Mahakali Treaty with India — Pancheshwar Dam and Water Sharing

What happened

Nepal and India signed a deal in 1996 about building a giant dam on the Mahakali River. Nepal would get half the electricity — which would be a huge amount. But 30 years later, the dam still has not been built because Nepal and India keep arguing about the details.

Full Verified Record

The Mahakali Treaty, signed between Nepal and India on 12 February 1996, governs the development of the Mahakali River basin, including the planned Pancheshwar Multipurpose Project — which, if built, would be one of the largest dams in Asia. The treaty promised Nepal 50% of the power generated from Pancheshwar (estimated at 6,480 MW). As of 2026, after 30 years, the dam has still not been built. Disputes over the detailed project report, India's water usage upstream, and compensation for Nepal's Sarada Barrage contribution have kept the project stalled. The Mahakali treaty is cited as an example of Nepal failing to extract value from its water resources in deals with India.

१२ फेब्रुअरी १९९६ मा हस्ताक्षरित महाकाली सन्धिले पञ्चेश्वर बहुउद्देश्यीय आयोजना र महाकाली नदी बेसिनको विकासलाई नियमित गर्छ। ३० वर्षपछि पनि बाँध बनेको छैन।

Why it mattered

The Mahakali treaty represents Nepal's unfulfilled hydropower potential in Indian-partnership projects. Its stalemate shaped Nepal's negotiating approach in subsequent water agreements. The treaty is cited in debates about Nepal's ability to leverage its water resources for development.