the greater metropolitan area. This is what is known as “load-shedding” here. While Nepal currently produces only 840 MW of energy from all sources, it boasts of a potential of at least 40,000 MW from hydropower alone. Neoventure and Nepal’s Energy Development Council organized the “Nepal Power Investment Summit 2016: Nepal—The Future Battery of South Asia.” The event was sponsored by Aggreko, Norwegian Geotechnical Institute (NGI), DFDL Tax and Legal, Nabil Bank, NMB Bank, and the Hydroelectricity Investment and Development Company (HIDCL). There were attendees from China, the U.S., Canada, Bulgaria, Norway, India, Bhutan, Slovenia, Czech Republic, Thailand, Vietnam, France, Austria, the U.K., and elsewhere.

Pre-conference Day

DFDL organized the first workshop of the conference. David Doran, Audray Souche, Robert Fitzgibbons, all of DFDL, and Priyadarshani Sherchan, of Nepal’s Pioneer Law Associates, were the panelists. The DFDL lawyers present various models of hydropower development primarily from the Mekong region, including Laos, Cambodia, Thailand, Vietnam, and Myanmar. Ms. Serchan picked apart Nepal’s 2016 Energy Crisis Policy Paper and the recent Budget 2073 speech. She was aided in this respect by several members of the audience which was filled with lawyers from Neupane Law Associates, Sinha-Verma Law Concern, and a sizable contingent from my own firm: Gandhi & Associates, as well as other specialists and interested parties in hydropower sector, such as the Norwegian Embassy.

The Laos model, which Mr. Doran was to present in more detail on the following day, is particularly interesting. It evolved from an entirely private-sector approach with more than 90 percent of the energy from its early 1990s projects exporting to the Electricity Generating Authority of Thailand (“EGAT“). Today, the Lao PDR is in a position to construct hydropower plants entirely for domestic consumption and no longer grants wholesale exemptions from Laotian laws and provides far fewer other concessions to international developers.

It was also here that I encountered my first of several Odd Hoftun connections. Odd Hoftun, an engineer-missionary who grew up on a hydropower plant in Norway, first came to Nepal in the 1950’s to help UMN build a hospital in Tansen and then dedicated his life to hydropower development in Nepal. In addition to helping to construct three hydropower projects of increasing size (the last was 60 MW), he helped establish the Butwal Power Company, its various spinoffs like the Hydro-Consult, and the Butwal Technical Institute which to this day remains the only apprenticeship-model school for Nepal’s young engineers to learn through hands-on experience. I had recently read his biography published by the Martin Chautari publishing house (which itself was named partly after his son, Martin) shortly before the conference so I was able to recognize his fingerprints and legacy throughout the three days. During the pre-conference workshop, I met Tim Lehane of Gilkes. Mr. Lehane had helped Mr. Hoftun restore and assemble secondhand hydropower parts imported from Norway when hydropower projects had upgraded to newer technology. The original, very serviceable, turbines at the Andhikhola Hydropower Project had first served duty powering Lillehammer before the 1994 Winter Olympics.

Unfortunately, no one from the Government of Nepal showed up for this workshop. This would have added more richness to the interactions with the audience. Throughout the conference there was a noticeable lack of government attendance in the many of the conference’s panels where government officers themselves were not speaking.

Day One

The conference was opened by the Right Honorable Prime Minister K. P. Oli. Her Excellency U.S. Ambassador to Nepal Alaina Teplitz, who recently penned an excellent opinion editorial on Nepal’s economic development, also gave a few words.

During the first panel, the Chairman of the Water Resources and Agricultural Committee of Nepal’s Constituent Assembly Gagan Thapa made an important point about the current state of politics in Nepal. While his own party is currently in opposition, hydropower development is one of the areas that all three of the major parties could agree on and should be vehicle for finding common ground and getting something done.

The first day of the conference was overall very positive, though much of the optimism was sucked out of the room by the last panel of the day which included a Statkraft veteran. Statkraft was finally forced to pull the plug on the USD $1.5 Billion 650 MW Tamakoshi-3 hydropower project after sinking over $12 million into the failed effort. Interestingly, it was not the major earthquakes of last year that forced its withdrawal from the export-oriented project, but the souring of political relations between Nepal and India.

Among the other panelists and presenters of the first day were representatives from the government of Bhutan, which like Nepal is surrounded on three sides by India and the north by tallest mountains in the world and China. Bhutan currently boasts that 99 percent of their people are connected to their national grid (and claims that the ones that aren’t have solar panels). Thought Bhutan has significantly fewer people than Nepal, there are some lessons there to be learned I am sure. The country’s approach is markedly different from Laos, for example, because its official line is that too much international private sector development may affect Bhutan’s Gross National Happiness. Another presenter made deft use of both Nicola Tesla and President Barack Obama quotes.

