Transboundary & Treaty Rivers of Nepal: India Water Agreements

Most of Nepal's major rivers, including the Koshi (Kosi), Gandaki (Gandak) and Mahakali (Kali/Sarda), flow south across the border and feed the Ganges plain in India. Because these are transboundary rivers, their barrages, canals, flood banks and hydropower plants can only be built and operated with the consent of both countries. Over the decades Nepal and India signed three principal bilateral water agreements to divide the water, share structures and apportion benefits.

The three treaties are very different in tone. The Koshi Agreement of 1954 and the Gandak Agreement of 1959 were signed in Nepal's early democratic and Panchayat era, and are widely criticised in Nepal as unequal because India designed, funded and operated the projects while Nepal received limited irrigation and power in return. The Mahakali Treaty of 1996 was drafted as a more balanced, integrated framework built on the principle of Nepal and India having equal entitlement to the waters of the boundary river.

For exam candidates and general readers, the treaties matter because their signing dates, water entitlements and article numbers are frequently tested and endlessly debated in Nepali politics. This page collects those durable facts in one place and pairs each treaty with its shared structures and unresolved disputes.

The Agreement on the Kosi Project between Nepal and India was signed on 25 April 1954 (2011 BS) and covered a barrage, head-works, afflux and flood banks, and canals on the Koshi river, roughly upstream of Hanuman Nagar, at the site now known as the Koshi Barrage near Bhimnagar. Its stated purposes were flood control, irrigation, hydro-electric power and prevention of erosion. India was to design, construct, operate and largely finance the project.

The original 1954 text drew heavy criticism in Nepal for being lopsided: it made almost no provision for irrigation inside Nepal, gave India wide control over the works, and was seen as encroaching on Nepal's sovereignty. In response, a Revised Agreement was signed on 19 December 1966 (2023 BS) after Indian Prime Minister Lal Bahadur Shastri's 1965 visit. The revision addressed some of the grievances and clarified Nepal's rights.

Under the revised terms, Nepal leased the barrage land to India for a period of 199 years, a duration many in Nepal still consider excessive given the barrage's much shorter working life. Crucially, Nepal retained sovereignty and territorial jurisdiction over the leased area, kept the right to withdraw water from the Koshi (and Sun Koshi) for irrigation or any other purpose in Nepal as needed, and was entitled to use up to 50 per cent of the power generated at the project's power house at agreed tariff rates. A joint Koshi coordination committee was established to handle land, displacement and related matters.

The Agreement on the Gandak Irrigation and Power Project was signed on 4 December 1959 (2016 BS) by Nepal's Deputy Prime Minister Subarna Shamsher Rana and India's Ambassador Bhagwan Sahay, and it was later amended on 30 April 1964. It permitted India to build a barrage on the Gandaki river at Bhaisalotan (Balmiki Nagar / Valmikinagar), just across the border, for irrigation in both countries, together with canals, flood-control works and hydropower.

Compared with the 1954 Koshi text, the Gandak Agreement was more detailed about Nepal's benefits. It provided for irrigation canals to serve Nepali land in the Nawalparasi and adjacent areas, and for a power house of 15,000 kilowatt installed capacity on the western canal inside Nepali territory to supply electricity to both nations. The agreement is framed around the 'common interests' and mutual benefit of Nepal and India from the Gandaki river.

In practice the project remains contentious in Nepal. Critics say the promised irrigation water and sill (river-bed) levels at the Gandak Barrage were not consistently maintained, that displaced people were inadequately compensated, and that sand deposition and bank erosion reduced the benefits Nepal actually received. The Gandak experience, alongside Koshi, shaped Nepal's insistence on a more equal framework by the time of the Mahakali negotiations.

The Treaty between His Majesty's Government of Nepal and the Government of India Concerning the Integrated Development of the Mahakali River was signed in New Delhi on 12 February 1996 (2052 BS) by Nepali Prime Minister Sher Bahadur Deuba and Indian Prime Minister P. V. Narasimha Rao. Nepal's parliament ratified it with the required two-thirds majority on 20 September 1996, and the instrument of ratification brought it into force from 5 June 1997.

