Indian construction and power project developer GMR Group has crossed its first legal hurdle in Nepal, with the apex court refusing to heed private petitioners who urged that the firm's newly signed hydropower pact be stopped.
The Hyderabad-based group became the first Indian company to break the jinx on Indian investment in Nepal's thorny hydropower sector by bagging a deal from Nepal's government to develop the 300 MW Upper Karnali hydropower project.
However, the group's move to float a joint venture company with the state-owned utility, Nepal Electricity Authority, to develop the project ran into public and legal opposition. Protesters accused Prime Minister Girija Prasad Koirala of selling out Nepal's natural resources under pressure from the Indian government.
Two individuals from the remote districts where the project is located filed a petition against the pact in Nepal's Supreme Court, saying the consent of two-third lawmakers was needed for such pacts.
Gorakh Bahadur B C from Kalikot district and Ram Singh Rawal from Surkhet challenged the MoU signed between GMR and Nepal's water resources ministry, asking for a stay order till the court gave a final decision.
However, the embattled Indian firm received a boost with Supreme Court this week declining to give a stay order.
Chief Justice Kedar Prasad Giri and judge Ram Kumar Prasad Shah heard the case and said the issue of whether the pact required parliamentary approval would be taken into consideration when the final verdict was delivered.
The government had sent its attorney general, Yagya Murti Banjade, to defend the pact.
The GMR case would be a test case watched by other potential investors.
After years of an impasse, GMR and another Indian company, Sutlej Jal Vidyut Nigam, were able to wrest two hydel projects in Nepal.
Sutlej, a public sector undertaking, has been given the right to develop the 402 Arun III project.
Over 10 more Indian companies are now bidding for a third project, the 600 MW Budi Gandaki.
Though the Maoists and nationalists are opposing the two deals, Koirala's Nepali Congress party said in its election manifesto this week that developing the hydropower projects under consideration would be given priority.