The first full day of the conference ended in a cocktail party sponsored by Dragon Capital. Dragon Capital has long been interested in Nepal’s clean energy development. One of their latest projects is a complete overhaul of Phnom Penh’s solid waste management. While supporting Cambodia’s in other areas of clean development it was an area they just could not ignore. Like many Asian countries including Nepal, the people litter freely, thoughtlessly throwing their trash wherever and burning it after it piles up too high. Dragon Capital has modernized Phnom Penh’s solid waste management system, replacing the Board of Directors of the management company and hiring a young woman to be its CEO. The new board banished the institutional practice of burning trash, installed GPS units in all of their trucks, and is building an entirely new landfill while taking steps to minimize the ongoing environmental degradation causes by the old ones.

I stuck around long enough to chat with representatives from Bauer and the CEO of InfraCo Asia, a member of the Private Infrastructure Development Group and already involved in providing funds to a couple of projects in Nepal. I also met several Norwegians from companies like the Norwegian Geotechnical Institute and Mulitconsult. I also had a very interesting conversation with the General Manager of Himal Power Limited which manages the Khimti Hydropower Plant with Statkraft.

The absence of local government in Nepal is felt strongly by the major hydropower projects. The Khimti project is a resounding technical success, but not as profitable as perhaps first imagined. Since Nepal has not held any local elections in nearly two decades, major development projects often choose to or end up having to take on added responsibility that would normally be the domain of local governments in many other countries. As part of their corporate social responsibility, the Himal Power Limited (“HPL”) had originally agreed to provide electricity for 1,000 households in the area. They willingly extended this to 9,000 households. HPL also funded local schools and a medical outpost, which is now part of the Dhulikhel Hospital network. When the local Village Development Committees (“VDC”) continued to approach the project with more development concerns, the project decided to create a fund of USD $100,000 a year for the ten closest VDCs (USD $10,000 for each VDC). Representatives from each VDC make up the board which itself chooses which projects to fund.

But this past winter was a particular dry one. When some local villagers ran out of water, they broke into the fencing surrounding the Khimti project and dropped a hose down the 40 meters deep intake shaft and began pumping water out. When HPL approached the Chief District Officer (“CDO”) about about the security breach, government security a right guaranteed to HPL by the Power Development Agreement (“PDA”) signed with the government, the project manager was told no such security would be forthcoming and that HPL should try to find a compromise with the locals. When HPC was finally able to get the Nepal Army, Nepal Police, CDO officers all to sit down together to talk about the security issue collectively, the government officers were only really interested in knowing why the USD $100,000 fund was not routed through them. Eventually, HPL was able to find another source of reliable water for the locals, but at the cost of another USD $50,000. Without a local government in place, the local VDCs effectively became wards of HPL, a private company. Without the benefit of a local government to hold accountable, HPL provides not only its electricity, but also the VDCs basic healthcare, education, and water supply needs. This underscores the importance of resolving Nepal’s federal structure as soon as possible and holding local elections regularly.

Day Two

Day two had its own high-level diplomatic support with Her Excellency Rensje Teerink, the European Union’s Ambassador to Nepal, chairing the talks on renewable sources of energy other than hydropower, such as solar, wind, and biomass.bbIt was during this session that Jimmy Carter’s infamous cardigan even made a cameo. I later ate lunch with the ambassador and representative from the U.S. Government’s Overseas Private Investment Corporation (OPIC), Dragon Capital, and Environmental Resources Management (ERM).

Among the other sessions of the day were representatives of Indian power grid and power trading companies as well as regional players in the power trading sector. The ultimate goal in Nepal is to be in a position to sell excess power during the rainy season and to buy needed power for shortfalls during the dry season when Nepal’s rivers run much lower. Nepal has a long way to go to make this possible, but it would be great to be able to sell beyond India.

The last session was one of the most anticipated by the various suppliers of hydropower machinery and solutions. It was also the most awkward. Various managing directors of various projects in various stages of planning were each given exactly ten minutes to present what seemed to be the culmination of their entire livelihoods. It was clear that many of the presenters, speaking in their third language, were not ready to pare down years of hydropower project experience and preparations into a brisk ten minute walk-through of their pet project’s major opportunities and challenges. Such as it was, they did their best to attract some much-needed funders and suppliers. Each was able to collect several congratulatory handshakes from their peers and handfuls of business cards for their efforts.