The treaty has 12 articles and, unlike the earlier agreements, opens by recognising the Mahakali as a boundary river along the two countries' border and by affirming that Nepal and India have an equal entitlement to the utilization of the waters of the Mahakali, without prejudice to their respective existing consumptive uses. It is built around three components inherited from and added to earlier arrangements: the Sarada Barrage, the Tanakpur Barrage, and the new Pancheshwar Multipurpose Project.

Article 9 establishes a Mahakali River Commission, a bilateral body guided by principles of equality, mutual benefit and no harm, to make recommendations and coordinate implementation. Under Article 12, the treaty is to remain in force for 75 years from the date of entry into force and is subject to review by both parties every ten years or earlier as required; either party may propose amendments.

For the Sarada (Sharda) Barrage, India is obliged to supply Nepal 28.35 cubic metres per second (about 1,000 cusecs) of water in the wet season (mid-May to mid-October) and 4.25 cubic metres per second (about 150 cusecs) in the dry season, subject to availability, for use in Nepal. A minimum environmental release of about 10 cubic metres per second (350 cusecs) is to be maintained downstream to preserve the river ecosystem.

For the Tanakpur Barrage, whose left afflux bund rests partly on Nepali land, Nepal is entitled to 28.35 cubic metres per second (about 1,000 cusecs) in the wet season and 8.50 cubic metres per second (about 300 cusecs) in the dry season for the Dodhara-Chandani area. In addition, India supplies Nepal 70 million kilowatt-hours (units) of energy annually, free of cost, from the Tanakpur power station, and Nepal retains sovereignty over the land used for the works and pondage.

These are firm, treaty-defined entitlements, which is why the Mahakali Treaty is regarded in Nepal as more balanced than the Koshi and Gandak agreements. Even so, Nepali critics argue that actual deliveries and the practical value of the free power have often fallen short of expectations, a recurring theme across all three river treaties.

The Pancheshwar Multipurpose Project, envisaged on the Mahakali at the Nepal-India border, is the centrepiece of the treaty. It is to be built on the basis of a joint Detailed Project Report (DPR) for power generation, irrigation and flood control. The treaty specifies that the electricity generated is to be shared equally between the two countries, while the cost of the project is to be borne by each party in proportion to the benefits accruing to it.

Decades after ratification, Pancheshwar remains unbuilt. The central sticking points are exactly the variables the treaty left to be settled in the DPR: how to value and share the water and irrigation benefits, how to price and allocate the cost, and how to account for India's prior 'existing consumptive uses' of Mahakali water. A Pancheshwar Development Authority was established to advance the project, but a mutually agreed DPR has repeatedly been delayed.

The delay has become a symbol of the wider gap between what Nepal's water treaties promise on paper and what is delivered on the ground. It also feeds domestic political debate in Nepal, where the treaty's ratification in 1996 was one of the most divisive foreign-policy votes in the country's parliamentary history.

The Mahakali Treaty is entangled with the Kalapani boundary dispute because the treaty treats the Mahakali as the boundary river, yet Nepal and India disagree on where that river actually begins. Nepal maintains, on the basis of the 1816 Treaty of Sugauli that fixed the Kali river as its western boundary, that the true source lies at Limpiyadhura and that the Kuti Yankti (Kuthi Yangti) is the main headstream, placing Limpiyadhura, Lipulekh and Kalapani east of the river inside Nepal.

India argues that the Kali originates from a smaller stream (often identified as around the Pankhagad rivulet near Kalapani) and that the boundary runs along a ridge further east, keeping the Kalapani area on the Indian side. The area is strategically sensitive as a tri-junction of Nepal, India and China near the Lipulekh pass, which has heightened the dispute.

The source question was raised prominently during Nepal's 1996 parliamentary debate on the Mahakali Treaty and flared again in 2019-2020, when a new Indian map and a road to Lipulekh prompted Nepal to publish a revised official map (the 'chuchche naksa') including Limpiyadhura, Lipulekh and Kalapani. The dispute remains unresolved and is separate from, but bound up with, the treaty's implementation.