An Implementation Framework for a Benefits Sharing Mechanism for the Hydropower Sector in Pakistan

Abstract

This thesis explores how a royalty-based or non-monetary benefits sharing mechanism (BSM) could be implemented in the hydropower sector in Pakistan and what implementation framework would be required to make it both feasible in the local context and socially beneficial. The establishment of BSMs worldwide in a variety of sectors (e.g. mining, hydropower and forestry) have had varying success, with developing countries often facing greater difficulties in implementing them effectively, due to a lack of capacity in local public institutions as well as a general sense of distrust towards the government and project developers from local communities. Royalty-based or non-monetary BSMs were introduced with the aim of redistributing the monetary and non-monetary benefits (e.g. local employment) equally and fairly within the locally affected communities, not only to offset the negative impacts caused but with the aim to create long-term sustainable solutions. The focus of this thesis was to explore how a BSM could be established and implemented in Pakistan, Gilgit-Baltistan (an administrative territory in northern Pakistan), where the Gilgit-Baltistan Hydropower Policy 2017 established a first outline of a potential Pakistani BSM. The methodology used for this thesis was a combination of desktop review of the proposed Gilgit Baltistan Hydropower Policy 2017, a thorough literature review of existing BSMs implemented worldwide and a site visit to Gilgit Baltistan in July 2017 to gain a better understanding of the local dynamics and the potential stakeholders. The desktop review identified key gaps within the proposed policy and drew out lessons learned and best practices from BSM examples found worldwide. This enabled the author to suggest changes to the proposed BSM framework to align it with the key factors of success identified in the literature. The results from the research demonstrated that a BSM could be implemented in the Paksitani hydropower sector by applying concrete changes to the BSM framework outlined in the Gilgit Baltistan Hydropower Policy 2017 to align it with the four key enablers highlighted by Lillehammer, San Martin & Dhillion (2011, p. 15): “1) policies and regulatory framework; 2) stakeholder engagement and community participation; 3) partnership formation; and 4) institutions and capacity building”. The research also found that the implementation of non-monetary/non-legislative agreements would be an important complement to the legislative royalty based BSM currently proposed to help create non-monetary localised benefits without much reliance on the federal government.