Fittingly, the conference closed in darkness. When the NEA closed the program with a vote of thanks to everyone who made the event possible, the conference room experienced one of the NEA’s infamous planned power-cuts: load-shedding. It took over a minute for the back-up diesel generator set to kick on, so the first words of NEA’s closing speech were spoken in the dark and without the benefit of a microphone.

Legal Impossibility, the Hotel Industry, and Surviving Disasters in Nepal

Nepal’s tourism sector is at an interesting crossroads following last year’s major earthquakes and even more recent “obstruction of supplies.” The impact of these back-to-back natural and unnatural disasters is difficult even for Nepal’s closest neighbors to understand. Felt as slight vibrations in parts of Delhi, some bars actually introduced “Shaken Not Stirred” drink specials on signboards until they learned that thousands of Nepalis had died. Then they became sick, having accidentally made light of earthquakes that had just decimated and shattered so many human lives in the Himalayas. They quickly took down their signs. Many Indians do not seem understand their country’s fragile diplomatic relationship with Nepal. I don’t really either. But I can say a thing or two about how these crises might affect future hotel deals that are bound to take place in Nepal.

In law school classrooms and law libraries across the United States, law students study the legal concepts of force majeure, impossibility, and impracticability, largely in the abstract. We read English cases from 1647 and 1863. When Egypt nationalized the Suez Canal Company in 1956, took over the canal itself, and then completely blocked it with sunken vessels, this brought trade to a complete standstill. The usual trade line broke. Ships carrying goods, most already bought and paid for or at least financed, stopped cold. Ships had to be rerouted to carry goods without the benefit of this all-important and most convenient Mediterranean shortcut. Many ships, including one carrying U.S. wheat from Texas, had to traverse all the way around the Cape of Good Hope—the entire continent of Africa—to land their goods at port in Iran. The shippers, whose costs had increased significantly by then, sued whomever they could to make up the difference. Ten years later, when legal cases were finally being decided by the courts, the judges had surprisingly little sympathy.

In one such case, the United States Court of Appeals for the District of Columbia Circuit applied a three-part test to see if the operator of the ship SS CHRISTOS could sue on the contract for the costs of its unanticipated trip around the tip of Africa.

First, a contingency — something unexpected — must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable. Unless the court finds these three requirements satisfied, the plea of impossibility must fail.

The closing of the canal was certainly unexpected. Check box one. But then again, the parties couldn’t have been completely blind to stirrings in the Middle East. Leave box two unchecked. It was certainly, more expensive to traverse an entire continent, but the wheat wasn’t going to expire that quickly, the sailors were able, and one could’ve bought insurance for such things. The third box remained uncheck as well. The shipper was out of luck, just like most of the others that faced the canal’s closure.

While we liked to imagine that some our professors may have remembered the crisis from when it happened, most of them could not have been directly affected by the crisis. And it was, for most of us more recently in law school, an academic exercise.

This is simply not the case in Nepal. Force majeure, impossibility, and impracticability have unfortunately become a way of life in Nepal. The crises, piled upon one another, have lingering affects felt by Nepalese people and businesses even today, a year after the last major earthquake and months after the end of the Indian border blockade. Just to make ends meet, businesses and families did things unimaginable to most people who read the above cases from a legal casebook. The black market became, for a time, the only market. And things still have not yet returned to what even passes for “normal” in Nepal these days.

Following the earthquake, many hotels were operating somewhere around seven percent (7%) occupancy. That means that more than ninety percent (90%) of their rooms were empty. That is no way for a hotel to make any money. And this was at the same time that so many Nepalis were left homeless from the earthquake. Many remain without permanent and safe housing. Amid this human tragedy, the suffering, and the business interruption, many Nepalese people, and businesses, showed their true spirit and helped each other.

Dwarika’s Hotel, for example, opened an entire village to help give housing to those who most needed it when they most needed. It was great that Mrs. Sangita Shrestha Einhaus and her family were able to help. Babies have since been born in that village. If not for the fuel crisis, I have no doubt that other hotels could have or would have displayed similar kindness. But the distance between empty hotels and shelter-less earthquake victims were made very long by damaged roads and shortages of fuel.

Even today, there are only five or six major branded hotels in Nepal, but because tourism is such an important part of the country’s economy Nepal should probably expect many more to come. Few hotels can offer what an establishment like Dwarika’s can when tourist are looking for a uniquely Nepali experience in an upscale hotel. But the industry will support Dwarika’s, local hotels, and the instant and international familiarity that some guests crave and only the brand standards of the major hotel chains can offer. This will likely bring jobs and Nepalese people will become experts in hotel management, international accounting standards, and dispute resolution. I say dispute resolution because multinational corporations have many tricks up their sleeve to avoid ending up in court other than just arbitration, though this is not necessarily a bad thing. But who knows what will happen in (or out of) Nepal? Disputes may end up in court anyway.

