Kinshanganga Project: Hydro-politics and Arbitration over the Indus Basin

The Kishanganga Hydroelectric Power Project (KHEP) in the Indus Basin remains a bone of contention between India and Pakistan. With the South Asian region facing an impending water crisis, the water issue has grown more pressing than ever. As the recent statement by the Permanent Court of Arbitration (PCA) has brought the matter to the forefront again, it is critical to comprehend the hydro-politics surrounding the Kishanganga project.

The disputed 330 KWH KHEP was developed by India’s National Hydroelectric Power Corporation (NHPC) through the Hindustan Construction Company (HCC) for around $560 million in the Himalayan region. The project is situated on the Indian Kishanganga River, a tributary of the Jhelum known as the Neelum in Pakistan. The flow of the western rivers, namely the Indus, Jhelum, and Chenab, was granted to Pakistan by the Indus Water Treaty (IWT). According to the treaty, India controls the flow of the eastern rivers. However, the treaty permits India to use the Indus River for power generation and agricultural development without interfering with the flow of the rivers.

The problem here lies with the project’s design and violating the IWT by diverting Jhelum waters to an underground power plant in India. Article IV(9) suggests that “Each Party declares its intention to operate its storage dams, barrages and irrigation canals in such manner, consistent with the normal operations of its hydraulic systems, as to avoid, as far as feasible, material damage to the other Party.” The Kishanganga River passes through the Azad Jammu and Kashmir (AJK) provinces of Neelum and Astore before entering India’s Gurez region. The project gives India control of a river that runs from Pakistan into India-controlled Kashmir before returning to Pakistan. Pakistan argues that the KHEP would reduce downstream water flow and leave the country with 27% less water than natural flow, exacerbating Pakistan’s pre-existing water crisis. This has also raised local concerns like damage to the local ecology and livelihoods of the people of Kashmir.

The PCA in Hague has rejected India’s objections regarding PCA’s competence to address the issue in a Pakistan-initiated case over water consumption in the Indus River basin.

Previously, the dispute was taken up by the Hague-based PCA in 2016 upon Pakistan’s request to establish an ad hoc arbitration court under Article IX of the IWT. It is because the treaty establishes two conflict resolution forums: the court of arbitration, which handles legal, technical, and structural concerns, and the impartial or neutral expert, which addresses exclusively technical issues. Pakistan sought the establishment of the arbitration court due to systemic problems requiring the interpretation of the law.

India responded to Pakistan’s official dispute resolution process by making its own tardy plea for the appointment of an impartial expert. Expecting divergent outcomes from two concurrent processes, the World Bank deferred the proceedings for establishing the arbitration court and nominating the neutral expert on December 12, 2016. It encouraged both governments to reach an agreement on a single platform. However, the two failed to reach a mutually acceptable scenario.

Pakistan’s recent determination to initiate proceedings derives from India’s ongoing unwillingness to respond to its apprehensions. Islamabad is highly concerned regarding India’s latest proposal to “modify” and “amend” the 1960 IWT without offering details. As “modify” implies “, divert significant waters away from Pakistan” as a means of hydro-politics. 70% of rural Pakistan is dependent on the Indus. The IWT provides Pakistan with 80% of the Indus Basin River flows to address this scenario. Still, Pakistan’s primary issue remains how India openly withholds water. Pakistan has lodged three objections to the design of the Kishanganga project, claiming that the reservoir is 7.5 million cubic meters big and ought to be one million cubic meters. Pakistan also wants India to elevate the inlet by up to 1-4 meters and raise the spillways by up to nine meters.

In contrast, India raised some objections, including: (I) The constitution is illegal. (II) The court lacks the competence to hear the case. (III) It is yet to be established that the matter of modifications in project designs is a dispute that can be settled at the PCA forum, so it must be taken into account by a neutral expert because it is the difference between Pakistan and India, not the dispute. (IV)  Pakistan failed to satisfy the procedural criteria of Articles IX (3), (4), and (5) of the Treaty before starting the present proceedings. (IV) Article IX (6) of the Treaty prevented the court from considering the questions “being dealt with by” the neutral expert. (V) India called the arbitration proceeding illegal, considering a neutral expert was also looking at the issue, and the World Bank-brokered treaty prohibits parallel proceedings

The PCA in Hague has rejected India’s objections regarding PCA’s competence to address the issue in a Pakistan-initiated case over water consumption in the Indus River basin. PCA has revived a procedure stalled for several years but did not specify how the case would be heard again. Yet, it stated that it would focus on the interpretation and application of the bilateral IWT, perhaps, on its terms mentioned for hydroelectric projects, in addition to the legal effect of prior rulings of the treaty’s dispute resolution bodies. The crux of the issue with transboundary lakes and rivers is that upstream nations can restrict or contaminate water flow to the downstream country at any time. When ties between upstream (India in this case) and downstream (Pakistan) economies are strained due to shared water resources, agreements governing these assets are critical to preventing future confrontations.

Conclusion and Recommendations

Overall, the Kishanganga Dam remains a contentious topic which demonstrates the region’s complicated politics, ecological, and economic worries about the ownership and control of water resources. The conflict has been repeatedly heard before the Jammu and Kashmir High Court and the PCA. India and Pakistan frequently hinder reasonable and peaceful settlements, often neglecting those immediately affected by the stalemate. The Indo-Pakistan case analysis leaves some sobering conclusions about challenges to collaboration between the parties. The case reveals how even the strongest riparian states are compelled to seek partnerships with their less powerful neighbours. A viable solution for Islamabad and New Delhi can be to resolve the issues with a one-basin approach. Besides, Pakistan should ratify the 1996 Water Convention as soon as feasible to gain further hydrological and legal defence and remedies under worldwide transboundary water regulations. Since we have a humanitarian case involving water, we should attempt to garner global backing on the matter. Pakistan is already one of the globe’s most water-stressed countries and might be the region’s most water-stressed country by 2040. Islamabad must actively push leading nations and international institutions such as the World Bank to effectively pursue its case and educate them on New Delhi’s attempts at causing problems for Pakistan.

Mariam Rehman

Mariam Rehman is pursuing her bachelor’s in Peace and Conflict Studies from National Defence University, Islamabad. She is an Intern at CSCR.

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