When local hotel owners or developers negotiate hotel management agreements, license agreements, and conversion services agreements with major international hotel chains, the realities of earthquake and blockade survival need to be expressed and allowed to sink in with those negotiating across the table because often they will not understand unless and until they come to Nepal. It is then they will hear, and more importantly begin to understand, Nepal’s stories of survival. About driving in a car, when all four tires seem to explode at once. About being on the third floor of your house when the ground fails you and traps you and your family in the stair case. About running to the door shouting for your mother and then turning around to grab your young son who is still sleeping while the very ground beneath your feet becomes unreliable and seemingly threatens to swallow you both whole.

It would be a shame then, for established and otherwise profitable hotel businesses, having survived a major earthquake or two and a complete interruption of supplies, to succumb to a nasty turn of phrase in a contract that was only meant to deter bad faith abuses. But once this baseline is established, and some of the unique intricacies of Nepalese law explained, the real negotiations can begin in earnest. Let’s make some deals, shall we?

The Energy Crisis in 2016 and the Government of Nepal’s Policy of Prevention since 1992

The Government of Nepal (GON) has had in place a policy to prevent the country’s current energy shortage crisis since at least 1992. At that time the country boasted of an installed capacity of just 278 megawatts (MW) of energy generation (233 MW from hydropower). The GON’s hydropower development policy at the time claimed that Nepal would have to add between 300 and 400 MW more electricity to national grid system by 2001 to keep up with then current demand. Many in the hydropower development industry since that time often talk about Nepal’s great hydropower potential. In 2001, GON estimated that Nepal had a total hydropower generation potential of 83,000 MW of which 43,000 MW was financially feasible using 2001 era technology. At the beginning of 2016 and Nepal has only reached 829 MW of installed capacity, but the peak demand for electricity is at least 1,423 MW and this will reach 3,200 ten years from now according to a rather conservative estimate from the Nepal Electricity Authority (NEA). Other projections estimate the peak demand could reach three times this number. So just how does Nepal plan to meet, not only its current shortfall, but the expected increase in demand? In other words, how will Nepal generate an extra 9,000 MW of electricity by 2026?

This post will highlight some of the findings of 2016 concept paper issued by GON to address Nepal’s national energy crisis and explains how Nepal will develop enough electricity for the next ten years.

Current Developments

The big news this year is the Dhalebar-Mujaffar Transnational Transmission Line bridging the electrical grid systems of Nepal and India. The project was completed around the same time of Prime Minister K.P. Oli’s recent visit to India, but the project has long been in development. The project has introduced an extra 80 MW, mostly from geothermal sources, into Nepal’s electricity grid. Once the rest of the substations along this line are upgraded to handle the extra load, this number will increase to 200 MW. The GON’s goal is to end load shedding during the rainy season in one year and end load shedding during the dry season in three. So far the Dhalebar-Mujaffar Transnational Transmission Line has only allowed the NEA to keep up with its published load shedding schedule and occasionally beat it. Another project, the Dhalkebar-Hetauda Transmission Line, will likely be completed within two years.

Future Plans

There is a lot more hydropower in the pipeline. Currently, 48 hydropower projects are operating and generating 776 MW of power. Another 99 projects are now under construction and promise a further 2,382 MW. Surveys are underway for another 79 projects to generate 5,148 MW. Power Purchase Agreements (PPAs) have been signed between GON and project companies for another 2,568 MW and Grid Impact Studies are under way for 53 more projects expected to generate 1,100 MW. An “all-of-the-above” strategy will plug the gaps between Nepal’s current installed capacity and the time when these future projects come online: a mix of solar, wind, biomass, and geothermal power generation.

Challenges

There are grave challenges indeed to fulfilling these lofty numbers. Currently, the NEA is the only entity that transmits and distributes electricity in Nepal and there is no independent regulatory agency. This could be why the NEA puts out a much more conservative estimate of the country’s needs or why it negotiates PPAs to buy less electricity than some planned power plants can supply. In any case, the NEA will need some help if Nepal is to reach its 10,000 MW goal within ten years. Prevailing laws are confusing and outdated at best and duplicative and inconsistent at worst. The NEA is also the only authorized wholesale buyer of electricity. Private companies cannot negotiate better deals with anyone else even if they wanted to. If private companies want to sell electricity to a thirsty South Asian energy market, they still have to pay NEA’s wheeling charges to use its already overburdened transmission lines. There are further problems relating to the environment, the government procurement process, and distribution and leakage, such as the tendency of overtaxed power transformers to explode as many Kathmandu residents well know. There is also a lack of development in alternative energy production and other issues caused by the recent earthquakes.

The Goal of Ending Load Shedding

The Government of Nepal plans to end the NEA’s current practice of load shedding. Currently Kathmandu residents face as many as 14 hours of each day without electricity, on purpose. These are planned power cuts that the NEA forces on alternating areas of the city in order to equitably share what little power it can distribute during the dry season. The GON has plans to end load shedding by addressing various issues of generation, transmission, and distribution as well as reforming various policies, administrative procedures, and laws.

Generation

The NEA and private companies plan to generate an extra 1,450 MW of hydropower within three years. The GON will also fix prices paid for wind and solar generated energy it the hope that these sources will make up around ten percent (10%) of the Nepal’s total energy production. In order to make this happen, the NEA will introduce a competitive bidding scheme for solar and wind energy companies and it will offer the winning companies favorable PPA terms. The NEA will also allow net metering in certain urban areas to account for net contributors to the grid. Households and commercial consumers will be eligible for 20,000 rupee solar panel subsidies and low interests rates for purchasing and installing solar panels. The GON will encourage sugar mills to sell excess biomass for energy production and GON itself will buy maize and other sources of bio-fuel to encourage commercial farming of these products. Finally, the government plans to phase out power bought from diesel plants, though industrial sector may still these as necessary at least until GON meets its goal of ending load shedding.

Transmission

The GON will hasten the construction of the Trishuli (Pahire Besi)-Matatirtha and the New Marsyangdi-Matatirtha Transmission Lines to Kathmandu. New Kataiya-Kushaha and Raxual-Parwanipur links with India will be constructed within one year to allow the import of another 100 MW. The GON will upgrade the transmission infrastructure of the Dhalkebar-Muzaffar Transnational Transmission Line. Transmission infrastructure upgrades throughout the grid system will take place in three phases. The first phase has already finished; Nepal is importing 80 MW more electricity from India. The second phase will enable an increase electricity imports from India to 200 MW by upgrading various transmission lines, such as the New Hetauda-Old Hetauda, Kimti-Dhalkebar, Bhaktapur-Harisiddhi-Matatirtha, Bhatatpur-Hetuada, Hetauda-Dhalkebar-Inaruwa, Hetauda-Kulekhani-Matatirtha-Syuchatar, Khimti-Lamosanghu, and a general strengthening of the Kathmandu grid system. The third phase will make importing 600 MW from India possible. The GON will expand the 200/400 kilovolt (kV) Dhalkebar Transmission Line and construct the New Khimti-Kathmandu and Hetauda-Naubise 200/400 kV Transmission Lines, along with other improvements.

Distribution

The GON will make a new master plan for energy distribution and leakage management within one year. This will include an electricity preservation program, Time-of-the-Day metering to encourage more efficient off-peak electricity use by consumers, and technical audits to target current distribution problem areas.

Policy

The GON will implement within six months a “National Energy Security Policy” for better land acquisition, Run-of-River PPAs, loan investments, force majeure provisions on the recent earthquakes, detailed actions plans for monitoring, and to address human resource problems relating to formulating necessary legal provisions and rules.

Administrative Procedure

For hydropower development projects, the GON will also ease the repatriation of foreign investment, simplify provisions on work permits and business visa for foreign investors or workers, let the Army or Armed Police Force give security to hydropower projects, improve PPA terms, and start an Industry Revitalization Fund. The GON also plans to remove requiring project company from having to seek Environmental Impact Assessments (EIA) or Initial Environmental Examination (IEE) approvals from the Village Development Committee (VDC) level.

An Energy Crisis Law

The GON also plans to push through an Energy Crisis Bill through the Constituent Assembly. This legislation would remove any restrictions on the amount of land called for in a hydropower project or transmission line. It would also create a cause of action against persons who hinder or create obstacles to hydropower projects. It would prohibit entry on electricity project sites when necessary. It would also offer certain tax incentives for the industry, make changes in the Electricity Theft Control Act of 1992, and make it easier for the NEA’s to procure goods and construction equipment for its own projects.

Ensuring Sustainability through Reform

To ensure sustainably development of energy in Nepal, GON plans even more policy, procedural, institutional, structural, and legal reform.

Policy Reform

The GON will enact several policy reforms. The GON will give special priority to reservoir projects like the Karnali Chisapani. The GON will keep a balance over the types of projects it approves: 40-50 percent reservoir and pump storage, 15-20 percent peaking run-of-river, 20-30 percent run-of-river, and up to ten percent other projects. Policies will be made to preserve water basins for hydropower use projects, making this a national priority, revise electricity tariffs, make PPAs more favorable, make sure all projects funded by money from the Nepalese people will benefit the greatest number of Nepalese people as possible, set a fixed determination of NEA wheeling charges to carry electricity out of Nepal, encourage foreign investment in Nepal’s hydropower sector, engage the Army to build transmission lines, and reimburse community forests for lost land. Efforts will also be made to support other community programs, revise Nepal’s procurement policies, install private transformers for large apartment blocks in urban areas, increase rural electrification, introduce smart metering, install more substations, form new policies supporting the national grid, enable high-voltage consumers to buy power directly, and fully exploit alternative sources of energy.

Procedural Reform

The GON will enact several government procedural reforms. The GON will restructure the Ministry of Energy and the Department of Electricity Development (DOED) to use more human resources for the licensing and study of hydropower projects. The GON will arrange extra support for all projects scheduled to come online in the coming years, develop government projects, and give priority to transmission lines and substations. The GON will facilitate studies of how hydropower projects will affect national parks, wildlife reserves, and environmental buffer zones. The GON will simplify the approval process for EIAs/IEEs for projects less 10 MW. The GON will expedite decisions on government land leases and permission for cutting down trees. The GON will fast track procedures for EIA/IEE approvals. The GON will no longer require community forest organizations to separately approve EIA/IEE reports. If a project company has to change the area of forestland impacted by its project by less than ten percent after its EIA/IEE is approved, then GON will not require supplemental approval. Project companies will be made to reserve ten percent of the equity in their projects for project-affected communities. The NEA will move certain electric lines underground in parts of Pokhara and Kathmandu. These and other cities, such as Biratnagar, Birgunj, Nepalgunj, Bhairahawa, Janakpur, and Hetauda will receive special 132 Kv lines.

Institutional and Structural Reform

The GON will enact several institutional reforms. The GON will form a Central Energy Crisis Prevention Coordination Committee made up of various Secretaries and headed by the Prime Minister. This committee will resolve any issues relating to hydropower development left unresolved at the Joint Secretary level. The GON will restructure the Water and Energy Commission for more discreet analysis of energy load demand forecasts, evaluation of energy consumption, and formulation of resource substitution policy. The Commission will draw up updated generation, transmission, distribution master plans. The GON will expedite the West Seti reservoir-based project with participation from the private sector. The government will also establish several new government companies: a National Electricity Generation Company, an Engineering Consultancy Service Company, a National Transmission Grid Company, and a National Power Trade Company. The GON will make other institutional improvements to support rural electrification efforts. The GON will outsource some responsibilities of the NEA to new smaller companies. Perhaps most importantly, GON will establish a Nepal Electricity Regulatory Commission complete with an appellate tribunal.

Legal Reform

Finally the GON will enact several legal reforms. A new Electricity Act to replace the now-dated 1992 Electricity Act and a bill creating the National Electricity Regulatory Commission will be submitted to the CA. These bills will address hurdles that have hindered hydropower projects in the past by allowing any difficulties to be addressed and removed by the Central Energy Crisis Prevention Coordination Committee. The roles of the Investment Board and Ministry of Energy in projects generating more than 500 MW will be revisited. Licenses will be issued consistent with GON’s transmission master plan. The Director General of DOED will be able to issue licenses directly for projects up to 25 MW.

Where does this all lead?

The Nepalese people need to understand what is being done in their name and hold the government accountable for reaching or failing to meet these goals. Just as the many Himalayan-fed rivers of Nepal boast so much hydropower promise, Nepalese politicians have made as many promises to the Nepalese people about ending load shedding through clean energy. Where I come from, when politicians fail to deliver on their promises, we remove them from office.

The UCC Comes to Nepal, Part III: US Trade Preferences for Nepal Lead to US Law Choices

U.S. Grants Trade Preferences to Nepal

On February 24, 2016, U.S. President Barack Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015. This new law presents new opportunities for Nepali traders. The law authorizes certain trade preferences for Nepal, allowing duty-free benefits for up to 66 different items, such as carpets, headgear, shawls, scarves, and travel goods. The package of trade preferences is part of the continuing U.S. response to the 2015 earthquakes. A few administrative procedures remain before the law takes effect. President Obama must certify that Nepal is eligible based on the same requirements as the African Growth and Opportunity Act of 2000 (“AGOA”) and the U.S. International Trade Commission must decide whether the law poses any negative implications for the U.S. economy. This article examines two of the most important laws on the international sale of goods in the U.S. and what these laws mean for traders in Nepal.

The UCC

In the U.S., most sales of goods are governed by one of two laws: a domestic code or an international treaty. The domestic law is Article 2 of the Uniform Commercial Code, or the “UCC.” The UCC was initially proposed by the Uniform Law Commission and the American Law Institute in 1952 and since that time, 49 of the 50 United States of America have adopted Article 2. The U.S., a common law jurisdiction, has several decades’ worth of legal precedent and state court interpretations of this law. The UCC applies by default between U.S. parties, but as you will soon see below, Article 2 can also apply to many international sales of goods as well.

The CISG

The international law for sales of goods is the United Nations Convention on Contracts for the International Sale of Goods, the “CISG” for short. In 1969, the United Nations Commission on International Trade (UNCITRAL) began drafting what became the CISG in 1980. It came into force in 1988 after the first ten countries ratified the treaty. Currently, there are 84 signatory countries, including the United States. Trade between CISG countries, a list that also includes China, Russia, Australia, Brazil, and most of the European Union, represent three-quarters of the world’s trade.

To call this law an “international law” in the U.S. is misleading. It is true that many countries negotiated this law and have since ratified it. But when the U.S. ratified this treaty, it automatically became part of U.S. domestic law. Yet this is hardly the end of the story. The CISG, by its terms, applies to transactions of goods between parties of contracting states (unless the parties choose a different law in their contract). And, according to CISG Article 1(1)(b), the CISG also applies “when the rules of private international law lead to the application of the law of a Contracting State.” Private international law is another term for the “conflict of laws.” In plain English, these are the laws that decide which law a court or tribunal will apply when more than one law could apply. In practice, the CISG will apply to many transactions of goods when at least one party is from CISG country.

The United States, however, is special. The U.S. only agreed to sign the CISG treaty on the reservation that it would not be bound by CISG Article 1(1)(b). This was a necessary concession that the other CISG countries made so that the U.S. would ultimately sign the treaty. Effectively, this reservation allows U.S. courts to apply the UCC in disputes between a U.S. party and a party from a country that has not ratified the CISG, such as Nepal or India. Furthermore, U.S. courts, lacking the decades of experience with the CISG, often look to UCC cases to help them decide even CISG disputes. This home field advantage for domestic laws is hardly unique to the U.S., but this is why the UCC should always be kept in mind when making a deal with a U.S. based trading partner.

What does this mean for Nepal’s Traders?

What does this mean for a Nepalese trader who wants to take advantage the new U.S. trade preferences? It means that Nepal law could apply to their contract (though it seems unlikely that an American party would willingly agree to this), but so could U.S. law: either the UCC or the CISG. One law is not necessarily better than the other; both can offer a client strategic advantages depending on the terms and structure of the deal. American attorneys often prefer the UCC over the CISG (just a Nepalese attorney might prefer Nepali law), but this is often due to the individual attorney’s own familiarity with the UCC rather than the client’s strategic interests. An attorney who is well-versed in both legal regimes can show his or her client the practical effects of including or excluding the default provisions of each statute. More importantly, such an attorney can pick the best law and draft a contract minimizing the legal risks that a client engaged in overseas trade may face. Whether the UCC or the CISG governs a contract can affect not only the negation, formation, terms, and interpretations of the parties’ contract itself, but also affects what remedies are available to either party should something go wrong and what steps a wronged party may have to take before they can take advantage of those remedies.

Dolalghat: A Place Where the Sun Shines All Day

I had the very unique opportunity of swearing in as an attorney here at the U.S. Embassy in Kathmandu before Vice Consul Michael C. Coker, himself a former practicing attorney in Arizona and Georgia. It was he who welcomed me as a new member of the Maryland State Bar just before Christmas. He enjoyed playing the part of a judge on the Court of Appeals of Maryland. It was quite an experience for the two of us, but even more so for my wife. She also had the opportunity to attend and then celebrated with me afterwards. I wore a new three-piece suit I had tailor-made here in Kathmandu and a certain blue tie that the City Attorney of Little Rock had once gifted me on Christmas while I was the Office Assistant his office in Arkansas.

Unfortunately cameras were not allowed at the Embassy for security reasons, but I have attached a few pictures from our recent company picnic. We went to Dolalghat, just outside of Kathmandu, where there is a beach by the river and sun shines all day long. It was a perfect spot for a wintertime picnic. We played games, ate lots of delicious food, held spirited conversations, and imbibed a few drinks. I even won an award.

I continue to meet new people in Nepal and foster my existing relationships with my colleagues and other contacts here. I enjoyed meeting Vice Consul Coker and other diplomats from the U.S. Embassy here. I met an American named Brian who sells bacon in Kathmandu. I also had the opportunity to meet some of the international journalists and writers who live and work in Nepal. It is interesting to learn from the perspective of those who are entrusted to be the world’s lens into Nepal.

I also have had tea with one of Nepal’s former Attorneys General. He served what has now, in these politically turbulent times, become an unusually long time as Nepal’s top solicitor and legal advisor to Government of Nepal. We talked about the recent changes to Nepal’s judiciary, Nepal’s new constitution, and the evolution of Nepal’s legal education system. We also talked about the 2000 U.S. elections and the time that he had met former U.S. Attorney General Janet Reno.

This month marked my first client referral. Thanks to my membership in the American Bar Association’s Section on International Law, a law partner at the Shanghai office of K&L Gates sent a potential client my way who wants some help expanding their business in Nepal. I arranged a meeting with their representative at our law offices and hope that it marks the beginning of a long, fruitful attorney-client relationship. I am grateful to the ABA for this opportunity and K&L Gates Shanghai for the introduction.

I am having a lot of fun here in Nepal and learning an awful lot. Lately, I have been working with a New York attorney to help a client raise some funds in the U.S. for some much needed hydroelectric power development here in Nepal. I have also recently drafted an engineering, procurement, and construction contract for an international non-governmental organization. I have brainstormed with another of my law firm’s long-time client about how to navigate the unique regulatory environment that is Nepal’s foreign investment regime.

Just yesterday, I helped one of my firm’s law partners draft an article, advocating for reform of some of these regulations and procedures, which will be published in a local business magazine. For example, Nepal’s Foreign Investment and Technology Transfer Act and its Foreign Exchange Regulation Act place the responsibility of approving foreign investment squarely in the purview of the Department of Industry within Nepal’s Ministry of Industries. The Nepal Rastra Bank, Nepal’s Central Bank, however also requires foreign investors to seek a secondary approval from the Bank. It is unclear what value is added by this second layer approval or what additional enforcement goals are achieved by the Bank’s involvement. What is clear, according to the attorney with more 30 years of experience in Nepal, is that it has discouraged some past foreign investors.

I also had the opportunity to sit down with the Chairman and Managing Director of an already established energy company operating in Nepal. He explained that the shares of successful hydropower companies in Nepal always sell out because they can offer a good return on investment,but more participation in the market by the Nepali investors would help encourage more confidence in foreign investors as well.

The Chairman’s biggest concern, though, was the lack of vision or long-term commitment from the Government of Nepal. He has heard for the last 30 years the claims about Nepal’s great untapped hydroelectric potential and a clean, energy independent future. As Nepal has rushed headlong into modernization, there also has grown a great demand for new electricity. This unmet demand is evident whenever the Nepal Electricity Authority (NEA), Nepal’s public and only electric utility company, announces another loadshedding schedule. Loadshedding is the name given to the planned rolling power cuts that the NEA forces on its customers because of the shortage of energy supply. Now, during the dry season, service areas of the NES are hit with up to 14 hours a day without electricity. The Chairman told me that the energy suppliers are ready to help the government build electricity transmission infrastructure, even up to Nepal’s borders, if only the government would take the initiative. The Government of Nepal could then sit back and collect its share in taxes or commissions.

One day the promise of a New Nepal will be fulfilled. There will new local elections: the first in more than twenty years. I recently read a book by Daron Acemoglu and James Robinson called Why Nations Fail: The Origin of Power, Prosperity, and Poverty. The authors drew a direct link between “inclusive political and economic institutions” and prosperity and the alternative link between “extractive political and economic institutions” and poverty. They opened the book by examining the differences between towns on different sides of the US-Mexico border. This example, they argued, cuts against the prevailing idea that prosperity is somehow determined solely by religion, ethnicity, or culture. Acemoglu and Robinson explained that “inclusive economic institutions” are those “that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few. . . . Inclusive economic institutions, are in turn supported by, and support, inclusive political institutions,” that “distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralization so as to establish law and order, the foundations of secure property rights, and an inclusive market economy.” Extractive political institutions are those that concentrated power in the hands of a few and are reinforced by extractive economic institutions that are built on the systematic exploitation of the status quo rather than innovation. Drawing on examples from Venice, Peru, Botswana, and the American South, the authors explained “sustained economic growth requires innovation” and “innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also destabilizes established power relations in politics.”

I hope Acemoglu and Robinson are right. Nepal was mentioned by the authors several times as a destabilized place. I am hopefully curious to see whether the implementation of more inclusive institutions; envisioned by Nepal’s new Constitution (as amended) and new local elections; bring about a new era of prosperity for Nepal. In the meantime, I am blessed that to have so many amazing opportunities to learn new things, to be surrounded by supportive people, and presented with new and unique challenges every week.